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Chip Eng Seng unit puts in top bid for site near Tanah Merah MRT

Its bid price is higher than what most consultants forecast; it plans to build a 720-unit condo with full facilities and a childcare centre

By Lee

Feb 24, 20165:50 AM


A CHIP Eng Seng unit has put in the highest bid for a residential site at New Upper Changi Road/Bedok South Avenue 3 (Land parcel B).

The site was put up for sale by the Urban Redevelopment Authority last month.

Chip Eng Seng's unit, CEL Residential Development, bid S$419.38 million or S$761 per square foot per plot ratio (psf ppr).

It beat seven others to the top spot. Allgreen Properties was a very close runner-up with a bid of S$415.89 million (S$754 psf ppr); China Construction (South Pacific) Development was third with a bid of S$395.92 million (S$718 psf ppr).

Chip Eng Seng's bid came in above most consultants' expectations. Most forecasts had been capped at S$750 psf ppr.

Ong Teck Hui, JLL's national director, research & consultancy, said the top bid for the subject site is "optimistic but not altogether unexpected".

It could have been "emboldened" by the keen bidding for the Siglap Road parcel in January that fetched S$624.18 million (S$858 psf ppr).

Mr Ong said: "For the latest site, the top bid is only 3.8 per cent lower than the S$791 psf ppr paid for The Glades' site in October 2012, although market conditions were more upbeat then.

"It shows the top bidder's confidence of favourable market conditions when the project is launched for sale. There are views in the market that economic conditions would improve by 2017 and cooling measures might be eased by then. This positive reading could have contributed to the firm bidding that we are seeing at government land sales (GLS) tenders."

The site was originally on the reserve list of the GLS programme. It was only launched for tender after a developer submitted a minimum price that the government okayed.

There are other positive attributes of the site, for instance, it is located near Tanah Merah MRT station and within a popular residential enclave, so bidders would be confident of demand from buyers.

SLP International executive director Nicholas Mak also noted an absence of a strong competing project by the time the project is ready to launch in 2017.

"Other than The Glades, the other two uncompleted condo projects in that location have less than 3 per cent of the total units unsold... At The Glades, 343 out of the total of 726 units are unsold at the end of January 2016," he said.

The site was offered for sale on a 99-year lease term. It has a land area of 24,394 sq m and an allowable gross plot ratio of 2.1 and a maximum gross floor area of 51,228 sq m.

In a statement filed to the Singapore Exchange on Tuesday, Chip Eng Seng said that 500 sq m of the gross floor area will be used for a childcare centre. Its proposed development, with full condominium facilities, will comprise about 720 residential units.

It will be financed by internal funds and bank borrowings and is not expected to impact the group's net tangible assets and earnings per share for the current financial year.

Desmond Sim, head of CBRE Research, Singapore and South East Asia, said: "Buoyed by the success of High Park Residences, it is not surprising that Chip Eng Seng is keen to ensure business continuity."

High Park Residences in Sengkang, which launched in July 2015, has sold 94 per cent of its 1,390 units as at the end of January - no mean feat in this market.

Mr Sim added: "That the site was triggered from the reserve list indicates developers still maintain healthy interest in sites, especially in sites with a relatively palatable quantum and with time on their side.

"Some developers are diversifying their risk by entering joint ventures, which some of the bidders have done in this tender."

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