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Singapore Property | Consultants see good interest in 'palatable' Sembawang site

Without need for big outlay, 0.7ha plot expected to draw small, mid-cap developers, with bids likely below S$50m

By Lee

A PUBLIC tender for a 0.7-hectare residential site at Jalan Kandis in Sembawang was launched by the Urban Redevelopment Authority on Thursday.


Feb 26, 20165:50 AM


A PUBLIC tender for a 0.7-hectare residential site at Jalan Kandis in Sembawang was launched by the Urban Redevelopment Authority on Thursday.

Consultants expect the small site to generate good interest among developers, given that it would not require a huge capital outlay.

The eventual project is expected to be an affordable, entry level condominium for the suburban market.

This "confirmed list" site (meaning it is launched according to schedule, regardless of demand and without having to be triggered by a minimum bid) can potentially yield about 110 residential units.

The site is 7,045.6 square metres, with a maximum permissible gross floor area of 9,864 sq m. It has a lease tenure of 99 years.

Ong Teck Hui, JLL's national director of research and consultancy, expects the top bid for this parcel to come in between S$400 and S$470 per square foot per plot ratio (psf ppr), so the absolute land price could be less than S$50 million, which will be affordable to even small developers.

He expects eight to 12 bidders to participate in the tender, as many developers need to secure new land to keep their businesses going.

"In the last two years, the lowest land price in the tender for a GLS (government land sales) residential site was that of High Park Residences (S$438 psf ppr for Parcel A & S$448 psf ppr for Parcel B) in Sengkang, which sold its units very successfully at an average price of S$986 psf.

"At that price level, 84 per cent of the units were taken up within the month of launch. The buyers for the Jalan Kandis project will be those who do not mind its outlying location. They could include upgraders from the nearby HDB estates in the Sembawang and Canberra area," he said.

The site is not very near Sembawang MRT station, but Desmond Sim, head of CBRE Research, Singapore and South East Asia, agrees that its small size makes it "very palatable", especially for small-cap and mid-cap developers.

"This is not exactly the most prime of the choicest sites, which will be reflected in the bid price and end selling price. But a small plot means that more people can take part, and greater price elasticity - developers can afford to pay a bit more."

He expects the bid prices to come in at S$40-50 million (S$380 to S$470 psf ppr), translating to an eventual breakeven price of S$900-950 psf ppr. The tender could see about 5-8 bidders.

There is one other positive attribute of the plot, he said.

"The site is predominantly surrounded by landed housing and is near Sembawang Park. So if you have a vantage point, it might be quite far; you may be able to see all the way to Malaysia."

This is even after considering that the maximum building height is capped at just a part three-storey and part seven-storey building.

SLP International executive director Nicholas Mak expects the tender to attract between five and 10 bids, including from some contractor developers who need to replenish their land bank. The land price could range from S$42.5 million to S$48 million (or S$400 to S$452 psf ppr).

"It is fairly rare for the government to launch residential sites that yield less than 120 housing units. The previous condominium site that could yield about 100 units was sold in June 2012 to Singland Development. It was located at Farrer Drive and developed into Pollen & Bleu," he said.

Working in the Jalan Kandis site's favour is also the limited supply of new upcoming private condominium launches in the vicinity.

For some estimates of end selling prices, he looked at two 99-year leasehold condominiums nearby, The Nautical and Canberra Residences, which are transacting units at median prices of S$1,190 and S$1,068 psf respectively now. Both projects were launched in 2011.

The tender for the latest land parcel closes at noon on April 7, 2016.

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