BY RENNIE WHANG
Straits Times
THE top bid at a tender for a Sengkang executive condominium (EC) site that closed yesterday will, if successful, be the lowest EC land price since July 2011, consultants noted.
The tender for the 1.75ha site in Anchorvale Crescent attracted just three bids, reflecting a cautious market outlook amid weak sales and ample supply.
Sim Lian Land's top offer of $157.8 million, or $280 per sq ft (psf) per plot ratio (ppr), was the lowest since the Twin Waterfalls EC site in Punggol Field was sold 31/2 years ago at $270 psf ppr.
It was also well below the initial estimate of $180 million to $203 million, or $320 to $360 psf ppr, said Mr Nicholas Mak, SLP International's executive director. Sim Lian's bid was 9.7 per cent higher than the second bid by Allgreen Properties.
Yesterday's tender for the site, which can yield 525 homes, was in stark contrast with the most recent EC site sold in the area.
The Vales, across the road, was sold in February last year for $367 psf ppr or 24 per cent more, and fetched a bullish 12 bids, said Mr Ong Teck Hui, JLL national research director.
It appears developer sentiment has weakened significantly since. The last tender for an EC site - in September last year - closed with just two bids for a 2.8ha site in Sembawang.
Islandwide, a record 2,000 EC units have been launched but remained vacant as at Dec 31 last year, said Mr Desmond Sim, CBRE research head for South-east Asia.
"There are, in the near future, at least 6,000 units in the pipeline, of which 1,700 are located in the north- east," he added.
Indeed, the Sengkang and Punggol area is home to the highest concentration of new EC projects. Prior to the latest site, 14 EC sites have been sold in the area, said Mr Ong of JLL.
The take-up rate at EC projects has also been muted.
In Punggol, nearly 600 of 747 units are unsold at The Terrace EC, which launched on Dec 7.
At the end of last year, 465 of 651 units were unsold at Bellewaters EC in Sengkang, which was launched in November, 64 units were unsold at Waterwoods EC (launched November 2013) and 54 units at Ecopolitan EC (July 2013).
If the latest site is eventually sold to Sim Lian at $280 psf ppr, break-even price for the project could be $640 to $660 psf, noted Mr Mak.
This would allow Sim Lian to launch at prices undercutting other projects in the area.
Ms Christine Li, research head at OrangeTee, said the trend of developers "fishing" for low winning bids could continue. "Given current tepid market conditions, we may possibly also see this behaviour extend into land tenders for private residential plots."