An article recently published by Straits Times stated, “A closely-watched tender for a large mixed-use site in Paya Lebar stunned the market with a staggering top bid of $1.672 billion.”
In addition, “Lend Lease's offer was 8.8 per cent above the next highest offer of $1.54 billion - or $867 PSF PPR* - from a consortium comprising Singapore Press Holdings, Keppel Land and Hong Kong tycoon Li Ka Shing's CK Hutchison Holdings.”
We then asked the question, WHY are developers so excited about this plot of land?
The answer is the one we all know: location, location, location.
First, if you take a look at SRX Property's Latest Home Prices Near MRT Stations for the Circle Line, you will notice that Paya Lebar has a median private flat PSF of $1,088, while neighbours Dakota and Mountbatten have PSF of $1,156 and $1,207, respectively.
This is good news for homeowners in Paya Lebar. If the developers do their jobs, they will upgrade the area, boosting both commercial and residential prices.
The potential upside is seen on the Circle Line. We would expect Paya Lebar prices to start to approach that of its neighbours.
If the median price of a private flat in Paya Lebar jumps from $1,088 to $1,207, that’s an increase of 10%. In dollar terms, this is a bonus of $119,000 for a 1,000 square foot flat. Not bad for the homeowner considering the developers are doing all the work.
(When the noise of construction starts to bother you, remember $119,000 per 1,000 square foot.)
Secondly, Paya Lebar is a major transportation hub. Not only is it close to the PIE, its MRT station is a coveted interchange. It allows commuters in surrounding areas to reach the Central Business District (CBD) in 10 to 15 minutes via both the Circle and East-West lines.
Finally, there is plenty of buzz as a result of recent development in this area.
For Instance, One Katong Mall just TOP’d on 30 November 2014. This mixed residential and commercial site is right next door to the site that Lend Lease just purchased for $1.672 Billion.
In addition, the Malay Village, which is just 100 metres away from the Paya Lebar MRT has been knocked down to create a new activity centre for the neighbourhood.
In summary, developers and government planners recognize Paya Lebar’s hidden value can be found in its low PSF compared to its neighbours, its strategic position as an MRT interchange to transport commuters to the CBD, and surrounding redevelopment of the area will raise prices for all market participants.
* PSF PPR = per square foot per plot ratio