SINGAPORE – The successful tender for an executive condo (EC) site, Treasure Crest EC, in Sengkang is likely to heat up the competition for buyers, given the number of similar projects such as The Terrace EC and Bellewaters EC that have sprung up in the area.
A bid of $157.8 million – or $280 per sq ft (psf) per plot ratio (ppr) from developer Sim Lian Group for an Anchorvale Crescent plot was accepted on Thursday, potentially pricing the new project well below neighbouring ECs, consultants said.
The site can yield 525 homes.
The top offer beat only two other contenders and was the lowest tabled for an EC site since July 2011 – a reflection of the cautious mood among developers amid weakening market conditions.
Market watchers noted that the tender’s results were released about 12 working days after the bidding closed, a departure from the usual practice of five days.
Mr Nicholas Mak, executive director at SLP International, reckoned that the 1.75ha plot site’s reserve price, which is kept secret, could have been adjusted to reflect the bidders’ assessment of the site’s value.
The Housing Board said yesterday: “It is not solely based on the tender price meeting the reserve bid price for state land.”
Factors like compliance with tender specifications are also considered, it noted.
There have been 13 EC developments – or 7,149 units – launched in Punggol and Sengkang since 2010. Sales at recently launched projects have been tepid, with The Amore in Edgedale Plains moving about 80 of 378 units at its opening last month.
At Bellewaters, an EC also in Anchorvale Crescent, 195 of 651 units have been sold since its launch in November.
The break-even price for the Sim Lian project is expected to be between $600 and $660 psf, said analysts, which gives the developer room to “undercut” selling prices of nearby ECs.
Sim Lian’s bid was 24 per cent lower than the $367 psf ppr that developer SingHaiyi paid for a neighbouring site which will accommodate The Vales EC.
Qingjian Realty shelled out $331 psf ppr for its Bellewaters EC site – 18 per cent higher than Sim Lian’s bid.
Mr Ong Teck Hui, national director of research and consultancy at JLL, said: “If EC buyers think that a nearby new project could come onto the market at lower prices, they might prefer to wait… This could slow the sales of other EC projects that are being actively marketed.”
Mr Mak said of SingHaiyi and Qingjian Realty: “The other two developers would be very worried.” Demand for ECs in Punggol and Sengkang, he added, could have already been met and it could take some time for the market to absorb the unsold units.
Based on the break-even price, Sim Lian could price its units between $700 and $750 psf.
Units at Bellewaters and The Terrace have sold for an average of about $810 psf.
Mr Ong Kah Seng, director of R’ST Research, noted that values of ECs in the vicinity could be hit “slightly”, as developers might have to cut prices to beat the competition from existing projects.
Since 2010, average prices of ECs have crept up from $700 psf and peaked at a high of $800 psf last year, as competition for EC sites shored up land values.
But Mr Mak pointed out that Thursday’s tender could be a harbinger of more bids sinking below the $300 psf ppr mark. A tender for a Woodlands Avenue 12 EC site will close next Thursday, while a plot in Choa Chu Kang Avenue 5 will hit the market in May.