19 bids for Bishan site, top offer $550m

CapitaLand's top bid for site near MRT station beats market expectations

By Cheryl Lim

A PRIME slice of government land near Bishan MRT station sparked a bidding war that involved 19 bids and delivered a top offer that was nearly double the market expectations.

The remarkable turnout - the largest since 32 bids squared off over a Jurong West site in 2009 - shows the level of confidence in the property market despite last month's cooling measures.

Analysts had expected a price of $303 million for the residential site, but CapitaLand easily trumped that with an offer of $550 million, or $869 per sq ft per plot ratio (psf ppr). The property giant wants to build a high-rise condo of at least 36 storeys with 600 units.

CapitaLand was up against a who's who of local and regional developers, including Keppel Land, Far East Organization and Beijing-based MCC Land (Singapore), as well as mid-sized and boutique players such as Teneriffe Development.

Its bid for the 129,136 sq ft plot was about 27 per cent higher than second-placed Keppel Land's, while the lowest bid came in at $213 million.

There is some irony in CapitaLand's stratospheric bid, given chief executive Liew Mun Leong's remarks in a newspaper report last month: 'We are amazed at the prices that come out (in government land tenders),' he said then. 'Not that we are jealous... but when we look at the numbers, we know that we can't do it... So in a way, we agree that there is some speculative chasing for land.'

The site was the second major tender that closed after the Jan 13 cooling measures.

Last week, a 30ha mixed-use site in Punggol was sold for a record price of $1.02 billion, or $753 psf ppr.

The results of both tenders indicate that developers are still confident there is demand from buyers and long-term investors, said market watchers.

Prime sites in mature estates are hard to come by, said Cushman & Wakefield vice-chairman Donald Han, and this could explain why developers were willing to pay a premium for this property.

Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, agreed: 'Properties in good locations, like the Bishan site, tend to be able to weather economic conditions and price corrections better as compared with other plots. Developers are prepared to pay more for a choice location that will sell well easily.'

Mr Han said CapitaLand could 'create synergy' with Junction 8 Mall, which is owned and operated by its unit CapitaMall Trust. He pointed out that the developer has experience in similar projects.

Mr Liew earlier said he would be keeping an eye on residential sites in the Government Land Sales Programme this year.

Earlier this week, CapitaLand had also said it was prepared to sink up to $6 billion into new investments.

Knight Frank's head of consultancy and research Png Poh Soon estimates the project could sell for up to $1,700 psf.

Last month's sales at nearby condo Clover By the Park was at an average of $967 psf, while Centro Residences in Ang Mo Kio sold for an average of $1,412 psf.

However, Mr Han does not believe it will cause prices of nearby HDB flats and private homes to go up. 'The impact will be quite minimal. While the location is important, other factors like the project's design, facilities, apartment layout and target audience may affect the average price a project will eventually sell for,' he said.

cherlim@Sph.com.sg