The tender for the 268,713 sq ft site attracted seven bids at the close yesterday, with the highest offer by UOL Venture Investments and Kheng Leong Company at S$463.1 million. That translates to S$820.65 per sq ft per plot ratio (psf ppr), an amount analysts say is conservative when compared with previous transactions within the area.
The site, which has a maximum permissible gross floor area of 564,308 sq ft, is located near the Alexandra Canal and Redhill MRT Station and will be able to yield about 655 units, said the Urban Redevelopment Authority.
“Today’s tender result indicates that the multiple government interventions in the property market have finally resulted in cooling the residential land sales market,” said Mr Nicholas Mak, Executive Director for Research and Consultancy at property firm SLP International.
The top bid appears cautious compared with the two most recent land sales in the vicinity, which went for well above S$900 psf ppr, Mr Mak added. Sold in 2012, the two sites were transacted before the seventh round of cooling measures and the Total Debt Servicing Ratio framework were introduced in January and June last year.
These measures have also had an effect on sales of new private homes, with developers selling 480 units last month, compared with 739 in February and 2,793 in March last year.
“The growing caution among developers is not surprising, given that the private residential market has softened considerably since a year ago,” Mr Mak said.
Mr Ku Swee Yong, CEO of real estate agency Century 21, agreed that developers who bid for the site took a more “conservative stance”.
Besides the current weak sentiment, bidders may have priced in competition in the area as well.
“There are unsold and unlaunched units in that location and also a few more parcels there that will be released (for sale) in the next two years or so, so there will be competition for buyers … I think this bidding is reflecting a launch price of around S$1,300 to S$1,400 psf, which is lower than the current rate in that area,” he said.
“So, even though there are a lot of good attributes about (the site) and that’s why participation is still strong, the bids are all coming in lower than expected.”