This is despite the Urban Redevelopment Authority (URA) rolling out the two adjacent sites and closing the tenders for both on the same day. It is the first time that the URA has attempted this with two adjacent parcels, although, it had earlier this year conducted simultaneous tender closings for three executive condominium (EC) sites. The three EC sites were in different areas - two in Punggol and one located near Jurong Country Club.
The top bid for both sites was put up by Kingsford Development, at $522.43 per square foot per plot ratio (psf ppr), which translates into $258.8 million for Parcel A and $201.6 million for Parcel B.
Parcel A has a land area of 165,125 sq ft and is located next to Rio Vista condo, while Plot B has a land area of 128,644 sq ft.
Kingsford Development beat the second highest bids for Parcel A and Parcel B by 16 per cent and 12.7 per cent respectively.
"While the bids seem bullish amid current buying sentiment, it indicates the developer's intention to land bank, to cement its position, and to minimise price competition it could potentially face in the vicinity," said Chia Siew Chuin, director of research and advisory at Colliers International.
Knight Frank Singapore's research head, Alice Tan, had pointed out earlier that there were currently eight private housing projects being built within a two-kilometre radius of the two sites. As at end-September, when the sites were launched, about 85 per cent of the total 4,840 units from the eight projects had been sold.
Notably, both parcels drew bids from five common participants, namely Kingsford Development, EL Development, Meteorite Land Singapore, MCL Land (Brighton), and a joint-venture between Verwood Holdings, Intrepid Investments and TID Residential.
According to Joseph Tan, executive director, residential, at CBRE, the differential between the top bid and the second highest bid for both plots is "not surprising", given that Kingsford Development is a "fairly new entrant who wants to compete with mainstream developers to shore up their landbank".
That being said, the latest tender result shows a trend of foreign developers continuing to outbid local players, pointed out Christine Li, head of research at Orange Tee.
"One of the reasons could be the continued availability of liquidity in the financial market which encourages foreign players to take on higher risks," she suggested.
Based on Kingsford Development's website, the developer is based in Shenyang, China. Given that the real estate market in Shenyang has slowed down quite significantly over recent years, this move could be read as Kingsford diversifying their real estate portfolio outside its home country, she added.
While Kingsford Development has been relatively active in recent land tenders here - it also bid in the last EC site tenders where all three parcels closed on the same day - it is probably best known for winning the site at Hillview Avenue, which was subsequently developed into the 512-unit Kingsford @ Hillview Peak.
Parcel A's second highest bid was put up by EL Development, at $450.36 psf ppr. The lowest bid was put up by CEL Residential Development, at $321.33 psf ppr.
Parcel B's second highest bid was put up by Maxdin and SingHaiyi Residences ($463.52 psf ppr), while the lowest bid for the parcel was put up by MCL Land (Brighton), at $318.96 psf ppr.
Colliers' Ms Chia estimated the breakeven cost for the proposed developments on both sites to be in the range of $860 to $920 psf. As such, the selling price could start from $1,000 psf.
Orange Tee's Ms Li said that she expects the developer to sell its projects from $1,050 psf. Currently, transactions in the vicinity range from $950 to $1,000 psf.
Source from Business Times