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Upper Serangoon mixed-use site draws top bid of S$276.8m

Despite the slow property market, a mixed-use land parcel in Upper Serangoon Road has drawn a better-than-expected top bid of S$276.8 million in a tender contested by 11 firms and consortiums, attesting to the attractiveness of such sites.

The bid placed by Asset Legend at the close of tender yesterday for the 108,685 sq ft site was 15 per cent more than the second-highest offer by SL Capital Ventures at S$240 million and 60 per cent higher than the lowest bid by KBD Ventures at S$172.7 million, said a statement released by the UrbanRedevelopment Authority (URA).

On a per square foot per plot ratio (psfppr) basis, the 11 bids ranged from S$529.70 psfppr to S$848.80 psfppr.

While the number of bids was in line with what property analysts had forecast, the top bid surpassed their expectations. Mr Eugene Lim, key executive officer of ERA, had projected a top bid of around S$750 psfppr.

The 99-year-lease site, located near Kovan MRT station, is for residential and first-storey commercial use. Launched under the Confirmed List of the Government Land Sales (GLS) by the URA, it has a maximum gross floor area of 326,060 sq ft and can yield an estimated 340 housing units.

Mr Chris Koh, director of Chris International, said the interest shown in the tender is a sign that developers are keen to bid for mixed-use sites.

“Developers have the confidence to bid for the site as it is a mixed development. For a site like this, the commercial units will typically attract buyers first and this will then have a spillover effect on buying interest for the residential units,” Mr Koh said.

Thus, bidders were expecting that the development could attract a wide range of buyers, he added.

Mr Lim said: “Asset Legend could be bullish about the site’s prospects because of its proximity to Kovan MRT Station, and its main-road frontage, which works well for the commercial units that have to be built on the first storey.”

The top few bids also indicated that there are developers who have enough financial reserves to selectively participate in tenders.

“There are developers who have accumulated a bit of wealth when the market was still buoyant. They are waiting for the right opportunities to place bids,” said Mr Koh.

The tender period for the site was extended by two weeks until yesterday to allow potential bidders to take into account new construction requirements.

Introduced by the Building and Construction Authority (BCA) on Nov 1to improve the industry’s capabilities and productivity, the requirements include higher minimum Buildable Design and Constructability standards, more use of prefabricated components and the adoption of productive technologies in GLS projects.

Mr Lim noted that the Upper Serangoon Road parcel is the first GLS site that has to meet the new requirements, which the winning bidder will have to consider when pricing the units.

“As this is a new move, the economies of scale have yet to be tested and the break-even price for this project could be higher as it is the first adopter of the new requirements,” he said.