A TUAS Bay Close industrial plot for which the highest bid was shy of the consultants’ forecasts points to further signs of a cooling industrial property market, as the effects of the government’s anti-speculation measures kick in.
Mezzo Development beat two other bidders, Wee Hur Development and Soilbuild Group Holdings, to submit the top bid of S$25.5 million, JTC announced on Tuesday. This works out to S$51.28 per sq ft per plot ratio (psf ppr).
This land price is the lowest since a Yishun Street 23 plot sold in Oct 2010 for S$64 million (S$51.10 psf ppr), SLP International executive director Nicholas Mak noted.
Another B2-zoned plot in nearby Tuas South Avenue 7 – dubbed Plot 12 and which has about the same size and tenure – sold for S$31 million (S$56.01 psf ppr) in August. Already considered a low price then, it was still higher than that of this latest winning bid.
Last April, another Tuas Bay Close site, where the West Star building now stands, went at S$37.1 million (S$81.19 psf ppr).
Mr Mak said yesterday’s lower-than-expected bid could have been the result of the large supply of and potential competition from B2-zoned sites for sale in the Tuas Bay Close area.
B2-zoned sites are meant for heavier and more pollutive industrial use.
That said, the three bids were within the range of two to five bids which consultants expected.
The 2.7ha site is one that can be strata-subdivided for sale and is expected to be developed into a multi-user ramp-up factory. Mr Mak expects the breakeven price to range from S$220 to S$250 psf.
It comes with a 30-year tenure with a maximum gross plot ratio of 1.7, which means it can be developed into a project with a gross floor area of up to 4.6 ha.
R’ST Research director Ong Kah Seng noted that the winning bid was 22 per cent higher than the second highest bid of S$20.9 million (S$41.99 psf ppr) submitted by Wee Hur Development.
“That the winning developer bid is much higher than the rest shows that it has a stronger confidence in the site, but it also shows that the rest of the bidders at large were not very aggressive, which suggests developers’ dwindling interest for the conventional factory development,” he said.
Only two large land parcels – along Tampines North Drive 2 and Penjuru Road – are left for sale in the “confirmed list” of the industrial government land sales programme until the end of the year. When their turns come, their bids may take a cue from yesterday’s tender results, Mr Mak said.