February 6, 2013 | By: Felda Chay | The Business Times

A PLUM, 99-year leasehold private housing site opposite the Queenstown MRT Station drew just three bidders, surprising property consultants who had expected between five and 10 contestants for the plot.

The top bid was, however, within expectations at $562.8 million, or $883 per square foot per plot ratio (psf ppr). This came from a consortium backed by Hong Leong Holdings and City Developments. Predictions for the top bid had ranged from $700 psf ppr to $1,100 psf ppr.

Some market watchers whom BT had earlier spoken to had expected the plot to be keenly contested because strata landed homes could be built on it with prior written approval from the Housing & Development Board (HDB). They say that such sites are getting harder to come by.

Two tenders for 99-year leasehold residential plots at Lakeside and Ang Mo Kio after the latest property-cooling measures were announced had attracted more than 10 bidders.

The plot is also located in an area known for its highly sought-after homes.

Said Desmond Sim, associate director of CBRE Research: “Prices fetched by resale HDB flats in Queenstown are the most expensive in Singapore. A five-room HDB Strathmore unit is observed to be asking for up to $100,000 cash-over-valuation, one of the highest transactions recorded.

“Five-room and executive flats … less than 10 years old fetched around $800,000 to $1 million in some cases between the July-November 2012 period.”

One reason the tender fell short of expectations could be the large sum of over $500 million that developers had to cough up for the plot.

Mr Sim said this could also have reduced interest in the site. “The large quantum of more than $500 million filtered out many other players and kept it to a close fight between the bigger players,” he said.

The effect of the cooling measures, rolled out in January, may be starting to set in, too. Said Lee Sze Teck, senior manager of Training, Research and Consultancy at DWG: “The recent government cooling measures may have put of some developers from bidding for sites in the Rest of Central Region.”

He noted that supply likely to come onstream in the region could also have dampened interest in the site.

“There have been quite a number of sites sold in the nearby Redhill area in 2012 – Prince Charles Crescent, Alexandra View. This could have affected interest from developers as well.”

Ong Teck Hui, national director of research and consultancy at Jones Lang LaSalle, noted that all three bids “are modest and within a 4 per cent margin, reflecting similar sentiments among the bidders”.

He added: “If moderation in land bidding continues, it would be healthy for the market as supply build-up is significant. There are 25 GLS private residential sites that have been sold and not launched and another seven to be offered for tender in the first half of this year.”

Located along Commonwealth Avenue and just next to Queenstown MRT Station, the 1.2-hectare plot can potentially yield about 700 homes, according to the HDB.

It has a 4.9 plot ratio (ratio of maximum gross floor area to land area), which means it can accommodate a high-rise condo of over 40 storeys, said consultants.

DWG’s Mr Lee estimates that the developer’s breakeven price is between $1,300 and $1,350 psf. The estimated selling price is in the range of $1,550 to $1,600 psf.

CBRE’s Mr Sim believes the breakeven price will be around $1,350 psf, and the launch price will be about $1,600 psf.