The Government Land Sale tender for 3 residential sites closed yesterday evening. Without much surprises, the demand for land remains strong and developers are still willing to pay good prices for land. CDL turns out to be the biggest winner in yesterday’s land tender, submitting the highest bids for 2 out the 3 sites.
Below are 5 important takeaways from yesterday’s GLS tender closure that you need to know:
- CDL/Hong Leong and Kheng Leong are hungry for land – Among the developers, CDL and Hong Leong are the most aggressive bidders in this round of GLS tender. Not just in terms of pricing, but also in terms of the number of bids that they put in. For the Handy Road site, CDL and Hong Leong both participated in the tender and submitted separate bids. It was the same for the West Coast Vale site. Kheng Leong also participated in the tenders for 2 sites – Handy Road and Chong Kuo Road sites. But for Kheng Leong, they are more measured in their tender offer price. In both of the tenders, Kheng Leong’s tender prices are among the lowest
- Sophia Hills look like a good buy now – With an expected selling price of S$2,650 psf for CDL’s new project at Handy Road, Sophia Hills now look like a bargain buy. Personally, I would prefer Sophia Hills over CDL’s site because of its larger land area and space for residents, as well as the exclusivity and quieter environment. On the other hand, CDL’s site has an irregular shape and is sandwiched between Suites @ Orchard and Nomu. The blocks are likely to be close to each other due to the land constraint. With the announcement of the Handy Road site tender, Hoi Hup is likely to sell out the remaining 5% balance units of Sophia Hills sooner than later
- Keen interests from big developers in prime district – Several other big developers took part in the tender for Handy Road site, including an unknown group of Hong Kong parties, Cheung Kong, Wing Tai, Hong Leong Group and Kheng Leong. This is a reaffirmation of the consensus outlook on the recovery in the high-end property segment
- Developers are bullish on the West Coast area – CDL’s winning bid for the West Coast Vale site is 35% higher than what China Construction paid for the adjacent site in Feb 2017, an impressive inflation in land price in less than a year. China Construction also participated in the tender and offered S$794 psf ppr, which is less than 1% below the winning tender. EL Development, developer of the adjacent Parc Riviera, is also prepared to pay S$726 psf ppr or 32% than what it paid for the Parc Riveira land. Many other big developers such as UOL/UIC, CNQC, Hong Leong Group, also participated in the tender
- Timing of West Coast Vale tender will benefit the launch of Twin View – According to Colliers, CDL’s breakeven price for the West Coast Vale site is around S$1,250 psf and selling price will be around S$1,400 psf to S$1,500 psf. With an expected launch price of S$1,200 psf to S$1,300 psf, Twin View should sell well as buyers will be attracted by the perception of “capital gain”, anticipating that prices of surrounding properties will rise when CDL launches the new site in a year’s time
Looks like it is going to take a while longer before the developers can satisfy their insatiable appetite for land.