Charged with confidence from its experience with launching two condo projects in Jurong growth region in the past two years, MCL Land on Tuesday placed the top bid of S$338.12 million or S$630.13 per square foot per plot ratio (psf ppr) for Jurong West Street 41 (Parcel B).
This is 6.4 per cent more than the next highest bid of S$592.46 psf ppr from Chinese developer Hao Yuan’s unit HY Realty.
MCL’s top bid for Parcel B was about 3.2 per cent less than its S$651 psf ppr winning bid in January 2013 for the next-door Parcel A, which it is now developing into the Lakeville condo. The latest tender exercise drew nine bids, fewer than the 12 for Parcel A. Still this outcome showed that “in spite of the market having softened significantly in the past two years, there is fair interest for attractive sites”, noted JLL national director Ong Teck Hui.
That said, he pointed out that only the top bid for the latest tender exceeded S$600 psf ppr, whereas five bids above $600 psf ppr were submitted for the Lakeville plot. “This shows the bidders are less optimistic today compared to two years ago… and (reflects) a higher degree of caution amongst the bidders”.
MCL Land’s chief executive, Koh Teck Chuan, said: “We know the pulse of the Jurong area, its buyer profile and their purchasing power. We are very confident of Jurong, which has the strongest growth story of all the regional centres in Singapore. And of course we’re also hoping that the Singapore-Malaysia high-speed rail system terminus will be located in Jurong East – which would give a further boost to the area.”
The breakeven cost for the project on Parcel B is estimated to be slightly over S$1,000 psf and the selling price will likely be around S$1,300 psf. The launch is likely to be late this year or early next year.
Mr Koh is confident that at MCL’s bid price for parcel B, there will still be demand in the area. “The big question is quantifying the impact that the new requirement to use prefabricated prefinished volumetric construction (PPVC) will have on raising construction costs,” he added. “We’ll be targeting more the younger families while still catering to predominantly owner-occupier demand for the new project.”
Mr Koh said the proposed project on Parcel B will comprise close to 600 units, of which a higher proportion, of around 60 per cent, will be smaller one and two-bedroom units. This will complement the unsold units in Lakeville which are mostly three and four-bedders.
Since launching Lakeville in April last year, MCL has managed to sell about 60 per cent of the 696 residential units, achieving an average price of slightly above S$1,310 psf. That’s not bad considering the dent that the total debt servicing ratio (TDSR) has left on property purchases since the framework was announced on June 28, 2013. On the same evening as the announcement and before the new rules took effect the following day, MCL quickly launched and sold out nearly all 738 units at its J Gateway condo near Jurong East MRT Station at an average of $1,480 psf.
Other bidders at Tuesday’s tender included Sing Haiyi Group’s Phoenix 99, which partnered Kay Lim Holdings and Haiyi Properties for a bid of nearly S$297 million or S$553.50 psf ppr.
City Developments unit Verwood Holdings teamed up with Hong Leong Holdings unit Intrepid Investments and TID Residential for a bid that works out to about S$550 psf ppr.
EL Development bid S$526 psf ppr, and Singapore Land unit Singland Homes, S$512 psf ppr.
Koh Brothers’ unit KBD Ventures offered S$488 psf ppr for the site.
In second last position was Sim Lian Land (S$419 psf ppr). Robert Kuok’s Allgreen Properties made the lowest offer, of S$222.89 million or S$415 psf ppr.
This article was first published on March 11, 2015.
Get The Business Times for more stories.