The tender for the 125,326 sq ft residential site at Kampong Java Road closed on Jan 15, and drew seven bids. The top bid of $418.8 million ($1,192 psf ppr) came from CELH Development, a unit of Singapore-listed construction and property developer Chip Eng Seng Corp. The second-highest bid of $417.24 million ($1,189.97 psf ppr) was submitted by GuocoLand.
The site could be developed into a new private condominium of 436 units given the maximum gross floor area of 350,914 sq ft. The Kampong Java site was the first private residential land on the Confirmed List of the government land sale (GLS) that was put up for launch since the minimum average unit size guidelines was announced in October, notes Tricia Song, Colliers International head of research for Singapore. “However, the top bid was below our expectations, a testament to the cautious mood of the developers.”
The top bid of $1,192 psf ppr for the GLS site at Kampong Java “was relatively low” compared to the $1,540 psf ppr for the Fourth Avenue GLS site purchased by Allgreen Properties and the $1,733 psf ppr paid by Frasers Property for the Jiak Kim Street site in Dec 2017, points out Nicholas Mak, ZACD Group executive director. What’s more, the freehold development next door, Makeway View, was sold en bloc for $168 million ($1,626 psf ppr) in March last year, observes Mak.
Based on the bid price by Chip Eng Seng, Colliers’ Song reckons the breakeven price to be at $1,700 psf and the selling price of the new project could be in the range of $1,900 to $2,000 psf. “Chip Eng Seng has been rather successful with its launch of Park Colonial last July, and is ready to replenish its landbank,” she remarks.
The Kampong Java land parcel is located within the prime district 9 and walking distance to Newton MRT station, says Lee Nai Jia, Knight Frank Singapore senior director and head of research. The location is ideal for those who work in the Novena medical cluster, CBD and Orchard Road, he adds. Hence, the new development on the site is expected to appeal to both homebuyers and investors.
“Given the number of land sales in the prime districts over the past two years, there is a significant supply of new units in these areas,” says Ong Teck Hui, senior director of research and consultancy at JLL.