Mixed-use sites still reel in the bids

DEVELOPERS are still hungry for mixed-use sites despite the recent property cooling measures. A tender for a mixed residential and commercial site inYishun, which closed yesterday, has attracted 13 bids from developers.

Experts say the site's commercial element - up to 40 per cent of the maximum allowable gross floor area - had mitigated the impact of the seventh round of measures unveiled earlier this month.

Interest in the 99-year leasehold parcel was also boosted by heightened interest in strata-titled commercial units - a segment so far left unscathed by the various cooling measures.

The 8,858 sq m site in Yishun Avenue 9 attracted a top bid of $212.1 million from Chip Eng Seng's CEL Property. That works out to $794 per sq ft (psf) per plot ratio (ppr).

This is 9 per cent more than the second-placed bid of $193.8 million by Far East Organization units Boo Han Holdings and Far East Orchard.

Other bidders include Frasers Centrepoint, Hong Leong Group, Sim Lian Group and Mezzo Development.

"The recent cooling measures do not seem to have affected this tender but this could be due to the relatively small residential development of around 160 units while the bulk of the development value is in the commercial component," said Mr Ong Teck Hui, Jones Lang LaSalle's national director of research and consultancy.

He noted that the top bid also compares favourably with the $805 psf ppr achieved in November 2011 for a commercial and residential site in Jelebu Road, which was roughly similar in development mix and is next to the future Bukit Panjang MRT station.

Mr Desmond Sim, associate director of CBRE Research, said that the full impact of the measures will be felt more acutely on purely residential sites instead.

However, the increased pool of developers might still see land bids hold up, he added.

Interest and bids for the Yishun site were within expectations, he said, adding that the developer might consider selling the commercial component as strata-titled units.

"Based on this land price, the developer could sell the retail portion on a strata-titled basis at around $3,000 psf to $4,000 psf and the residential units at around $900 psf," Mr Sim said.

Colliers International's director of research and advisory services, Ms Chia Siew Chuin, said this month's measures are likely to divert buyer interest from the residential sector, and partly from the industrial segment, to the commercial sector.

"With new strata-titled retail properties being a relatively scarce product in Singapore, investors would now direct their attention towards such units."

For instance, all but two of the 116 strata-titled units at Alexandra Central - also developed by Chip Eng Seng - were sold within the first day of its launch earlier this month at prices ranging from $4,000 psf to $7,000 psf.

But Mr Lee Sze Teck, senior manager for training, research and consultancy at Dennis Wee Group, said that the top bid could have been even higher if not for the cooling measures.

He expects the break-even price for the residential component to range from $1,100 psf to $1,150 psf with an estimated selling price of $1,300 psf to $1,350 psf.

Chip Eng Seng group chief executive Raymond Chia told The Straits Times that plans for the commercial component are not firmed up as yet although the residential component is likely to see 160 apartments.

"If the retail market stays robust, we might sell the commercial component as strata-titled units. But for this land size and quantum, we can afford to hold so we're not overly concerned about it."

Source: Straits Times, 25 Jan 2013