Straits Times
A PLUM residential site in Sturdee Road has beaten analyst expectations - and the sombre market mood - by attracting a top bid of $181.2 million in a 16-way battle royale among developers.
Analysts had expected keen interest for the 65,784 sq ft parcel off Jalan Besar because of its size and location but the leading offer trumped predictions that the price would come in between $138 million and $166 million.
The number of bids also surprised. The last time a Government Land Sales (GLS) tender attracted more bids was in October, when 18 developers vied for a site in Lorong Puntong.
SL Capital (1), a unit of Sustained Land, lodged the highest bid for the Sturdee Road plot, at $787 per sq ft (psf) per plot ratio (ppr). That was 7.3 per cent more than Singland Homes, a unit of Singapore Land, at $168.8 million - or $733 psf ppr.
Wee Hur Development was third with $161.9 million - or $703 psf ppr - while City Developments unit Verwood Holdings, Hong Leong Holdings' Intrepid Investments and TID Residential were next on $160 million - or $695 psf ppr.
"It reflects the bidders' confidence that, in spite of the current market slowdown, a project at the doorstep of the city, surrounded by abundant amenities, would be in demand, and do well," said Mr Ong Teck Hui, national director of research and consultancy at JLL.
A limited supply of new homes in the area could be another draw for developers, he added.
The last GLS site in the area, in Bendemeer Road, was bagged by United Engineers for $543 million in 2011. The 862-unit Eight Riversuites condominium is now being built on the plot.
The Sturdee Road site is near City Square Mall and Farrer Park MRT station, and can be developed into a 30-storey project with about 265 homes. It is the first of six sites to be sold under the GLS programme for the first half of the year.
The funds needed to develop the "relatively small" project would therefore be "lower" compared with a larger site, said Mr Nicholas Mak, executive director at SLP International. "The risk would also be lower and the site would be attractive to a wider range of developers," he added.
The estimated break-even price for the new condo on the site is expected to be between $1,260 psf and $1,310 psf.
CBRE Southeast Asia research head Desmond Sim said he expects demand for the upcoming development to be underpinned by its proximity to the city.
The site is near Little India and the neighbourhood is becoming "trendier, with chic retail and F&B offerings", he added.
"Investors are likely to be keen on such a location due to the potential growth in leasing demand," said Mr Ong.