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MCL Land tops bids for Margaret Drive residential site with S$238.4m

23 May, 2017

MCL Land has emerged top in a fierce contest among 14 bidders for a residential land parcel at Margaret Drive. The top bid of S$238.39 million translates to S$997.85 per square foot per plot ratio (psf ppr) based on the maximum gross floor area of the site near Commonwealth MRT station, which is big enough for 275 homes.

It is also 7.9 per cent higher than the next highest bid, from Allgreen Properties, at S$220.9 million. Such aggressive bidding for the 99-year leasehold site signals that developers are reading the market positively with a possible upside in prices by the time the project is launched for sale.

This land parcel is a Reserve List site under the government land sales (GLS) programme that was triggered for tender, after a developer committed to bid at least S$185.76 million for it last month. The breakeven level for the future project to be built on the site, based on MCL Land's top bid, is expected to be about S$1,500 psf, according to sources.

The strong participation by 14 bidders and a higher than expected top bid of S$998 psf ppr is not really surprising given the strong attributes of the site, the affordable absolute land price, the hunger for new development sites among developers and positive market sentiments. The tender results also reinforce the view of some that developers' high bidding interest will encourage the government to release more residential sites in the next GLS programme for the first half of 2017.

The huge turnout for this tender shows the insatiable hunger of developers for land, especially those which have not won any sites over the past 12 months. In addition, the palatable quantum for this site allowed for a higher winning margin. It is also presented a possible opportunity for smaller developers.

The 7.9 per cent gap between the highest and second-highest bids represents the widest gap among residential GLS tenders (including executive condominium sites) that closed this year. Many developers who are interested in this site are aware of the potential fierce competition in this tender. In order to have a fair chance to win in this tender, their bids must be bullish.

Other developers that took part in the tender (in no particular order) included UOL, Tuan Sing Holdings, Frasers Centrepoint Limited, Malaysia's SP Setia International, and Greatview Investment (owned by Beijing's Haojing Investment Group unit and Yu Zhisong).

Golden Development (owned by the Ng family who founded Far East Organization) tied up with Sekisui House; ZACD Investments joined hands with Maxdin; while TID Residential (a joint venture of Hong Leong Holdings and Mitsui Fudosan Co) tied up with Hong Realty, a vehicle of the Kwek/Quek family.

The site also drew bids from construction-related developers - namely China Construction (South Pacific) Development Co, a unit of Shanghai-listed China State Construction Engineering Corporation Ltd; Low Keng Huat (Singapore); United Engineers; and Chip Eng Seng's CEL Development.

Adapted from: The Business Times, 7 December 2016