Today, the tender for the Executive Condominium (EC) development site at Sumang Walk in Punggol closed with 17 bids.
The subject site has a land area of 291,232 sqft and can develop a maximum Gross Floor Area (GFA) of 873,697 sqft. This development site could yield about 820 residential units.
The number of launched and unsold EC units has been declining since March 2017 due to lack of new supply of EC projects in the past year. Presently there is only one more EC project yet to be launched, namely Rivercove Residences. This EC project, with an estimated 628 units, is located along Anchorvale Lane. As a result, there is a looming shortage of new EC units in the primary market in 2018.
The subject site is the only EC site offered for sale in the GLS programme for the whole of 2017. The looming shortage of new EC units in the primary market in the next 12 to 18 months would give the developers with unlaunched EC projects near monopolistic position in this niche market. This is the key reason why the subject site was hotly contested. The numbers of bids submitted were within our expectation when the subject site was launched.
The aggressive top bid of $509,370,000 for this land tender was submitted by City Developments Ltd and TID Residential Pte. Ltd. It translates to a unit price of $583.01 per square feet per plot ratio (psf ppr). The bid was about 4.8% higher than the second highest bid of $486,000,000 by Qingjian Realty.
Recently, City Developments Ltd (CDL) has been actively acquiring land. It was also the top bidder for two of the three private housing sites at a state tender that closed last month on 30 January 2018. The developer lodged the top bid of $212.2 million, or $1,722 psf ppr, for a plot in Handy Road near Dhoby Ghaut MRT station. It also bid $472.4 million, or $800 psf ppr, for a land parcel in West Coast Vale.
The government has not sold any EC site in the Punggol planning area since the sale of the land parcel of The Amore and The Terrace in August 2013. The top bid today was very bullish as it was about 64.1% higher than the land price of The Terrace land parcel and about 63.7% higher than the land price of The Amore land parcel, which tenders were awarded in August 2013.
The top bid of S$583.01 psf ppr for this EC site sets an all-time record price in the EC land sales market. This land rate for an EC site is near to the land rate paid for 99-year leasehold condominium sites in suburban areas such as West Coast Vale and Tampines Avenue 10 one year ago.
It is 39.3% higher than the previous highest EC land rate (psf ppr)., which was the land rate of Yuan Ching Road / Tao Ching Road site at $418.53 psf ppr, which was developed into the EC project called Lake Life. Lake Life is located near Jurong Country Club in the Jurong Lakeside district, an area which has been starved of new EC supply at that time. The buzz in the location, following strong sales at J Gateway condo at that time contributed to the strong demand for that EC plot.
With the land rate of $583.01 psf ppr for the Sumang Walk EC site, the breakeven price is estimated to be about $960 – $1,000 psf. The estimated breakeven price of this EC project is about 14% to 19% higher than the average transacted unit price of Hundred Palms Residences EC at $842 psf for all transactions recorded in 2017. Hundred Palms Residences EC is the most recently launched EC project. It is also located in the northeast region.