'Bullish' top bid from CDL/ Hong Leong

A tie-up between City Developments Ltd (CDL) and Hong Leong Holdings yesterday placed the top bid of $245 million or $793.02 per square foot per plot ratio (psf ppr) for a 99-year-leasehold mixed-use site near Potong Pasir MRT Station.

The bid exceeded market expectations and it was also about $24.4 million, or 11 per cent, higher than second highest offer of $714.10 psf ppr from Chip Eng Seng's unit CEL Property

The state tender drew eight bids, which analysts say attests to the popularity of residential projects with a commercial component.

CDL said last night its proposed scheme is for a residential development of up to 19 storeys, with around 28 commercial units on the ground floor. Some of the commercial units could be released for sale.

The authorities have stipulated a maximum commercial quantum of 2,000 square metres (about 21,528 square feet) gross floor area (GFA) on the ground floor, which can be carved into no more than 28 units, translating to an average unit size of about 71.43 sq m (nearly 769 sq ft). Also stipulated is a maximum 267 residential units, reflecting an average unit size of 100 sq m. The caps on the number of residences and commercial units are to ensure that the traffic generated from the project can be supported by the area's current road capacity.

Based on the CDL/Hong Leong's top bid, DWG the breakeven cost is estimated at $1,250-$1,300 psf and selling price for the apartments at $1,450-$1,500 psf. The retail component could be sold on a strata basis for around $4,000-4,500 psf.

Some market watchers consider CDL/Hong Leong's top bid "bullish". In July, property consultants predicted winning bids of $580-$750 psf ppr for the site.

CDL's spokeswoman noted that "demand for homes near MRT stations, in particular those integrated with commercial/retail components, continues to be robust".

"Given this, along with the ongoing transformation of the area around Potong Pasir MRT station into a private residential enclave, we expect this development to be highly sought after," she said.

Source: Business Times – 7 September 2012