UOL Group bid tops 12 others as developers vie for choice piece of land
The top bid from UOL Group was above market expectations of about $420-450 per square foot per plot ratio (psf ppr) just a few days ago. UOL’s price yesterday was slightly more than $329 million or about $508 psf ppr – just 3 per cent shy of the $524 psf ppr that Ho Bee and NUTC Choice Homes paid during the peak in June 2007 for the plot next door on which they are developing Dakota Residences, which has achieved an average selling price of about $970-980 psf.
Business Times (BT) understands that UOL is gunning for a high proportion of smaller units in its proposed scheme, and thus push for a higher average selling price of about $1,000-1,050 psf. ‘They should be able to achieve this kind of psf price – so long as they keep the absolute price quantum within an affordable range,’ an industry observer said. BT understands UOL’s breakeven cost will be about $920 psf.
When contacted, UOL chief operating officer Liam Wee Sin said the group plans to build about 550-600 units, with at least half likely to be two-bedroom apartments. The 18-storey project will be launch-ready around mid-2010, he added.
Analysts note that the supply pipeline for mass-market homes, particularly those on 99-year sites bought at state tenders, has dwindled rapidly in the past six months, aided by the suspension of the confirmed list state land sales since October last year and strong home buying in this segment since February.
UOL’s $508 psf ppr bid was 5.4 per cent higher than the next highest offer by GuocoLand of almost $482 psf ppr. Frasers Centrepoint bid about $462 psf ppr. Four other bids were above $400 psf ppr.
By some estimates, developers have raised prices of mass-market projects by about 10-15 per cent from the January-February lows.
Source : Business Times – 9 Sep 2009
