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Kheng Leong tops bids for Fernvale EC site

May 7th, 2012 · No Comments


A 99-year leasehold executive condominium site at Fernvale Lane yesterday drew a top bid of $245 million, or $295.60 per square foot per plot ratio (psf ppr).

The top bid, which was placed by Peak Living, a subsidiary of Kheng Leong Group, defeated three others.

The second highest offer of $290.03 psf ppr was a joint bid by Frasers Centrepoint’s FCL Tampines Court and Keong Hong Construction. EL Development and City Developments’ Sunmaster Holdings bid $284.86 psf ppr and $280.52 psf ppr respectively.

While the top bid is ‘within expectations’, tender participation is ‘rather lacklustre’, observed Credo Real Estate executive director, Ong Teck Hui, noting the shortage of an MRT station and amenities in the neighborhood as possible factors.

It could also be owing to the surrounding land parcel set aside for B2 industrial use, said Lee Sze Teck, DWG’s senior manager of research and consultancy.

Nevertheless, Mr Lee is expecting demand for ECs to remain robust, supported in part by second-time buyers, for whom the quota of ECs put aside was increased from 5 per cent to 30 per cent last month.

‘Right now, the mass market is still doing okay, and ECs are seeing genuine demand (instead of) people going in for investment,’ he said. Mr Lee anticipates the break-even price to be between $550 psf and $660 psf, which translates to a targeted selling price of $670-720 psf.

According to Ong Kah Seng, director at R’ST Research, the number of offers obtained for the subject site did not translate into pessimism in the property’s future sales and selling price.

‘Forward-looking developers are increasingly location-sensitive,’ said Mr Ong, adding that developers are willing to pay a premium for sites with a prime location.

Nicholas Mak, executive director of SLP International’s research and consultancy arm, pointed out that the variation between the first and second offer was 1.9 per cent, the closest margin ever since the tender for the Twin Waterfalls EC site in July 2011.

‘The highest bid for this site may possibly result in a break-even price of $590 psf to $620 psf,’ he said. ‘The price difference between the first and last bidder was only 5.1 per cent, signifying that Singapore property developers have related expectations concerning the future selling price of ECs in this location.’

Added Credo’s Mr Ong: ‘The site is a bit under-rated as there are no ECs in the Seletar Hills vicinity and there are upcoming shopping and food establishments nearby … Being at the fringe of a private housing estate, the project will also have a different feel from ECs surrounded by public housing. There should be good interest from potential EC buyers for this site.’

The site under discussion has a land area of 236,804 sq ft and a plot ratio of 3.5, which translates to a gross floor area of 828,816 sq ft.


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