An executive condominium (EC) site in Choa Chu Kang deemed "mediocre" by experts has attracted more bids than expected from developers - though the sums they offered were relatively modest.
The 1.64ha Choa Chu Kang Avenue 5 site had drawn 11 bids by the time the tender closed yesterday - the highest number of bids for an EC site since February last year. The site can host 490 homes.
A joint venture of Qingjian Realty, Suntec Property Ventures - a Suntec Investment unit - and Qingjian's investment arm Bohai Investments (Sengkang) put in the top bid of $156.157 million, or $295.12 per sq ft per plot ratio (psf pr).
This was about 6.6 per cent above the second-highest bid of $275.71 psf pr from TID Residential, a joint venture between Hong Leong Holdings and Mitsui Fudosan.
The surprising number of bids came as fewer EC sites have been released recently, experts said.
There have been some signs of healthy take-up.
MR LI JUN, Qingjian Realty (South Pacific) Group general manager, reaffirming the firm's confidence in the EC market
The site was the sole EC offering in the Government Land Sales (GLS) programme for the first half of the year. Just one EC site is being offered in the second half GLS programme - a far cry from the second half of 2012, when six EC sites were made available, said Mr Ong Teck Hui, JLL national research director.
The muted top bid was in line with tenders this year.
An Anchorvale Crescent EC site went for $280 psf pr in February, and a Woodlands Avenue 12 EC site for $278 psf pr later that month, marking the lowest EC land prices since July 2011.
The EC market is grappling with rising unsold supply. The number of launched but unsold units with pre-requisites for sale was 2,232 in the second quarter, up from 2,129 in the first quarter, and 2,028 in the fourth quarter of last year.
The EC vacancy rate was 14.1 per cent in the second quarter, representing 2,391 vacant units - though this was down from 15.1 per cent in the first quarter.
Qingjian Realty (South Pacific) Group general manager Li Jun said the firm has confidence in the EC market, noting: "There have been some signs of healthy take-up."
Last weekend, buyers snapped up 185 units at the launch of The Brownstone, a 638-unit EC in Sembawang, the highest number for an EC launch this year.
With the lower bid prices, developers participating in the tender were likely looking to price the project more competitively, said Mr Desmond Sim, CBRE research head for Singapore and South-east Asia.
MCL Land paid $375 psf pr and $338.90 psf pr for two adjacent EC plots in Choa Chu Kang Grove in March last year, which it has combined into the upcoming Sol Acres.
In September, Sim Lian Land paid about $361.10 psf pr for an EC plot in Choa Chu Kang Drive. However, the two plots are closer to the Choa Chu Kang MRT Station.
The eventual selling price for the latest site could be below $800 psf, suggested Mr Eugene Lim, ERA Realty's key executive officer.
At least seven EC projects are yet to be launched, but some developers may feel supply will have eased by the time a project is launched, more than 15 months from now, said Mr Nicholas Mak, SLP International executive director.
The expected rise in the eligibility income ceiling to be announced by the Government soon could be another factor behind the strong interest, he added. "If (it) were to raise the monthly income ceiling for eligible EC buyers from the current $12,000, it could increase the demand for ECs."
Qingjian's Mr Li said it may incorporate some features from recent projects for the latest site. These include smart living technology.