Hong Kong-listed developer Logan Property Holdings has made its first foray into Singapore as part of a plan to diversify its land bank portfolio.
In a joint effort with mainland developer Nanshan Group, Logan Property placed a record $1.003 billion bid for a plum housing site near Queenstown MRT station in Stirling Road recently.
"(The firm) has been paying close attention to the property markets in certain overseas core cities including Hong Kong and Singapore in recent years, with an aim to diversifying our land bank portfolio," said Mr Derek Lee, investor relations director at Logan Property.
Mr Lee told The Straits Times the firm believes the Singapore property market has a relatively stable "operating environment with a simple and low tax system".
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Competition over government land tenders has been increasingly stiff in recent years, due to the influx of foreign developers and limited number of plots up for sale.
Records were smashed this year when a high of 24 bidders went for a non-landed private residential site in Toh Tuck Road. The Stirling Road bid was also an all-time record for a purely residential site in the Government Land Sales programme.
"Given that the local market is showing signs of bottoming out, there will be increased interest for sites here," said Dr Lee Nai Jia, head of South-east Asia research at consultancy Edmund Tie and Company.
At over $1 billion, the price for the 21,109.5 sq m site in Stirling Road translates to $1,050 per sq ft (psf) per plot ratio - high in some analysts' view, but "reasonable" to Logan Property. Mr Lee noted: "The company has conducted detailed investment analysis to come up with the bid... (We believe) the project is profitable and meets the company's internal margin and internal rate of return targets."
The optimism stems from the site's attractive location near a train station and amenities in the established estate, as well as current selling prices of nearby new projects at about $1,600 to $1,800 psf, he said.
About 1,110 private homes can potentially be built on the 99-year leasehold plot in Stirling Road. Sales of units are expected next year and the new development will largely target Singapore buyers, Mr Lee said.
Market watchers estimate that the selling price would be from $1,700 psf onwards.
Consultancy JLL said the additional buyer's stamp duty rule that requires developers to complete and sell all units within five years of site acquisition could limit the extent to which Logan Property can be aggressive in pricing units.
Logan Property has more than 20 years' experience in residential property development in greater China, particularly in the Guangdong, Hong Kong and Macau Greater Bay Area.
Its annual contract sales hit 28.7 billion yuan (S$5.8 billion) last year, of which 40 per cent came from the Shenzhen market, where the firm has several large-scale projects, added Mr Lee.
Analysts say Logan Property has solid credentials. "It's ranked 32nd among the top 100 Chinese real estate developers in 2016, and owns a land bank of 14.08 million sq m in GFA (gross floor area)," noted Ms Tricia Song, research head at Colliers International Singapore.