A prime mixed-use site in Yishun attracted a remarkable top offer of $1.43 billion yesterday - streets ahead of market expectations.
North Gem Development and FC North Gem Trustee - both units of Frasers Centrepoint - lodged the bumper bid, which translates into a price of $1,077 per sq ft (psf) per plot ratio (ppr).
That easily trumps market expectations of a top offer of between $750 and $850 psf ppr.
It was also a stunning card to play in the bidding war against the other four developers. The bid was 47 per cent higher than the next highest offer of $969.3 million - or $731 psf ppr - from a group comprising Far East Civil Engineering, Far East Orchard and Sekisui House.
Bids for the 41,085 sq m site at Yishun Central 1, next to Frasers' Northpoint mall, were also lodged by the Hong Leong Group, Sim Lian Group and CapitaLand, which offered the lowest at $704.5 million.
The Frasers bid also surpassed the top bid of $794 psf ppr placed by CEL Property for a similar mixed-use site in Yishun Ring Road in January. "It is possible that (Frasers) had expected (such) keen competition for this site that they decided to put in such a high bid," said ERA Realty key executive officer Eugene Lim.
Mr Ong Teck Hui, the national director of research and consultancy at Jones Lang LaSalle, noted that market values for mixed-use sites are about $800 psf ppr so Frasers' bid suggests the developer expects prices to rise.
CBRE Research associate director Desmond Sim suggested that its aggressive bid could be an attempt to reinforce its stronghold on shopping centres in the northern part, where it owns Northpoint and Causeway Point.
Other consultants said that while the offer might seem hefty, the value the site could generate for Frasers Centrepoint would justify the price tag. International Property Advisor chief executive Ku Swee Yong said that "Frasers can integrate the commercial space, draw traffic from the MRT and bus interchange and control how consumer traffic flows through the building".
The residential portion of the development is also expected to be popular as it will sit above the upcoming Yishun bus interchange and be next to the Yishun MRT.
The plot can yield about 890 units, likely to be launched at $1,350 to $1,450 psf.
"Having operated Northpoint for the last two decades, we are very familiar with the Yishun area," said Frasers Centrepoint Commercial chief executive Christopher Tang yesterday.
He added that they may integrate the new development with Northpoint through a covered pedestrian promenade and link bridges, if approval is granted.