Year’s first reserve site triggered for sale

The dust has barely settled on the New Year festivities, but at least one developer is anxious to get the land sales ball rolling.

The Urban Redevelopment Authority (URA) announced yesterday that a 2.44ha site on the reserve list has been triggered for sale.

Around 570 homes can be built on the plot at the junction of New Upper Changi Road and Bedok South Avenue 3.

An unnamed developer has committed to a minimum bid of $320 million, or about $580 per sq ft per plot ratio (psf/pr), the URA said.

Triggering a site so soon in the year, and amid gloomy economic news, suggests that developers must simply keep their businesses going.

“It’s all about forward planning. If you are a developer, you need that continuity of business and the biggest raw material in the equation is land,” said Mr Desmond Sim, CBRE research head for Singapore and South-east Asia.

The bid lodged comes less than four months after a reserve-list site in Lorong Lew Lian was triggered and sold last year. The Lorong Lew Lian sale surprised some, as it was the first such reserve parcel released in about 21 months, and it flew in the face of a somewhat-moribund market.

Experts said they expect some reserve plots would be triggered, given the Government Land Sales slate for this half of the year.

“There’s been a significant pullback in confirmed-list sites and a top bid for this one would probably be less than $400 million, a palatable amount,” said Mr Sim.

“Definitely, there is still pressure on prices and unsold stock at the moment. But (a developer who buys a site now) would still have a few years to plan and sell units.”

More reserve plots will likely come on sale in the next six months, as the number of developers far outweighs that of development sites, he added.

While many Singapore developers have ventured overseas, there is a need for them to continue doing projects in Singapore to occupy their project staff, said Mr Lee Liat Yeang, Rodyk & Davidson partner in real estate.

“With many projects completing since last year and into next year, the developers of the well-sold ones will have the financial appetite, after collecting more payments, to take on new projects.”

The site trigger also shows that developers have confidence in the mid- to long-term potential of the local real estate market, he added.

Two smaller reserve-list parcels could be triggered in coming months – a 0.48ha one in Margaret Drive that can host 275 units and a 0.47ha plot in Bartley Road that can accommodate 115 units, said Mr Eugene Lim, ERA Realty key executive officer.

A mixed-use 2.3ha Holland Road site that can yield about 570 residential units is also a possibility.

“Developers would look out for site attributes, such as closeness to an MRT station, or a proven location where projects sell well,” he added.

The plot triggered yesterday is a case in point: It is opposite Tanah Merah MRT station, with nearby amenities including Bedok Market Place and Changi General Hospital.

Developers would also bear in mind the upcoming The Glades condominium right next door, which has sold about 50 per cent of 726 units. A defensive bid is possible.

A top bid could come in at $600 to $700 psf/pr, less than the $791 psf/pr for the site of The Glades, which was sold in a more buoyant market in October 2012, said Mr Ong Teck Hui, JLL national research director.