With a Chinese consortium putting in the highest bid at S$1 billion ($718 million), a residential plot in Singapore may fetch a record price for a government land sale.
According to a statement from the Urban Redevelopment Authority, the highest bid in the Stirling Road land auction was submitted by Logan Property (Singapore) Co. and Nanshan Group Singapore Co. Once the offers have been evaluated, the winning bid will be decided.
According to Cushman & Wakefield Inc., translating into the highest absolute price paid for a residential plot, the price would be equivalent to S$1,050 per square foot of gross floor area. According to URA estimates, the plot can house about 1,110 units.
“It’s the first time for a pure residential site to cross the S$1 billion mark,” said Christine Li, director of research for Singapore at Cushman & Wakefield. “The participation from 13 local and foreign developers shows the sheer amount of liquidity in the market as S$11 billion is going after a plum site.”
After three years of declining prices, hunger for Singapore land is adding to signs the city’s housing market is making a comeback. Developers are becoming more aggressive in bidding at land auctions with new home sales surging after an easing of property restrictions in March. According to Cushman & Wakefield, they’ve paid a 29 percent premium, the highest level in at least five years, on the average.
“The strong bid and healthy local participation reflects developers’ optimism on Singapore residential property,” UOB Kay Hian Pte. analysts Vikrant Pandey and Derek Chang said in a note. After bottoming out this year at about 15 percent to 20 percent below the peak set in the third quarter of 2013, they expect housing prices to move in line with GDP growth of 2 percent to 4 percent in 2018.
A joint venture between China’s Nanshan Group and Logan Property Holdings Co., a Hong Kong-listed developer which has developments in Shenzhen and the Pearl River Delta region was the source of the top bid. According to Cushman & Wakefield, participating in eight of 11 tenders in the past 12 months, Nanshan has been active in Singapore’s government land auctions.
“The winning bid is an anticipatory one — looking forward to a possible tweak of measures in the pipeline or some form of market recovery,” said Desmond Sim, head of research for Singapore and South East Asia at CBRE Group Inc. For Logan Property shares, taking this year’s gain to 45 percent was a rise of 2.2 percent as of 10:36 a.m. in Hong Kong.
MCL Land (Everbright) Pte. was the second-highest bidder at S$925.7 million
(Adapted from Bloomberg)