Sturdee Rd site would have seen 'red hot' demand in better times

PROPERTY consultants gave a wide range of forecasts for the number of bids - from three to 15 - for a 99-year private housing site along Sturdee Road released by the Urban Redevelopment Authority (URA). However, their forecasts for the top bid bunched around S$700 per square foot per plot ratio (psf ppr).

Located near City Square Mall and Farrer Park MRT Station, the 0.6-hectare site can be developed into a 30-storey project with an estimated 265 homes. Property consultants noted that the site boasts an attractive city-fringe location with shopping, eating places and other conveniences nearby.

The plot's relatively bite-sized offering - assuming a pricing of S$700 psf ppr, the lump-sum price would be S$161.2 million - means it should attract a fairly high level of participation at tender from small and medium-sized developers, resulting in about 10 to 15 bids, predicts SLP International executive director Nicholas Mak.

"However, the weaker residential property market would weigh on bid prices," said Mr Mak, who predicts the winning bid to be around S$600-S$680 psf ppr.

JLL national director Ong Teck Hui argued that under better market conditions, demand for the plot would have been "red hot with robust bidding".

"However, sentiments are now softer and developers more cautious, so keen interest is likely to be tempered by some realism in bidding," said Mr Ong, who predicts seven to 12 bids with the highest in the S$650-S$720 psf ppr range.

Desmond Sim, South East Asia head at CBRE Research, too expects at least 10 bidders for the Sturdee Road plot. "It is within an emerging trendy enclave, in a quiet corner of a bustling neighbourhood well served by F&B and entertainment outlets," he added.

Giving a different perspective, R'ST Research director Ong Kah Seng noted that the Sturdee Road plot had been made available for application on the reserve list since August 2013 and had not been triggered by developers for launch (the site was transferred to the confirmed list for the first half 2015 Government Land Sales or GLS Programme). "This suggests limited developers' interest for the site," he said.

Sites on the reserve list are launched for tender upon successful application by a developer, accompanied by an undertaking of a minimum bid price that is acceptable to the state. Confirmed list sites, on the other hand, are launched for tender according to schedule, regardless of demand. The Sturdee Road land parcel is the first of six private housing sites slated for launch on the confirmed list of the current H1 2015 GLS Programme.

R'ST's Mr Ong reckons that developers are unlikely to bid aggressively for the land parcel, despite its good location. While the site has strong potential for development into investment homes, the sheer size of the nearby City Square Residences would make investors in new projects ponder if there will be intense leasing competition in the locale.

On the other hand, the developer of the Sturdee Road project could easily use City Square Mall's amenities as a selling point to attract buyers. "However, further up in Potong Pasir, there is a substantial supply of new private housing units under construction," he pointed out.

Mr Ong expects three to seven bids for the Sturdee Road site, with the top bid in the S$690-S$750 psf ppr band. He projects the selling price for the proposed project on the site to be about S$1,450-S$1,520 psf. Mr Mak estimates a lower launch price of S$1,250-S$1,350 psf.

JLL's Mr Ong noted that the Eight Riversuites condo project (near Boon Keng MRT Station) has fetched an average price of S$1,290 psf for units sold since 2014, with an average size of 980 sq ft.

"Slightly further away in Geylang, recent sales prices of TRE Residences have been averaging S$1,560 psf, albeit for small units averaging 570 sq ft. The land price for this project was S$776 psf ppr in January 2014 with 16 parties contesting," he added. TRE Residences is next to Aljunied MRT Station.

URA's tender for the Sturdee Road site closes on March 24.