HY Realty makes top bid of S$483m for Dundee Road site

Singapore

HY Realty, which shares the same shareholders as Chinese developer Hao Yuan Investment, has emerged as the top bidder for the land parcel at Dundee Road that drew nine offers.

Its S$483.18 million bid, which works out to S$871.14 per square foot per plot ratio (psf ppr) for the 99-year lease site, was 8.4 per cent higher than the second-highest bid, from Allgreen Properties.

The owners and directors of HY Realty, Du Zhenzeng and Wen Baoguo, who also own Hao Yuan, are shifting their focus in development projects from suburban to city-fringe homes through this new vehicle, BT understands.

HY Realty plans to develop a 700-unit condominium on the 10,516 square metre site, which is close to the Queenstown MRT Station. "This project is expected to be launched in the first quarter of 2016," said a HY Realty spokesman.

"We are confident of this location as city-fringe homes are always in high demand due to the close proximity to city centre as well as the high density of amenities," he added.

Desmond Sim, CBRE research head for Singapore and South-east Asia, noted that the top bid reflects the developer's landbanking hunger and confidence in the site's location.

"As end-June marks the second anniversary of TDSR (total debt servicing ratio), bidders for this site have the advantage of being able to punt on a possible review of the property measures," he said.

But JLL head of research for South-east Asia Chua Yang Liang noted that the number of bids drawn was the lowest for a residential site in the Rest of Central Region (RCR) since the third quarter of 2014 when a site at Sims Drive received just four bids. This is also lower than the 14 bids drawn by a 99-year private condo site in Toa Payoh that just closed last week.

"The smaller number of bidders could suggest two things: Firstly, developers are not as enthusiastic over this site; and secondly, there is bid saturation as developers struggle to absorb the two sites consecutively in what is a slowing market," Dr Chua said.

As a new kid on the block, HY Realty has been vying for sites from state tenders, coming in sixth for the Toa Payoh site that was awarded on Tuesday to Evia Real Estate, Maxdin and Malaysia-listed group Gamuda for S$345.86 million. Similarly, they had in March lost to MCL Land in bidding for a Jurong West site.

"We reckon the developer could be looking at a selling price of between S$1,550 and S$1,600 psf, assuming a construction cost of between S$320 and S$360 psf," Dr Chua said. "This could be priced to sell especially since the average take-up rate of the nearby projects around Queenstown and Redhill have been about 20 to 60 per cent with an average price for new sales ranging between S$1,680 and S$1,750 psf."

Among the bidders for the Dundee Road site, Allgreen Properties priced the site at S$803.95 psf ppr while Hong Leong Holdings, CDL and Hong Realty put in a S$780.26 psf ppr bid. Cheung Kong Holdings' unit Japura Development put in the lowest bid of S$506.63 psf ppr.

R'ST Research director Ong Kah Seng noted that the cautious bidding among developers was expected given that a nearby project, Commonwealth Towers, launched about a year ago, still has 400 unlaunched units as at end-May. It sold 372 units out of a total 845 units so far, based on caveats lodged. He expects the future project at Dundee Road to sell for at least S$1,500 psf. "To achieve high selling prices, the project is expected to roll out more small-format units."

Earlier in February, Hao Yuan Investment won a state tender for an executive condominium site at Woodlands Avenue 12 with a top bid of S$103.79 million or S$278 psf ppr.