Tengah EC parcel receives fewer than expected bids. Hoi Hup’s S$701 psf ppr is the highest.
Hoi Hup Realty, Sunway Developments and other companies are establishing their presence in Tengah. They have made this location a central point of their strategy for development, indicating a confidence in Tengah’s potential.
The bid made by the Hoi Hup and Sunway joint-venture is a defensive, prudent strategy that will maintain their presence in the region and reduce competition.
Hoi Hup Realty & Sunway Developments were the highest bidders for a development site in Tengah, Plantation Close. Their bid of S$423.4M (S$701 per sq. foot and per plot ratio) was S$423.4M.
Housing and Development Board’s bids for the tender that closed Thursday (Feb.1) attracted just four bids.
Hoi Hup’s-Sunway’s joint bid was S$690 per square foot per year, or S$416.9 millions. The next highest offer came from Qingjian Realty & Forsea Residence with S$416.9million. Hong Leong Holdings & Mitsui Fudosan were next with an offer of S$398.6M or S$660psfppr. A City Developments Ltd. subsidiary offered S$383.8M at S$636psfppr.
Developers’ concerns about the upcoming EC production at the adjacent site, which could result in 495 additional units, could be a key factor for the slowdown of the bids on this EC site.
Thursday’s highest bid was just a few cents less than the price paid by Hoi Hup Sunway for the adjacent site in Plantation Close during a June 2013 tender. The previous site, where nine bidders were involved, was sold for S$703psfppr or S$348.5m.
CBRE cited competition from Altura and Lumina Grand, two projects located nearby on Bukit batok West Avenue.
Due to the high proportion of first-time buyers and owners, this segment has not been affected as much by the recent property cooling policies.
The bids show that developers continue to bet on the upgraders’ markets, and despite its relatively large size (560 units), developers have confidence in the project’s saleability.
The market is also limited in new EC units, and developers look for a development site with a lower risk to add to their stock.
There are currently fewer that 500 unsold ECs on the market.
This ensures they can also price future units in a profitable yet affordable manner.
If the developer wins the second Plantation Close EC, they will be able to strategically synchronise their timing and pricing for the launch of both ECs.
The developer could benefit from economies-of-scale by combining the sites into one mega project with over 1,000 units.
Sim Lian won the most recent EC site at Tampines in October 2023. The site cost S$543m or S$721 psf ppr – a sum that was 2.8% more than the winning bid of the Tengah tender on Thursday.
In May 2024, a site for an EC will be opened at Jalan Besar in Pasir Ris. Pasir RIs hasn’t had an EC project since 2012. There may be more demand due to this large gap in time.
Plantation Close will launch its latest project in the fourth-quarter of 2025 to coincide with the expected global economic recovery.
The average price of the new EC launches has increased 5.8%, from S$1,329 psf a year ago to S$1,406 psf a year later. Plantation Close will sell units in the S$1,400 to S$1,500 range.
The land prices of EC projects are steadily increasing, and EC project launch prices are rising along with them. Projects launched in 2022 sold 70 per cent of their units at launch, with prices around S$1,300/sqft. However, the price increases have caused sales to slow down. CDL’s Lumina Grand was the most recent EC to hit the market. It sold 53% of its units on average at S$1,464 psf.
The first EC in Tengah sold was to a CDL-MCL joint venture for S$400.3m or S$603 psf, in June 2021. Copen Grande EC launched in October of 2022 was priced at S$1,300 psf. The project sold out within a few months.
