No takers for Jurong EC site

By The Folks @PropTalk - August 13, 2010 No Comments

The ST today reported that an executive condominium (EC) site that experts thought might draw at least two or three developers failed to attract a single bid at the tender’s close yesterday.

The surprise lack of interest in the Jurong West site likely stems from the Government's recent decision to put a record number of sites up for tender in coming months, giving developers a wealth of choice.

Bids were tipped to come in between $230 and $300 per sqft per plot ratio for the 99-year leasehold site after strong interest in other EC tenders this year.

But developers have become much more selective and the site is not particularly appealing, being next to the expressway with no amenities nearby and some distance from the MRT.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said developers will be more cautious with sites where they see limited pricing flexibility.

ECs are aimed at households with a gross monthly income ceiling of $10,000 so developers would want to price units at below a million each, he said. They should cost at least 10 – 15% less than a private mass market condo unit.

The last time an EC site had no takers was in late 2008 when the market was weakening. The site – at the junction of Punggol Field and Punggol Road and near Punggol MRT station – eventually sold in June last year.

A Ministry of National Development spokeman said: “It’s not possible to conclude the lack of bids is a sign of the market cooling. Developers’ participation on Government land sales sites is affected by several factors, of which location of the sites and supply of sites are some of the considerations.”

However, Mr Mak said the Jurong West outcome will have a “psychological effect on the land sales market”.

 “It could signal to developers that they no longer need to bid high for sites that are not attractively located,” he said.

The Jurong EC site can yield an estimated 460 units with a maximum permissible gross floor area of 542,988sqft.

The US economic recovery is showing signs of weakening, the Chinese property market is definitely cooling and now we have seen the first “non taker” for an EC site since 2008… The wife and I wonder if the guy from MND might have shot himself in the foot. Then again, it is the Hungry Ghost month after all so there’s an excuse!

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