Tender for condo site at Punggol reflects developer cautiousness

The $323 psf ppr reported top bid for the land parcel released in June is similar to the top bids received by some executive condominium sites last year and in the first half of 2011, says an expert.

The condominium site’s tender was closed yesterday with eight bids.

According to Cushman & Wakefield senior manager for Asia Pacific Ong Kah Seng, the winning margin for the Punggol site, i.e. gap between the top and second top bid was also narrow, at 4%, reflecting overall cautiousness among bidders.

Provisional tender results could be found here .

“Stakeholders are increasingly realistic, underpinned by various demand-side reasons, particularly an expected slowdown in Singapore’s economic growth arising from uncertainties in the wider economy such as the Euro-zone debt crisis and US economic challenges,” he said.

“Developers who have acquired land recently are probably channeling business focus from potential business development activities to preparing for sites which have recently been bought for launch, when timing is appropriate. Although the market is quieter, it may be temporary if Singapore and Asia emerges faster from the worldwide financial challenges,” added Mr. Ong.

The analyst noted that lower prices are “ultimately” beneficial for developers, as the breakeven price will be lower.

Looking ahead, Mr. Ong expects that the the interest for sites available in the GLS will be modest until the impending economic problems like the European sovereign debt crisis and US economic problems are cleared up.

“Against the backdrop of overall moderation in homebuying sentiments, it may be sites with project-specific/micro-market strengths such as locational attributes andopportunities, e.g. new infrastructural developments or plans to revitalize the neighbourhood, which will continually emerge,” he said.

“There may be better interest from developers for sites with a comprehensive plan to continually rejuvenate the suburban area or proximity to new transport nodes like upcoming MRT stations which will radically enhance property prices,” added Mr. Ong.

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