Higher price not negotiated because of ‘commission agreement’, court told

Higher price not negotiated because of ‘commission agreement’, court told


Thursday • March 20, 2008


Ansley Ng



THE property agent of a condominium locked in an en bloc tussle had colluded with the potential buyer, and did not seriously negotiate for a higher price because of a “commission agreement”.


So asserted a minority owner of embattled Horizon Towers, and in so doing, Ms Jasmine Tan — who represented herself in the High Court yesterday — applied for the minutes of meetings and correspondences between the consortium and First Tree Properties to be revealed.


The consortium (HPPL) comprises Hotel Properties Limited, Morgan Stanley Real Estate and Qatar Investment Authority.


Ms Tan also asked for documents and minutes of the consortium discussing the $500 million sale price for the development, be revealed. These would show that there was a conflict of interest when First Tree Properties revealed the reserve price to the consortium, failing to “seriously” negotiate for a higher price, she said.


Citing unnamed sources inside the consortium as well as residents, Ms Tan described HPPL as “laughing all the way to the bank” because it was prepared to offer as much as $600 million.


But Justice Choo Han Teck rejected her application.


Two months after the Strata Titles Board (STB) decided that the controversial $500 million sale could proceed, residents and their lawyers met in court again yesterday after its minority owners appealed against the STB‘s decision.


The en bloc process for Horizon Towers began in May 2006 and a deal was sealed eight months later. But some majority owners tried to back out of the sale, after seeing how nearby properties, such as Grangeford, had revised their reserve price upwards.


At the height of the wrangle last year, the majority owners managed to stave off a $1-billion lawsuit HPPL had brought against them for loss of profits, when they successfully appealed against the board’s original decision in August to throw out the deal over technical irregularities.


Firing the first salvo in yesterday’s appeal, Senior Counsel Harry Elias, the lawyer for other minority owners, said that the sale committee had not acted in good faith since it “suppressed” a higher offer of $510 million for the estate from a foreign firm. The hearing continues.


Source: TodayOnline

Cutting the expat queues

Cutting the expat queues


Thursday • March 20, 2008


Loh Chee Kong



THE sight of anxious expatriate parents queueing for days outside popular primary schools — as was seen at Tanjong Katong Primary School last year — will soon be a thing of the past.


For the next school year, expats can land a place for their children in mainstream schools via a centralised admissions exercise.


Yesterday, the Ministry of Education (MOE) announced it would simplify the application procedure for international students, who currently must apply directly to the schools of their choice and sit for admission tests.


The first admission exercise, for students seeking admission to levels Primary 2 to 5 and Secondary 1 to 3, would involve a centralised test tentatively scheduled for September or October. Details will be confirmed in June.


The test will comprise English and Mathematics papers assessing “English literacy, numeracy and reasoning abilities”.


Applicants who pass will be “offered a place in a suitable school … based on test performance and available school vacancies”, said the ministry. But Singapore students participating in posting exercises “will continue to enjoy priority” over new international students.


According to an MOE spokesperson, there are about 22,000 international students (or 4 per cent of the total student population) in the mainstream education system, including those in junior colleges and centralised institutes.


“We welcome bright and talented international students as they add to the diversity in our schools, and hope they will find the new process more convenient,” the spokesperson added.


The MOE’s move, said Mr Dom LaVigne, executive director of The American Chamber of Commerce in Singapore (AmCham), would ease the hassle and confusion American expatriates face when deciding whether to send their children to local schools. More are now doing so, especially those employed on local terms without the education allowance.


Some AmCham members have said “they were not very clear on how to enrol their children in Singapore schools”, Mr LaVigne noted.


Mr Ng Kok Cheng, a Singaporean who married a Malaysian and had put his son through a Malaysian primary school, said it took “two to three weeks” last year before he got a place for his son in Yuhua Secondary School here.


“The first school we went to rejected my son’s application … It was a very hectic period. I had to ask a friend to help; run here and there,” said Mr Ng, who is self-employed.


“A centralised system is better. For us, it didn’t really matter which school he ends up in. The standards of all Singapore schools are very good.”


The latest initiative comes two years after the MOE made it easier for returning Singaporeans to enrol their children in mainstream schools, including introducing an annual centralised placement exercise. The scheme has received about 300 applicants each year.


Source: TodayOnline

A sub-primer for dummies

A sub-primer for dummies


How did the mortgage mess in the US produce such ripple effects in the global economy? DAVID LEONHARDT explains


RAISE your hand if you don’t quite understand this whole financial crisis.


It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.


But the overwhelming majority of homeowners are still doing just fine. So how is it that a mess concentrated in one part of the mortgage business – sub-prime loans – has frozen up the credit markets, sent stock markets gyrating, caused the collapse of Bear Sterns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?


I’m here to urge you not to feel sheepish. This may not be entirely comforting, but your confusion is shared by many people who are in the middle of the crisis.


‘We’re exposing parts of the capital markets that most of us had never heard of,’ Ethan Harris, a top Lehman Brothers economist, said last week. Robert Rubin, the former treasury secretary and current Citigroup executive, has said that he hadn’t heard of ‘liquidity puts’, an obscure financial contract, until they started causing big problems for Citigroup.


I spent a good part of the last few days calling people on Wall Street and in the government to ask one question, ‘Can you try to explain this to me?’ When they finished, I often had a highly sophisticated follow-up question, ‘Can you try again?’ I emerged from it thinking that all the uncertainty has created a panic that is partly irrational.


That said, the crisis isn’t close to ending. Ben Bernanke, the Fed chairman, won’t be able to wave a magic wand and make everything better, no matter how many more times he cuts rates and cheers Wall Street. As Mr Bernanke himself has suggested, the only thing that will end the crisis is the end of the housing bust.


Back to the beginning


So let’s go back to the beginning of the boom. It really began in 1998, when large numbers of people decided that real estate, which still hadn’t recovered from the early 1990s slump, had become a bargain.


At the same time, Wall Street was making it easier for buyers to get loans. It was transforming the mortgage business from a local one, centred around banks, to a global one, in which investors from almost anywhere could pool money to lend.


The new competition brought down mortgage fees and spurred innovation, much of which was undeniably good. Why, after all, should someone who knows that they’re going to move after just a few years have no choice but to take out a 30-year, fixed-rate mortgage? As is often the case with innovations, though, there was soon too much of a good thing. Those same global investors, flush with cash from Asia‘s boom or rising oil prices, demanded good returns. Wall Street had an answer: sub-prime mortgages.


Because these loans go to people stretching to afford a house, they come with higher interest rates – even if they’re disguised by low initial rates – and higher returns. These mortgages were then sliced into pieces and bundled into investments, often known as collateralised debt obligations, or CDOs. Once bundled, different types of mortgages could be sold to different groups of investors.


Investors then goosed their returns further through leverage, the oldest strategy around. They made US$100 million bets with only US$1 million of their own money and US$99 million in debt. If the value of the investment rose to just US$101 million, the investors would end up doubling their money.


Homebuyers did the same thing, by putting little money down on new houses, notes Mark Zandi of Moody’s Economy.com. The Fed under Alan Greenspan helped make it all possible, sharply reducing interest rates, to prevent a double-dip recession after the technology bust of 2000, and then keeping them low for several years.


All these investments, of course, were highly risky. Higher returns almost always come with greater risk. But people – by ‘people,’ I’m referring here to Mr Greenspan, Mr Bernanke, the top executives of almost every Wall Street firm and a majority of American homeowners – decided that the usual rules didn’t apply because home prices nationwide had never fallen before. Based on that idea, prices rose ever higher, so high, says Robert Barbera of ITG, an investment firm, that they were destined to fall. It was a self-defeating prophecy.


And it largely explains why the mortgage mess has had such ripple effects. The American home seemed like such a sure bet that a huge portion of the global financial system ended up owning a piece of it.


Last summer, many policymakers were hoping that the crisis wouldn’t spread to traditional banks, like Citibank, because they had sold off the underlying mortgages to investors. But it turned out that many banks had also sold complex insurance policies on the mortgage debt. That left them on the hook when homeowners who had taken out a wishful-thinking mortgage could no longer get out of it by flipping their house for a profit.


Many of these bets were not huge. But they were often so highly leveraged that any loss became magnified. If that same US$100 million investment I described above were to lose just US$1 million of its value, the investor who put up only US$1 million would lose everything. That’s why a hedge fund associated with the prestigious Carlyle Group collapsed last week.


‘If anything goes awry, these dominos fall very fast,’ said Charles R Morris, a former banker who tells the story of the crisis in a new book, The Trillion Dollar Meltdown. This toxic combination – the ubiquity of the bad investments and their potential to mushroom – has shocked Wall Street into a state of deep conservatism.


The soundness of any investment firm rests in large part on the confidence of other firms that it has real assets standing behind its bets. So firms are now hoarding cash instead of lending it, until they understand how bad the housing crash will become and how exposed to it they are. Any institution that seems to have a high-risk portfolio, regardless of whether it has enough assets to support the portfolio, faces the double whammy of investors demanding their money back and lenders shutting the door in their face. Goodbye, Bear Stearns.


The conservatism has gone so far that it’s affecting many solid, would-be borrowers, which, in turn, is hurting the broader economy and aggravating Wall Street’s fears. A recession could cause automobile loans, credit card loans and commercial mortgages to start going bad.


Many economists now argue the only solution is for the federal government to step in and buy some of the unwanted debt, as the Fed began doing last weekend. This is called a bailout, and there is no doubt that giving a handout to Wall Street lenders or foolish homebuyers – as opposed to, say, laid-off factory workers – is deeply distasteful. At this point, though, the alternative may, in fact, be worse.


Bubbles lead to busts. Busts lead to panics. And panics can lead to long, deep economic downturns, which is why the Fed has been taking unprecedented actions to restore confidence. ‘You say, my goodness, how could sub-prime mortgage loans take out the whole global financial system?’ Mr Zandi said. ‘That’s how.’ – NYT


Source: Business Times

Housing boom still alive in some places in US

Housing boom still alive in some places in US


There are exclusive, desirable pockets with scarce land and robust demand


(ROSS, California) Even in the worst storms, there are pockets of calm, and the housing crisis gripping the US is no different.


While prices are falling and owners are losing their homes to foreclosure around the country, places like Ross, a wealthy, woodsy town 28 km north of San Francisco, still enjoy robust demand.


That demand is explained by the town’s sleepy feel – the 2,300 residents have to collect their own mail from the post office – and its exclusivity. Actor Sean Penn and Grateful Dead bassist Phil Lesh live here.


‘It’s doing very well,’ said real estate agent Tracy McLaughlin, whose offerings include a US$10 million estate. ‘It’s supply constrained. I can’t think of one buildable lot in Ross.’


While Ross and surrounding Marin County may be a special case, a report last month by S&P/Case-Shiller showed that three metropolitan areas posted modest gains in home prices last year – Seattle; Portland, Oregon; and Charlotte, North Carolina.


Both Charlotte, a major financial centre, and Seattle, a high-tech hub, have low unemployment rates and all three are seen as desirable places to live.


But even in those three markets, average home prices declined in December from November, leading home owners and real estate agents to hope declines will be small.


Seattle’s home prices may give up some gains – but not much, because ‘they weren’t as far out of kilter as in other places’, said Glenn Crellin, director of the Washington Center for Real Estate.


Charlotte‘s home prices should hold much of their gains or only lose a bit of ground for the same reason, said real estate agent Mike Sposato of Carolina Realty Advisors.


‘Maybe one year we had 10 to 12 per cent appreciation, but over the five-year period we had on average about 7 per cent,’ he said.


Mark Jenkins and Linda Baker hope that Portland, like Seattle and Charlotte, holds relatively steady. They are looking to sell their home in Portland and buy a new one there.


‘We are a little worried, but not terrified,’ Baker said. ‘We have been told by our broker that we have a good chance to sell at a reasonable price and in a reasonable amount of time.’


Similar sentiments hold in San Francisco, where real estate agents report that demand for homes still exceeds supply, especially for luxury properties, even though average prices fell there last year.


‘There is a lot of wealth here . . . If they (buyers) want something better, they’ll go for it,’ Realtor Richard Weil said while showing a 10,000 square-foot home listed for sale at US$14.5 million in San Francisco’s Presidio Heights neighbourhood.


Demand remains strong in San Francisco and nearby cities for less expensive homes, too.


Where home builders in many other markets have shelved blueprints, builders in the San Francisco Bay area’s urban centres remain busy thanks to the region’s wealth, scarce land for building and persistent demand.


‘Would I like to sell more units at better prices in San Francisco, Oakland, Silicon Valley? Sure. But it’s very insulated from what’s going on in many places,’ said Mike Ghielmetti, president of home builder Signature Properties.


By comparison, the median home price in Las Vegas, up at double-digit rates during the boom years, fell 5.6 per cent in January from December and 16.4 per cent from a year earlier, according to DataQuick Information Systems.


And the worst of the US housing slump is playing out just a two-hour drive east of the San Francisco Bay area in California’s Central Valley, where affordable land, strong demand and easy credit fuelled a boom in construction.


As interest rates on adjustable-rate loans reset to higher levels, an increasing number of borrowers defaulted, sending foreclosures soaring\. \– Reuters


Source: Business Times

Worst financial problem in 80 years: Stiglitz

Worst financial problem in 80 years: Stiglitz


(WELLINGTON) The US economy is facing the worst financial crisis in almost 80 years and interest-rate cuts will do little to cure the problem, economist Joseph Stiglitz said.


‘This is clearly the worst financial problem we’ve had since the Great Depression (of 1929),’ Prof Stiglitz, a Nobel-prize winning economist, told Radio New Zealand yesterday from Auckland, where he is attending a conference. ‘That has to have very major ramifications for the American economy and the global economy.’


Federal Reserve policy makers are struggling to cushion consumers and companies from the worst of a credit freeze that has made some of the world’s biggest banks reluctant to lend to each other. The Fed cut its main lending rate 0.75 percentage points to 2.25 per cent on Tuesday, the sixth cut since August, when the US sub-prime mortgage markets collapsed.


The cut ‘will do a little bit to stem the blood,’ said Prof Stiglitz. ‘The problems are very deep. It’s not addressing the fundamental problems underlying the collapse of the financial sector. It’s just trying to ease the economy down.’


Prof Stiglitz, a former chief economist at the World Bank, expects that more Americans will default on home loans as house prices fall, adding to pressure on banks.


‘Alan Greenspan is right, this is clearly the worst economic problem we’ve faced in the last 50 years,’ Prof Stiglitz said. ‘It’s a little bit ironic coming from him because he is the source of much of the problem.’ The Fed has the regulatory authority to have prevented some of the bad practices for which the US is now paying, and Mr Greenspan chose not to use them, he said. — Bloomberg


Source: Business Times

1st Software plans $175m acquisition of property firm

1st Software plans $175m acquisition of property firm


It will issue new shares to acquire Teambuild in reverse takeover deal




IN a bid to retain its listing status, 1st Software is acquiring a construction and property development firm for $175 million in a reverse takeover deal.


1st Software entered into an agreement with Teambuild Corporation yesterday to acquire it through the issue of about 10.94 billion new 1st Software shares at 1.6 cents each, which will give the vendors of Teambuild an approximately 85 per cent stake in 1st Software’s enlarged capital.


Teambuild, which has offices in Singapore and Malaysia, is a privately-held company specialising in property development and building construction.


The firm’s current business is made up of a mix of public and private residential developments, as well as institutional and upgrading projects.


Another reason for the proposed acquisition is that it will allow the company to participate in the business of property development and building construction based primarily in Singapore with a strong growth potential, said 1st Software.


Under the deal, Teambuild provided a post-tax profit guarantee of at least $8 million for FY2007 and $20 million for FY2008.


For its 2007 financial year, Teambuild may declare dividends out of its reserves of not more than $10 million. If Teambuild fails to meet its profit targets, the vendors will have to pay 1st Software for the shortfall.


The acquisition is subject to regulatory and shareholder approval. It is also contingent on other prevailing conditions including the ability to secure a $2 million loan to finance the buyout. An application has also been made for waiver from a general offer. Shares of 1st Software have been suspended since Dec 26, 2006, following the sale of its core digital publishing business earlier in the year.


In a bid to find a new venture to maintain its listing, the company had tried to acquire Hong Kong commodities trading firm Psons Ltd through a $67.95 million reverse takeover deal in November 2007 but the transaction eventually fell through.


Source: Business Times

Horizon minorities say sale done in bad faith

Horizon minorities say sale done in bad faith




The minority owners of Horizon Towers say the collective sale of the development was conducted in bad faith because the sales committee did not seek the best price.


This was the case they put forward yesterday on the opening day of their appeal against a decision by the Strata Title Board (STB) on Dec 7 last year to approve the en bloc sale of Horizon Towers.


Some of their arguments were already presented at the STB hearings but the minority owners felt the need to bring them up again as they believe they did not get a fair hearing when the sale was adjudicated by STB last year.


The group of minority owners, represented by Harry Elias Partnership, dwelt heavily yesterday on their claim that the Horizon Towers sales committee deliberately ignored an offer from a Hong Kong developer that was higher than the $500 million offered, and eventually paid, by Hotel Properties Ltd and its partners.


The minorities say an offer of $510 million came from Vineyard Holdings (HK) via Malaysian law firm Shan & Su, and that the sales committee deliberately hid this information from the other owners.


The minorities also claim the sales committee set onerous conditions for this competing offer and misrepresented at the STB hearing that its lawyer had advised it to dismiss the offer.


The minorities also introduced fresh evidence they say contradicts testimony to STB last year by sales committee member Henry Lim. Mr Lim said he was advised by the sales committee’s law firm, Drew & Napier, not to pursue the Vineyard Holdings offer.


But Harry Elias Partnership produced a letter from Drew & Napier in which the law firm said it advised Mr Lim to follow up all potential offers – and left the responsibility of doing so entirely to him. ‘At no time was Drew & Napier asked to do anything in relation to Vineyard’s interest,’ the firm’s letter said.


The letter was obtained only in January this year, after STB made its decision on the collective sale of Horizon Towers.


The minorities are arguing that STB therefore based its decision on false and misleading evidence, as it relied on the testimony of Mr Lim to conclude that the sales committee did not act improperly in not pursuing the Vineyard offer.


The hearing of the minorities’ appeal continues today. Hotel Properties’ law firm Allen & Gledhill, which was granted leave yesterday to intervene in the appeal, will present its arguments. The majority owners who agreed to the collective sale, represented by Tan Rajah & Cheah, will also put their arguments.


Two minority owners – Lo Pui Sang, who represented himself, and Canterford, who was represented by Senior Counsel Michael Hwang and Dr SK Phang – decided not to appeal against STB‘s decision. Minority owner Jasmine Tan, previously represented by Tan Kok Quan, has opted to represent herself in the appeal.


Source: Business Times

Stress test for builders as steel price soars

Stress test for builders as steel price soars


It has almost doubled in 15 months and is poised to keep rising this year




(SINGAPORE) The price of steel has almost doubled since January 2007 and this could come in the way of the construction industry’s quest to reduce its dependence on concrete.


In Singapore, industry players report that the price of both steel reinforcement bars (rebars) and structural steel has gone up by around 80-100 per cent over the past 15 months. This comes on the back of higher global demand and hikes in the costs of the raw materials used to make the metal.


The development is a setback for the construction industry, which was veering towards using more steel to reduce dependence on concrete, which is more prone to supply-side shocks.


‘In the last 15 months, steel prices (steel rebars and structural steel) have gone up by about 80 per cent,’ said Jackson Yap, chief executive of United Engineers.


Brandon Lye, assistant vice-president for Sembawang Engineers and Constructors, similarly said that steel prices have doubled over the past 18 months.


Data provided by industry regulator Building and Construction Authority (BCA) shows that the price of 20mm-high tensile steel was $752.50 a tonne in January 2007.


But by January 2008, the price had climbed to $1,235.46 a tonne – a rise of some 64 per cent. The price continued to climb in February and March, industry players said.


On the back of this, the proportion of steel cost against total construction cost has gone up from about 10 per cent to 15 per cent over the same period, Mr Yap said.


One reason for the steel price hike is increasing global demand, said Bernard Chung, second vice-president of the Singapore Structural Steel Society.


Macquarie Research’s data shows that global steel consumption rose from 1.24 billion tonnes in 2006 to 1.33 billion tonnes in 2007. Demand is expected to continue growing in 2008 – Macquarie Research forecasts global steel demand of 1.43 billion tonnes for this year.


Mr Chung said the demand is being driven by developing economies such as Brazil, Russia, India and China. He said that these four countries alone accounted for about three-quarters of demand growth between 1997 and 2006.


Similarly, Macquarie Research said that China accounted for 62 per cent of world demand growth from 2000 to 2007.


Steel prices have also been pushed up by large rises in the costs of raw materials, industry players said.


‘The cost of components used to make steel – iron ore, scrap, coking coal, coke, freight and electricity – have also gone up,’ Mr Chung said.


Macquarie Research said that steel mills are expected to pass through large rises in raw material costs in 2008, which could add around US$150 per tonne to steel costs. Add this to price increases brought on by surging demand, and the overall price of steel could climb even more this year, analysts said.


In Singapore, increases in the price of steel could impact the industry’s move towards using more steel for building.


BCA, for example, has been encouraging more extensive use of steel for construction since Indonesia banned the export of concreting sand in January 2007. Land sand is used to make concrete.


‘Rising steel prices will slow down the drive towards the use of more steel for sustainable construction,’ said United Engineers’ Mr Yap.


BCA, however, pointed out that the prices for both ready-mixed concrete and steel have increased by about 60 per cent, which means that the situation has not changed that much in terms of cost competitiveness.


‘However, steel is more readily available from many sources as compared to sand and granite,’ a BCA spokeswoman said.


And where faster ‘time-to-market’ is required, developers will still continue to use steel, Mr Yap said.


Source: Business Times

Cheung Kong pips Far East in URA tender

Cheung Kong pips Far East in URA tender


It offers $305psf ppr for West Coast condo plot next to Blue Horizon




(SINGAPORE) Cheung Kong Holdings-linked Billion Rise yesterday pipped Far East Organization to emerge as top bidder for a 99-year leasehold condo site facing West Coast Park and overlooking the sea.


Billion Rise’s bid of $110.44 million or $305 per square foot per plot ratio (psf ppr) was just 1.4 per cent higher than the next highest offer of $301 psf ppr by Far East unit Tian Hock Properties.


The tender for the choice plot, next to Blue Horizon condo developed by Far East, attracted 12 bids. City Developments and TID, Allgreen Properties, Frasers Centrepoint, MCL Land, Sim Lian, a Kheng Leong unit and Hoi Hup Realty were among the other bidders. Entities linked to Alpha Investment Partners and Teambuild Construction also took part in the tender.


Yesterday’s outcome was in a sharp contrast to that at a state tender last week for a landed housing plot at Jurong West when there were just two bids – both way below market expectations. The Housing & Development Board, which conducted that tender, decided not to award the site.


On offer at yesterday’s tender, conducted by Urban Redevelopment Authority, was a more appealing site near the sea and a short drive from the VivoCity shopping and entertainment complex.


‘The plot attracted an overwhelming response of 12 bids from major and mid-size developers and contractors,’ said CB Richard Ellis executive director Li Hiaw Ho. ‘It signals developers’ confidence in the suburban segment despite the current lukewarm response to new projects.’


Notwithstanding the wide participation in yesterday’s tender, the top bid of $305 psf ppr was towards the lower end of the $260-400 psf ppr range of bids indicated by property consultants when the site was launched in January.


Industry sources suggested that Cheung Kong’s breakeven cost for the condo could be about $600-630 psf. ‘It is likely that units in the proposed development will be sold at an average price of around $750-800 psf,’ said Knight Frank director Nicholas Mak.


Units at Blue Horizon next door were transacted at an average price of $740 psf in Q4 last year.


Market watchers had expected Cheung Kong, controlled by Hong Kong tycoon Li Ka-shing, to be awarded the latest site. The last time that a company in Mr Li’s stable was awarded a 99-year condo site in a state tender here was 11 years ago in early 1997, when Japura Pte Ltd placed the top bid of $456.51 psf ppr for a site in Bayshore Road, which it later developed into the Costa Del Sol condo that boasted sweeping views of Singapore’s eastern shoreline.


Costa Del Sol is in front of The Bayshore condo, which was developed by Far East. This time, the heavyweights took the competition to the West Coast.



Source: Business Times

West Coast condo plot draws whopping 12 bids

West Coast condo plot draws whopping 12 bids


HK-linked firm puts in top tender of $305 psf for site in attractive location


By Joyce Teo


COMPETITION was brisk for a 99-year leasehold condominium site in West Coast Crescent, with 12 firms defying signs of a property slowdown to lodge bids.


The bidders included major and mid-sized developers and contractors, with a Hong Kong-linked firm emerging with the highest tender – but only just. Billion Rise, which is linked to the Cheung Kong group, bid $110.44 million for the site – $305 per sq ft (psf) of gross floor area – to pip its nearest rival by 1 per cent.


Tian Hock Properties, which has Far East Organization chief executive Philip Ng as a shareholder, tendered $108.9 million or $301 psf. MCL Land was next with $103.5 million or $286 psf.


The response was strong, in contrast to the weak property market sentiment. One sign of that came on Tuesday when the Government decided not to award a leasehold landed plot in Westwood Avenue in Jurong West as the bids were too low.


Consultants pointed to differences between the two sites. They said the West Coast Crescent site’s prime location had sparked the keen interest.


It suits a mass market condo project, which would be able to better weather any sector weakness, said Knight Frank director Nicholas Mak.


The Jurong West landed plot was in a less favourable spot and would have accommodated 99-year leasehold landed homes, which typically do not sell as well, he added.


The West Coast Crescent site can be built up to about 36 storeys. Some high-floor units would enjoy good views of the ocean and West Coast Park as surrounding buildings are mostly low- to medium-rise, he said.


This tender also reflects the current market situation as some bids came in relatively low. Industry sources say a few developers were trying their luck with opportunistic bids.


The lowest bid of $50 million, from Teambuild Construction’s Scantech Development, works out to just $138 psf.


Other bidders included Sim Lian Land ($236 psf), Hoi Hup Realty ($235 psf), Frasers Centrepoint ($210 psf) and Allgreen Properties ($186 psf). City Developments’ Sunny Vista Developments and TID also put in a bid of $180 psf.


Consultants said the top bid of $305 psf will translate into an estimated break-even price of $680 psf to $720 psf for new condos. Units could be sold at between $750 and $800 psf.


Units at nearby Blue Horizon were sold at about $750 psf in the resale market in January and February, while sub-sales of units in Varsity Park and Clementi Woods were done at $680 psf to $750 psf, according to CBRE Research.


Source: Straits Times