Chip Eng Seng said on Tuesday that its wholly owned subsidiary CELH Development was the top bidder in the Singapore government’s sale of a land parcel at Kampong Java Road with a S$418.38 million tender.
The residential site has a 99-year lease term and is around 11,643 square meters of land area, with a maximum permitted gross floor area of around 32,602 square meters, it said in a filing to SGX after the market close on Tuesday.
Chip Eng Seng said it planned to develop the site with an around 380-unit condo project.
Analysts said the top bid for the site, which had attracted seven bidders, was below expectations.
Tricia Song, head of research for Singapore at Colliers International, said in a note on Tuesday that the lower-than-expected winning bid was “a testament to the cautious mood of the developers.”
With the bid at S$1,192 per square foot, the break-even price would likely be S$1,700 per square foot, with a selling price of S$1,900 to S$2,000 per square foot, she estimated.
Ong Teck Hui, senior director of research and consultancy at JLL, said the cautious bidding for the site was due to “significant supply” in the prime district.
Ong noted that several collective, or en bloc, sites had been sold in the vicinity last year, before the government introduced a fresh round of cooling measures for the sector in early July. An en bloc deal is the sale of an existing development to a developer, usually to demolish and rebuild.
Near the Kampong Java site, the freehold Makeway View was sold at S$1,626 per square foot in March 2018, the freehold Dunearn Gardens was sold at S$1,914 per square foot in April 2018 and the 99-year leasehold property Chancery Court was sold at S$1,610 per square foot in May 2018, according to Ong.
“Other factors aside, the wide gap between the top bid of the subject site and the above-mentioned sites sold earlier suggests that residential land prices in that area has softened,” he said, adding that expectations of “significant” supply of units kept bids cautious.