URA's Fourth Avenue site sold for $533m
But the bidding failed expectations due to the nearby en bloc sale of Royalville.
Developer Allgreen Properties won its third site along Bukit Timah Road within five days with its winning bid of $553m or $1,540 psf ppr for the Fourth Avenue site.
According to DBS Equity Research, the price is 21% below what it paid for the collective sale of Royalville, which is located less than 0.5km away.
The developer also placed bullish bids for Royalville previously at $1,960 psf ppr, which has since raised expectations of the land bids for this site. As a result, the site did not receive as many bidders as previously expected.
DBS analyst Derek Tan said, "Nevertheless, seven bidders for the site are still quite respectable given that Royalville land price could have deterred some developers from coming in."
Cushman & Wakefield also said the top bid is still bullish.
"The new development will have to sell at around $2,250 psf, assuming developer’s profit margin is around 10% of the gross development value." Cushman & Wakefield research director Christine Li said.
Although most projects in the locality are of freehold status, the location of the Fourth Avenue site is good enough to offset the leasehold status, Li added.
The site is located right next to the Sixth Avenue MRT station and also within close proximity to several schools such as Nanyang Primary School, Raffles Girls’ Primary School, Hwa Chong Junior College.
DBS also noted that Bukit Sembawang submitted a bid after a long silence and was a close second. Its bid price was only $10m below Allgreen Properties. The bid spread was 14%.
The next batched land tenders will close on 30 January 2018 for Chong Kuo Road, Handy Road and Sumang Walk (Executive Condo) land sites.