A subsidiary of China’s biggest construction firm snatched up a development site in Singapore’s West Coast Vale on Thursday of last week for S$291.99 million ($205.22 million), according to a statement from the Singapore Urban Development Authority.
Coming in just behind the offer from China State Construction Engineering Corporation (CSCEC), MCC Land, a Singapore subsidiary of the Metallurgy Corporation of China, offered the second highest bid at S$289 million, just 0.7 percent lower than CSCEC; Allgreen Properties Limited, the Singapore satellite unit of the Kuok family – which owns Kerry Properties and the Shangri-La Hotel group came in for bronze with $287 million. Also competing for the plot were Singapore’s Sim Lian Land, whch placed the fourth highest bid, and a subsidiary of China’s Nanshan Group offered S$247 million for the parcel.
Bidding Exceeds Industry Expectations
Offered up the city government in December 2016, the 1.64-hectare riverfront plot just off of Singapore’s West Coast Highway site could sport as many as 520 residential units. CSCEC’s gambit for the land plot close to western Singapore’s Jurong Lake District comes down to S$592 per square foot of accommodation – marginally more than the adjacent Parc Riviera site sold for in 2015.
“The top bid is 7.4 percent higher than the S$551 per square foot per plot ratio paid for the adjacent Parc Riviera site, which is attributable to the subject site’s slightly superior location being further away from the Ayer Rajah Expressway,” Ong Teck Hui, national research and consultancy director at JLL Singapore, said in a press release. “Nine bidders is a good turnout for this site which is mediocre, not being near an MRT station and slightly away from amenities. The interest level is certainly higher than the Parc Riviera site which saw six bidders in August 2015.”
With Christine Li, research director at Cushman & Wakefield, initially predicting S$222 million to S$246 million and competing property consultancy Orange Tree anticipating S$271 million to S$296 million, CSCEC’s bid comes perhaps a little on the high side. “The top bid […] is at the upper end of expectations and reflects optimism that the residential market will continue to improve,” JLL’s Ong noted.
Bracing for a Singapore Salvo
A 16 percent increase in Singapore home sales in 2016 was preceded by a three year decline in home prices, but change is in the wind, due at least in part to Hong Kong’s stamp duty. Terence Tang, Managing Director for Asia Capital Markets and Investment Services at Colliers International, told Mingtiandi last week that Hong Kong’s recent stamp duty could revitalize Singapore’s home prices, an opinion shared by Cushman & Wakefield.
In November 2016, Hong Kong enacted its second 15 percent stamp duty on all residential purchases – a total of 30 percent – in the hopes that it would cool Hong Kong’s skyrocketing real estate market. Despite the new curbs, the city’s housing market has stayed on the boil, pushing some buyers to re-examine the Lion City and its lower hurdle of just 15 percent.
The southeast Asian financial hub has also attracted more investment deals this year, with Nanjing-based Fullshare Holdings this month paying $725.2 million for Singapore’s GSH Plaza and Stanley Ho’s Shun Tak Holdings earlier paying $216 million to acquire a majority stake in TripleOne Somerset.
CSCEC Diversifies into Development
For CSCEC the development project is a departure from its history of construction work in southeast Asia, but fits the company’s growing interest in expanding the scope of its business globally.
In the US, the state-run giant paid $68 million in 2013 for a site in New Jersey overlooking the Hudson River in 2013, which was followed up later that year by the purchase of New York construction firm Plaza for an undisclosed sum. The acquisition of two condo sites in New Jersey in 2015 continued CSCEC’s American development spree.
As China’s largest builder, CSCEC has been acquiring a number of international development projects over the past two years, with ventures in Panama and a $150 million stake in the $3.5 billion Baha Mar debacle.