Singapore Property - DBS Research 2017-07-12: Power Of Two

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CHIP ENG SENG CORPORATION LTD C29.SI

Singapore Property - Power Of Two

• Close to S$2bn invested in Bidadari over the past month. Chip Eng Seng consortium tops with S$701m bid.
• Woodleigh Lane residential site rides on the resurrection of Bidadari Estate.
• Interestingly, local developers’ bids are more aggressive now at above S$1,000psf
• Bodes well for UOL’s Raintree Gardens site. Developers remain optimistic.

What’s New 

Record bid again at new Bidadari Estate at S$1,110 psf ppr by Chip Eng Seng consortium. 

• Bid for Woodleigh Lane land site, second land site at the new Bidadari Estate, closed today with another record price of S$701m/S$1,110 psf ppr by local contractor/developer Chip Eng Seng / Heeton / KSH consortium. Keppel Land/Wing Tai JV came in second, just S$6m (S$9psf ppr) short of the winning bid.
• The tight winning margin of 0.8% and the large number of bidders (15 bidders, second highest YTD to the Toh Tuck land site) indicate that competition for land sites is still strong.

Local developers more aggressive. 

• Key interesting trends to note in the bids: 
  1. local developers are more aggressive in their bids, 
  2. there were fewer foreign developers bidding for this site, 
  3. JVs were formed to bid for the land (risk sharing?) with City Dev bidding twice.

Riding on the resurrection of Bidadari Estate and a potential new “Junction 8”. 

• The land parcel is located opposite the Upper Serangoon Road land site, which closed in June 2017 at S$1,181psf for mixed-use development, next to Woodleigh MRT station. The estimated number of residential units for the site is 735.
• We previously highlighted in our report ‘Singapore Property: The resurrection of Bidadari Estate’ on the development prospects of the former cemetery site at Bidadari Estate, spearheaded by close to 11,000 new public housing units and a potential new “Junction 8” on the Upper Serangoon Road site. 
• Woodleigh Lane site, a pure residential land site, could benefit from the two developments and close proximity to the MRT station.

Residential estimated breakeven price at close to S$1,600psf. 

• The estimated breakeven cost is c.S$1,600psf, implying that the launch price could be above S$1,700psf.
• Recent new launches around the area were priced at c.S$1,400 to S$1,500 psf. We understand that The Poiz Residences' prices were recently raised by 3% with only 61 units left (8% of total) as at May 2017.

Developers remain optimistic. 

• The aggressive bid shows that developers remain optimistic and are keen to replenish their land banks. As mentioned previously, UOL stands to benefit again with its Raintree Gardens site.
• The next tender closing soon would be for the nearby Serangoon North Avenue 1 site (Serangoon Gardens), on 27 July 2017.

Rachel TAN DBS Vickers | Derek TAN DBS Vickers | http://www.dbsvickers.com/ 2017-07-12

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