Tender for a 99-year leasehold residential site at Bartley Road / Lorong How Sun closed with a partnership between CDL, Hong Leong Group and TID emerging as the top bidder. They put in a top bid of S$413m or S$621 psf ppr, winning the next bidder, Keppel Land narrowly by 0.8%, which has put in a bid of $410m or $616 psf ppr. In total, the site attracted 8 bids and in fact, the first 4 bids came in at a tight range of less than 8.0%. The group intends to build a 700-unit condominium on the 237,822 sf site targeting at young families, professionals and upgraders.
We are not surprised that this site is hotly contested given its relatively good location - next to the Bartley MRT Circle Line and near to Maris Stella High and Primary School as well as Paya Lebar Methodist Girls' Primary School. Breakeven cost is estimated to be around $1,000 - $1,050 psf, in line with market expectations and selling price could range from $1250 - $1350 psf, translating to at least a 15% profit margin. Prices for new suburban condominiums are now >$900 psf. Nim residences next to Potong Pasir MRT and The Tennery at Choa Chu Kang are priced at about $1,200 psf. Therefore, we think that the price is fair and the acquisition should be accretive to the group. However, at this point of time we are unable to ascertain the impact on CDL's RNAV as no announcement on the JV structure has been made.
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