City Dev: its JV with Hong Leong and TID has submitted the top bid of $388m ($495 psf GFA) for the first residential site to be tendered out following the 5th round of measures. Interest was muted with only 5 bidders.
The site is located next to Bartley Secondary School, and a slightly further distance to the Bartley MRT compared to the earlier site which City Dev bought at $620 psf GFA in Mar last yr.
The current site has a max GFA of 784k sf, and can be developed into a 785-unit condo. Estimated breakeven cost of $920 psf implies ASP of $1,100psf based on a 15% gross margin.
Nearby Oasis Garden (Freehold, completed 2009) is transacting at ~$1,000psf in the secondary market while new projects around Potong Pasir (eg. Nin Residence, 85% sold) are averaging ~$1,200 psf.
The top bid came in significantly below market expectations of $610-630psf, which means City Dev may have gotten a decent deal. Deutsche estimates a modest 3ct/sh accretion to NAV for City Dev’s 1/3 stake in the project.
Nevertheless, the low transaction price also indicates cautiousness amongst developers, and given City Dev’s premium valuations, Deutsche keeps at Sell with TP $8.83.
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