Aspial

Aspial: is the highest bidder for the first-ever residential site launched with multiple lease options at Jalan Jurong Kechil in the Upper Bukit Timah area. The tender received an overwhelming response from developers - attracting 23 bids for the 1.02-ha land parcel. Aspial bid $73.8 m or $481.51 psf ppr, for a 60yr lease. This is 10.3% higher than the second highest bid of $66.9m by CEL Property. Most bids clustered around the median bid of $246 psf ppr, ranging from $198 to $302 psf ppr. Only one bid was tendered for the shorter lease term of 45 years while there were none for the 30-year tenure, the third option offered by URA. Jones Lang LaSalle notes, the tender participation far exceeds expectations as demand for shorter-leasehold residential properties is untested; highlights the experience of existing properties with substantially run-down leaseholds is that most buyers are less keen on them due to concerns about long-term value depreciation, yet the keen competition among bidders in this tender shows that they are confident of demand despite the shorter leasehold. International Property Advisor says the competitive bidding could be due to the expected high demand from buyers in the retiree category. Adds, this also implies that we have a shortage of such accommodation targeted at senior citizens who are healthy and middle-upper income. Breakeven is estimated at ~$700 psf, assuming a normal residential project or slightly lower if it is retirement housing. JLL est selling price in the region of $900 psf or a 25-30% discount from a 99-year leasehold equivalent, while ERA Realty expects the selling price to start from $1,100 psf owing to the ASP of $1,600 for a one-bedroom unit at Suites at Bukit Timah, which is located down the road from the land parcel. Aspial said they would explore various development options which include condominium and retirement housing. The stock is +2.4% at $0.425.