ECONOMIC uncertainty is likely behind the poor response to a residential site in Upper Serangoon Road that ended up going for a song.
Allgreen Properties emerged tops in a three-cornered tussle for the 265,012 sq ft site with a bid of $270 million or $291 per sq ft per plot ratio (psf ppr).
That looks like a giveaway given that just three months ago, a 99-year leasehold plot next door at the junction of Buangkok and Sengkang East Drives went for $391 psf ppr.
It is the first time in a long while that Allgreen Properties has topped a tender exercise, said analysts, who added that the developer has been cautious with bids in recent months.
Property experts said the Allgreen bid, if successful, would be the lowest price for a non-landed site since City Developments paid $280 psf ppr for a Chestnut Avenue site in August 2009 that was developed into the Tree House condominium.
Allgreen was followed by a consortium of Frasers Centrepoint, Far East Organization and Sekisui House with an offer of $253 million, or $273 psf ppr for the 99-year leasehold. A unit of Chip Eng Seng bid $261 psf ppr.
Experts cited a number of reasons for the lacklustre bidding.
Mr Ong Teck Hui, head of research and consultancy at Credo Real Estate, said the low offers were a clear sign that residential land sales are softening amid a more uncertain economic climate.
He added: 'The bids are getting more cautious with more buffer being provided in anticipation of a more difficult market.'
Mr Nicholas Mak, head of research and consultancy at SLP International, noted that the low number of bids could be a sign that developers did not see the site as that attractive.
'(The developers) could be saving their resources for other site tenders which would be launched soon,' said Mr Mak.
But he cautioned that the lower land prices might not translate to lower home prices.
'Allgreen Properties would likely sell the condominium to be developed on this site at the going market price at the time of its launch,' he added.
The nearest MRT station - Hougang - is some distance away. However, the site's proximity to Punggol Park and Serangoon Reservoir will appeal to nature lovers and exercise enthusiasts.
The land can be built up to a maximum gross floor area of 927,545 sq ft, possibly yielding 860 apartments.
Units at neighbouring Boathouse Residences have been transacted at an average of $880 psf.
Analysts predicted an approximate break-even price of between $630 and $660 psf.