The second Marina View plot drew only two bids when its tender closed yesterday. The top offer came in at $952.9 million

BARELY two months after a site at Marina View fetched a record $2.02 billion, a similar plot next door has managed only half that price.

The unexpectedly low bids for the plot, which was seen as highly attractive, came on top of lukewarm response to other recent land sales. This is further proof that sentiment in the property market has started to cool, consultants warned.

The second Marina View plot drew only two bids when its tender closed yesterday. The top offer came in at $952.9 million - a far cry from the first site’s price and well below the experts’ predictions of up to $1.6 billion.

Both Marina View sites, which are located behind the One Shenton condominium, had the same high bidder: Macquarie Global Property Advisers (MGPA), a private equity real estate firm partly owned by Australia’s Macquarie Bank Group.

Property group CapitaLand also put in offers for both plots.

MGPA’s offer in September for the first site, which is slightly bigger, worked out to $1,409 per sq ft per plot ratio (psf ppr), almost double the $779 psf ppr bid it submitted for the second site.

The stark difference shows how much the mood in the market has shifted in just two months, said Knight Frank director of research and consultancy Nicholas Mak.

‘Clearly, they had a change of heart,’ he said. ‘The two sites are right next to each other, but the second bid is only 55 per cent of the previous bid.’

Mr Mak agreed that the price is ’still decent’, and that there was ‘a fair bit of exuberance in land tenders previously’.

But, in general, property investors are now turning more cautious, he said. This is due to stock market volatility, uncertainty over the global credit crunch and recent government measures in the property market.

The Government last month removed the deferred payment scheme for homebuyers in a surprise move that is being seen as an act to discourage speculation.

Mr Mak suggested, however, that this may have helped overcool the market.

Following the Government’s move, a residential land parcel on Enggor Street at Tanjong Pagar attracted only two offers when it went on sale, while an office site in Tampines found just one bidder.

This is despite these plots being fairly attractive, said Mr Mak.

‘If the Government throws in a site in Jurong, they may not get any bids at all.’

But while other consultants agreed that developers and investors are now more circumspect, some said the low Marina View bids could be an aberration.

‘The mood has changed somewhat, but it’s not as drastic as this. This is a bit of a flash in the pan,’ said Mr Li Hiaw Ho, CB Richard Ellis’ executive director.

He had expected bids for the second Marina View site to come in at a lower level because 25 per cent of the plot’s gross floor area must be used for hotel rooms, which have slightly lower land values.

Mr Li said, however, that the huge difference in bids was unexpected. He attributed it partly to the fact that there were only two bids: ‘This cannot draw out the most competitive offers.’

The Marina View site has a land area of about 0.9ha and a maximum floor area of 1.2 million sq ft. On top of the hotel use requirement, at least 60 per cent of the plot’s area must be given to offices.

If MGPA is awarded the second site, it could lower its average price for the two plots to about $1,100 psf ppr and combine them to form a mega commercial development, said Mr Donald Han, managing director of Cushman & Wakefield.

Source : Straits Times - 14 Nov 2007