SINGAPORE (Jan 31): DBS likes City Development Limited (CDL) among the Singapore property stocks as it returned to familiar hunting grounds, topping the tenders for two out of three government land sales sites (GLS) that closed on Tuesday evening.
The group placed the top bid at $212.2 million or $1,722 per square foot per plot ratio (psf ppr) for a plot in Handy Road, and $472.4 million or about $800 psf ppr for a land parcel in West Coast Vale.
The third site is located along Chong Kuo Road in the Sembawang/Mandai area, but a partnership between Lian Soon Holdings and OKP Land placed the top bid at $44.0 million or $681 psf ppr.
Strong developer interest was expected for the Handy Road site given the limited availability of centrally located sites in the GLS.
In an unrated report on Wednesday, analyst Derek Tan says, “We note that CDL is familiar with the area, formerly launching the 40-unit Wilkie Studios condominium back in 2007 but sales momentum was slow given the uncertainty in the economic environment at that time,”
Meanwhile, the analyst believes that sentiment towards the West Coast/Clementi areas have improved vastly on the back of the recent en bloc and strong sales seen in launches in the vicinity of the region probably emboldened CDL to make a bid for the site.
The group is also not new to this area, having developed Hundred Trees Condominium earlier in 2009, which saw robust take-up back then.
However, the risk to the analyst’s view is that new residential supply in the vicinity is building up, hence competition will remain strong. And this will probably be the group’s biggest hurdle to cross to achieve meaningful sales momentum during launch.
This came on the back of the group’s failed takeover bid of Millennium and Copthorne Hotels due to failure to secure valid acceptances representing more than 50% of shares not already owned by them, at the final closing date of the final offer.
See: City Developments' takeover bid for M&C Hotels fails
As at 12.45pm, shares in CDL are trading at 3 cents higher at $13.29.
