URA announced last evening the tender results for the commercial and residential site at Sengkang Central. The site for this dual envelope (concept and price) tender was awarded to a CapitaLand and City Developments Limited (CAPL; CDL) joint venture, with a winning bid of S$777.78m.

Based on a maximum permissible GFA of 842,124 sq ft, this works out to be S$923.60 on a psf ppr basis and was ~14% higher than the second highest bidder, which came from a Singapore Press Holdings and Kajima Development joint bid.

We note that the tender had closed on 21 Jun this year, which was before the property cooling measures announcement on 5 Jul. As such, the developers could not have taken into account the dampening measures in their underwriting assumptions when they submitted their bids.

Notwithstanding this, the new non-remittable and revised ABSD rate imposed on housing developers from 6 Jul 2018 will not apply for this site acquisition.

Furthermore, this site will be developed as part of an integrated community hub in the heart of Sengkang Central with direct connectivity to Buangkok MRT station and the future bus interchange. We estimate the breakeven selling price to be close to S$1.3k psf.

Maintain NEUTRAL on the Singapore residential sector. We have a BUY rating on CapitaLand with a fair value of S$4.09, and a HOLD rating on CDL with a fair value of S$9.81.

Source: OCBC Research - 17 Aug 2018