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The URA’s decision to reject the joint offer from UOL Group and Singapore Land for a commercial land parcel in Paya Lebar has caused a stir in the market.
The consortium’s S$529.30 million offer was rejected “as the price offered is too low,” said the URA. It was 35 percent below a Low Keng Huat-led consortium’s offer for a site nearby, which the URA awarded in April.
Although some analysts believe that the lone bid was “reasonable”, the URA clearly disagreed.
Some property watchers feel the decision implies that the URA does not see any urgency to raise the pipeline of office space, particularly in decentralised areas.
Ong Teck Hui, Executive Director of Credo Real Estate, noted that the decision will unlikely affect plans to transform Paya Lebar into a major commercial centre.
The move has also revived a longstanding debate among industry players on whether the government should announce a site’s reserve price.
Despite the URA’s decision, investors should note that the consortium’s offer underpins land-banking discipline on the developers’ part.
In defending their bid price, the consortium said they took into consideration the land parcel’s technical challenges and resultant impact on layout, as well as the unfavourable economic outlook and volatile market.
Meanwhile, some analysts have applauded UOL for not rushing in with a bullish offer in an attempt to boost its land bank.
Currently, the developer has just two land bank sites which have not been launched, one of which is a residential land parcel at Bedok Reservoir, won in a state land tender in March this year.
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