Group led by Hong Kong conglomerate New World Development wins Singapore plot for US$306.76 million

Hong Kong conglomerate New World Development is part of a consortium that has won the tender for a luxury residential site close to Orchard Road, Singapore’s famous shopping and entertainment strip, securing the plot for S$2,377 per square foot, a record for all government residential sites in the city.

New World, which is controlled by the Cheng family, teamed up with Singapore-based SC Global Development and Hong Kong-listed Far East Consortium to outbid eight competitors for the S$410 million (US$306.76 million) deal, Singapore’s Urban Redevelopment Authority said on Thursday.

“It sets a record for government residential land sales in terms of per square foot,” said Ong Teck Hui, national director for research and consultancy at JLL Singapore.

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The site, a prime location in Singapore, is significantly cheaper than comparable land in Hong Kong. On Tuesday, Sun Hung Kai Properties won a bid for a plot of residential land at the city’s former Kai Tak Airport site, paying a record HK$25.16 billion (US$3.2 billion), which translates into HK$17,776 per sq ft.

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The previous record – S$2,525 per sq ft – was set by the YTL Corporation, which bought the former freehold Westwood Apartments on Orchard Boulevard during the market peak of 2007.

“New World’s expansion overseas will help it to diversify its investment risks, as Hong Kong land prices soar sky-high,” said Kenny Tang Sing-hing, chief executive at China Hong Kong Capital Asset Management. With lower debt and strong cash flows, he said he believed that New World would continue expanding overseas.

Hong Kong’s home prices have surged for 24 consecutive months, the longest stretch for a property bull market in a quarter of a century, making the city the world’s costliest urban centre to live and work.

The New World consortium’s bid was 8 per cent, or S$30.56 million, higher than that of Shun Tak Holdings’, which was the second-highest offer at S$379.4 million. Along with Shun Tak, the other bidders included Shenzhen-based Logan Property Holdings, Far East Organisation, Wing Tai Holdings, Guocoland, Bukit Sembawang Estates and a joint bid by China Overseas Holdings and Singapore’s CSC Land Group.

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JLL’s Ong attributed the consortium’s aggressive bid to the view that Singapore is in the early recovery stage, with prospects of a better price upside, at a time when residential markets in other popular global and regional cities are at the top or upper end of their market cycles, or are in decline.

The plot, which could yield a total gross floor area of 172,470 sq ft, is located south of Cuscaden Road and north of Orchard Boulevard, directly opposite The Regent Hotel and just a 10 minutes’ walk from the Orchard MRT station.

Tricia Song, head of research at Colliers International Singapore, said she expected the winning developers will have to offer units for between S$3,500 and $3,700 per sq ft to fetch a profit margin of up to 15 per cent.

“While bullish, it is probably achievable, as nearby new freehold luxury launches such as New Futura and Ardmore Le Nouvel have achieved average prices of S$3,200 to S$4,000 per square foot,” said Song.

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Adrian Cheng, executive vice-chairman of New World Development, said: “The land will be developed into a luxury residential project enriched by a focus on arts and culture, infusing Singapore’s downtown area with an exciting new atmosphere.” He did not disclose the total investment cost.

The Singapore contract win comes two weeks after New World announced it planned to invest HK$20 billion in Skycity, a commercial entertainment project next to the Hong Kong International Airport. The 350,000 sq m retail complex will be connected to the Hong Kong-Zhuhai-Macau bridge.

Skycity, which covers about 25 hectares of land, will be the largest retail complex in Hong Kong when completed, according to the Hong Kong International Airport. The project is expected to be completed between 2023 and 2027.

“New World has become more aggressive in its land acquisitions, under the management of the third generation of the Cheng family,” said Tang.

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