Heated bids may fuel Orchard home prices to $4,000 psf

Breakeven levels for Park House is estimated at $3,300 psf.

Aggressive bids for prime sites in Orchard Road may push home prices to hit or even go beyond the $4,000 psf mark, according to a flash note by DBS Group Research.

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This comes as Hong Kong-listed Shun Tak snapped two prime residential sites in Orchard Road, 21 Orchard Boulevard (Park House) and 14 & 14A Nassim Road, for a combined $593.5m in a move that significantly widened its real estate exposure as the company has selectively invested in commercial and hospitality projects in the lion city.

“These are bold bids placed by Shun Tak as the bid prices imply that selling prices will test new highs in the Orchard vicinity,” said DBS analyst Derek Tan.

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After assuming a 10% balcony bonus, break-even levels for Park House and 14 & 14A Nassim Road clock in at $3,300 psf and $3,100 psf respectively, according to DBS estimates, suggesting that projects in the pipeline could hit or even breach the $4,000 psf mark.

“We note with over 20 sites sold within the core central region year to date, supply in the CCR for new developments is building up in the near term and competition for buyers’ attention is also heating up,” he added.

With nearly the entire stretch of Cuscaden Road up for sale including YTL’s 77-unit 3 Orchard by the Park and a GLS site scored by SC Global, Far East Consortium and New World Development, it would come as no surprise if property prices would breach benchmarks and set new records in the coming months.