How Bidding Affects Real Estate Market
The real estate market as seen in the US has returned to its full glory even from the market crash in the late-2000s due to low interest rates and low inventories. As a result, it created a new way for sellers and buyers. However, most buyers take the fall due to rising prices, real estate developers’ bidding wars and prolonged periods as they venture into a volatile market. So one will wonder how are real estate prices recognized?
Essentially, its what we all heard before. “Location! Location! Location!” However, what it means in practical terms as to real estate prices? You guessed it. It is because of the prime location that economists refer to it as hedonic pricing. It means for most residence, some key factors impact life and lifestyle on quality of schools in the area, nearness to local employment opportunities and nearness to social and recreational hubs to be valued more from young professionals and buyers in general.
One way or the another this factors affect each other but as it is always about the location. For example, many parents want a school where it is near in their homes to drop their children off and pick them up at school that should be okay for transport to and from their place of work. Therefore, the main preferences of accessibility to school, work and entertainment and shopping areas increases the value to real estate property which in turn creates a bidding frenzy. To buy a home unit which has one of these three characteristics is a so-so for real estate developers. However, If two out of three characteristics, we should expect the bidding wars to begin due to stiff competition and rising prices. You are indeed lucky if you get all three attributes.
Other than location of course, is the appraisal value which in the real estate industry, it is the accepted process for property pricing. If there is a loan in the property purchase when financing for it or borrowing on home equity, there should be an appraisal that is always required. Lenders doesn’t approve a loan exceeding the amount appraised. This means that if the value falls short, the seller has to lower the price or the buyer has to put more money down to decrease the loan.
This is what happened to Woodleigh Lane. Several prominent real estate developers signed up for a bid of Woodleigh Lane of about more than $700 million Singapore dollars as revealed by the Government Land Sales programme or GLS.
The almost a century old site next to railway station occupies 210,402 sq. ft. with a gross floor area of 631,206 sq. ft. The site is next to Bidadari New Town and amenities of the shopping mall named Nex. Sources revealed that the site can be transformed into approximately 735 residence. The land sales site has attracted 15 bidders with tender amounts over reaching limits.
However, the highest bid of $700.7 million came from CEL Unique Development. Chip Eng Seng Corp holds the majority share of 60 per cent of CEL Unique Development while Unique Real Estate holds only 40 per cent. If broken down into its components, Unique Real Estate is composed of Heeton Holdings and KSH Holdings.
Experts reveal that the bidding war for housing sites has increased and reached highly in Woodleigh Lane due to the drive of the bidders to be determined in securing this lucrative and pristine site. It shows that the real estate market is recovering despite the downfall being experienced. Due to its location, some experts expected high bidding of Woodleigh Lane. Experts say that it really depends on how the development brings itself to residents who will enjoy views of the site as it is next to amenities and various housing areas