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Different tales for two cities in latest URA tender

29 Mar, 2019

The latest state land tender closing has yielded a mixed bag of results for the two 99-year leasehold sites offered. A land parcel along Middle Road in the buzzing Bugis locale, which is slated for residential with commercial at first storey use, drew 10 bids, with Wing Tai's highest bid of nearly S$492 million or S$1,458.33 per square foot per plot ratio (psf ppr) within expectation.

Over in the Sims Drive locale in Geylang, a private housing plot drew just five bids. The top bid of almost S$383.53 million or S$732.01 psf ppr - from a Hong Leong Holdings and City Developments Ltd (CDL) tie-up - was below expectations.

Colliers International's research head for Singapore Tricia Song highlighted that this is the lowest private residential land bid price since the S$681 psf ppr winning bid for the smallish Chong Kuo Road site (near Mandai) in early 2018 - before the cooling measures kicked in last July.

Besides the locational difference, the stark contrast in tender outcomes for the two plots is also partly due to the fact that the Sims Drive site is subject to the 85 sqm average unit size for non-landed private residential projects outside the Central Area. The Middle Road plot isn't, which frees its developer to build a higher proportion of small apartments to drive up average psf price while keeping absolute prices palatable.

Market watchers expect the top bid for the Middle Road plot to be used to peg pricing for an even more attractive site along Tan Quee Lan Street, just above the Bugis interchange MRT Station expected to be launched by URA today. As for the Sims Drive site, Ms Song noted that GuocoLand came in a distant second for the tender, with its bid of about S$655 psf ppr some 11 % lower than the top bid. GuocoLand's bid was even below its successful bid of S$688 psf ppr for the next-door plot back in 2014 and which it has developed into the 1,024-unit Sims Urban Oasis. The project is fully sold.

JLL Singapore's senior director of research and consultancy, Ong Teck Hui, noted that the Sims Drive site is surrounded by HDB estates, industrial properties, next to the Pan Island Expressway and slightly off the Aljunied MRT Station. "In the current soft market where buyers have plentiful options, demand for less prime sites is likely to be selective with measured bidding as in the case of this site."

CZACD Group executive director Nicholas Mak noted that the top bid for the Sims Drive plot was 34 % lower than the S$1,109 psf ppr at which a plot next to Mattar MRT Station was awarded last May. The other three bidders at the Urban Redevelopment Authority's tender closing on Thursday were:

  • A tie-up between Coli (Singapore) and CSC Land Group (Singapore) which offered S$631 psf ppr. CSC Land is a unit of China Construction (South Pacific) Development Co
  • Sing Holdings' unit Sing Properties in partnership with MCC Land (S$621 psf ppr)
  • Trident East (owned by Fission Holdings, Pinnacle Assets and Chee Hsian Sing), with a S$546 psf ppr bid.

Commenting on its top bid for the Sims Drive plot, a Hong Leong Group spokesman said the joint venture will explore developing a residential project of about 560 units. It noted the site's proximity to popular schools including Geylang Methodist and Canossa Catholic Primary. Moreover, the short travelling distance to Paya Lebar MRT Station (one stop from Aljunied station) is another plus point, given the newly-built mixed development Paya Lebar Quarter.

A spokeswoman for Wing Tai, the top bidder for the Middle Road parcel, said: "We are excited with the opportunity to create a quality development that integrates residential and commercial offerings in this prime location." The group's bid was 4.7 % higher than the second highest bid of S$1,393 psf ppr from a tie-up between MCC Land (Singapore) and Greatview Investment.

Also bidding for the Middle Road plot were:

  • Coli (Singapore) and CSC Land Group (Singapore) with a S$1,309 psf ppr bid
  • Coli (Singapore) and CSC Land Group (Singapore) with a S$1,309 psf ppr bid
  • Sing Essential, linked to Hong Kong-based K&K Property (S$1,253 psf ppr)
  • CDL and MCL Land (S$1,245 psf ppr)
  • GuocoLand, Intrepid Investments (part of Hong Leong Holdings) & Hong Realty (S$1,221 psf ppr)
  • Cheung Kong Holdings' Best Desire Investments (S$1,209 psf ppr)
  • UOL Group and United Industrial Corporation (S$1,205 psf ppr)
  • Far East Organization (S$1,166 psf ppr)
  • JBE Development (S$1,043 psf ppr).

CBRE's head of research for Singapore and Southeast Asia, Desmond Sim, said: "The well-located Middle Road site received interest from seasoned developers who are keen to develop their residential portfolio in the Beach Road/Ophir-Rochor Corridor to complement the increasing number of offices in the vicinity.

"The area is also an up-and-coming destination for work, live and play; surrounded by commercial developments and an array of F&B options, this site is poised to benefit from the limited housing supply in the vicinity and is aligned with the state's goal to introduce more housing within the CBD area."

Ms. Song of Colliers expects a potential selling price of S$2,200-2,300 psf. Based on Wing Tai's top bid, Citi analyst Brandon Lee estimates the breakeven cost at S$2,025 psf, which implies average selling price of S$2,250-2,530 psf to achieve 10-20 % profit before tax margin for a new 375-unit high-end condo.

Ms. Song noted that the 10 bids garnered for the Middle Road plot is the highest number of contenders for a residential Government Land Sale site since the tender for the Mattar Road site last year, which also drew 10 bids.

 

Adapted From The Business Times, 29 March 2019