SINGAPORE (EDGEPROP) - The tenders for two Government Land Sale (GLS) sites closed on August 1. The site at Jalan Loyang Besar received four bids, while the site at Margaret Drive received two bids. In this article, we examine both sites and the possible reasons for the different levels of interest from developers for both sites.

Site #1: Jalan Loyang Besar

The GLS site along Jalan Loyang Besar is the lone executive condo (EC) site on the Confirmed List for the GLS programme in 1H2024. There is another EC site along Tampines Street 95, but it is on the Reserved List for 1H2024 before being moved to the Confirmed List for 2H2024.

The 99-year leasehold site is bounded by Jalan Loyang Besar, Pasir Ris Close, and Pasir Ris Drive 3. It is located within the Pasir Ris Planning Area and District 18. The GLS site is expected to yield an estimated 710 units and a permissible gross floor area (GFA) of 764,395 sq ft (71,014 sq m) (see Map 1).

Read also: GuocoLand-Hong Leong JV submits top bid of $1,154 psf ppr for Margaret Drive GLS site

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It is also located adjacent to Downtown East and within walking distance of Pasir Ris Central Hawker Centre, Pasir Ris Sports Centre, and Pasir Ris Park.

Casuarina Primary School, Pasir Ris Primary School, and Pasir Ris Crest Secondary School are located within a 1km radius of the GLS site. The permanent site of Hai Sing Catholic School is at Pasir Ris Drive 6, which is a short walk away from the subject site. However, the school is undergoing renovations from 2023 to 2025, so it has moved temporarily to the former Greenview Secondary School’s site along Pasir Ris Street 21.

The successful tenderer must comply with the Pasir Ris Town Design Guide and the town theme of “Resort Town by the Sea.” They must also construct a cycling path and footpath within the road reserve along Pasir Ris Close and Jalan Loyang Besar, as well as crossings along Pasir Ris Close and NParks’ Park Connector Network along Pasir Ris Drive 3. Additionally, the successful tenderer must provide covered linkways that connect the future development with existing bus stops along Pasir Ris Close and Pasir Ris Drive 3. Lastly, there is an open-air car park on the site that must be demolished by the successful tenderer at their own cost.

Three ECs within 500m radius

There are three executive condos with 1,223 units within a 500m radius of the Jalan Loyang Besar GLS site. The oldest development is Eastvale, which obtained its temporary occupation permit (TOP) in 1999. This development features 312 units and is located along Pasir Ris Drive 3. It is also the furthest from the subject site compared to the other two ECs.

The 416-unit Watercolours is located along Pasir Ris Link (TOP in 2014) and is across the road from the subject site. The 495-unit Sea Horizon is located along Pasir Ris Rise (TOP in 2016) and is adjacent to the subject site (see Map 2).

There are another three ECs nearby if the radius is expanded to 2km, and one of them, namely Tenet, is still under construction. Tenet is located along Tampines Street 62 and will have 618 units when completed in 2026. The EC achieved a stellar take-up rate of 72.3% during its launch weekend in December 2022, which is a good indicator of continued demand for new ECs in the neighbourhood.

Read also: Sustained Land submits top bid of $841 psf ppr for GLS site at De Souza Avenue

Furthermore, Qingjian Realty is one of the developers for Tenet as well as part of the consortium that submitted the highest bid for the Jalan Loyang Besar site. The robust buyers’ response to Tenet could have encouraged the developer to submit its chart-topping bid. It is noteworthy that the top bid of $729 psf ppr is higher than the $659 psf ppr paid for the Tenet site in 2021.

The other two ECs are the 274-unit The Esparis (Pasir Ris Drive 4) and the 315-unit Belysa (Pasir Ris Drive 1). The Esparis is older, having obtained its TOP in 2005, while Belysa obtained its TOP in 2014.

Strong price growth for ECs in District 18

The average price for new ECs in District 18 surged by 93.1% from $785 psf in 2013 to $1,516 psf this year. However, no new ECs in District 18 were sold from 2017 to 2020, likely due to the lack of new developments available for sale during those years.

The lack of supply could explain the subsequent strong demand and price growth. Since 2021, the average price for new ECs in District 18 has grown by 28.4% despite the pandemic (see Chart 1). For example, Parc Central Residences achieved a take-up rate of 59% when it was launched in January 2021. A total of 695 units from the EC located along Tampines Street 86 were sold in 2021.

Resale prices for ECs on an upward trend

Strong resale price growth was also noted for the three neighbouring ECs. Despite being the oldest among the three ECs, Eastvale achieved the strongest price growth of 45.5% since 2020. This could be because it is the closest to Pasir Ris MRT Station. The average resale price for Watercolours and Sea Horizon grew by 42.6% and 35.5%, respectively (see Chart 2).

Furthermore, Eastvale is a privatised EC because it has been more than 10 years since the development received its TOP. This means that the units in the development can be bought and sold as if they are private condo units. Watercolours will reach the 10-year mark this year, which could boost its demand and price. Meanwhile, Sea Horizon will reach the 10-year benchmark only in 2026.

Read also: Allgreen’s $1,304 psf ppr at the top of two bids for Zion Road Parcel B

However, the age of Eastvale ($1,014 psf) likely had some impact on its price because it has the lowest average resale price compared to Watercolours ($1,201 psf) and Sea Horizon ($1,270 psf).

Site #2: Margaret Drive

The GLS site along Margaret Drive is bounded by Margaret Drive and the Alexandra Canal Linear Park, and it is located adjacent to Queenstown Primary School (see Map 3). The 99-year leasehold site is located within the Queenstown Planning Area and District 3. It has a maximum GFA of 430,495 sq ft (39,994 sq m), and URA has estimated that the site can yield 460 housing units.

The site has excellent locational attributes due to its central location and numerous nearby amenities. It is within walking distance of Queenstown MRT Station, Margaret Drive Hawker Centre, Margaret Drive Marketplace, Dawson Place, and Queenstown Public Library. Additionally, Queenstown Primary School, Queenstown Secondary School, and Queensway Secondary School are within a 1km radius of the site.

There is a requirement for the successful tenderer to provide an early childhood development centre with a minimum GFA of 5,382 sq ft (500 sq m) that can accommodate at least 100 children. The GFA for the centre is included in the maximum GFA for the development. The successful tenderer must demolish an existing open-air car park and remove an existing staircase on the site. The successful tenderer is also encouraged to provide a pedestrian side gate that leads from the development to the Alexandra Canal Linear Park to allow future residents easy access to the park.

Additionally, the successful tenderer must complete a number of roadworks, including realigning and widening existing footpaths and roadside drains, as well as reconstructing an existing covered linkway that connects an existing zebra crossing with another covered linkway.

Three leasehold condos within walking distance

There are three 99-year leasehold condos within walking distance of the site. However, all three condos are located closer to Queenstown MRT Station than the GLS site. Commonwealth Towers and Queens Peak are located between the MRT station and the site. Queens is located further away from the site but is directly across the road from the MRT station.

Queens is the smallest development among the three condos, with 722 units. Commonwealth Towers and Queens Peak feature 845 and 736 units, respectively. The future development on Margaret Drive is likely to be an even smaller development, because URA estimates that the site can yield only 460 units.

Prices for new condos in District 3 still on the rise

The average price for new 99-year leasehold condos in District 3 surged by 61.7% since 2013. It broke through the $2,000 psf benchmark in 2020 and has since grown by 35.3% to the current average price of $2,826 psf (see Chart 3). The strong increase despite the pandemic could be due to the robust sales of Stirling Residences (281 units sold) and Avenue South Residences (195 units sold) in 2020.

This year, 71 units from a new leasehold condo in District 3 were sold, and all of these units were from The Landmark. The 396-unit development is located adjacent to Pearl’s Hill City Park and within walking distance of the triple-line Outram Park MRT Station. The leasehold condo was launched in November 2020, achieving a take-up rate of 28% at that time. Based on caveats lodged at the time of writing, the condo is almost fully sold.

Robust demand for nearby completed condos

The average resale price for Queens ($1,704 psf) consistently trends below that of Commonwealth Towers ($2,169 psf) and Queens Peak ($2,203 psf) (see Chart 4). This is not surprising because Queens is at least 15 years older than the other two developments, having obtained its TOP in 2002. Commonwealth Towers and Queens Peak obtained their TOP in 2017 and 2020, respectively.

It is noteworthy that Queens is the only condo with an average resale price that is still below $2,000 psf. However, Queens has achieved the strongest price increase of 37.4% since 2020, compared to 18.1% for Commonwealth Towers and 16.2% for Queens Peak.

The strong price growth could be due to continued demand for the three condos. The combined resale volume for the condos exceeded 100 units per year from 2021 to last year, with Commonwealth Towers contributing to the bulk of the transactions. A combined total of 55 units have been sold thus far this year (see Chart 5).

Furthermore, the combined resale volume for the three condos represents 27.8% of all resale volume in 2021 for leasehold condos in District 3. The percentage rose to 33.3% in 2022 but dipped to 26.2% last year.

A tale of two different responses

Based on the locational attributes of each site, the Margaret Drive site would seem to be a better choice than the Jalan Loyang Besar site. The Margaret Drive site is in a central location and within walking distance of a MRT station. Furthermore, the Margaret Drive site is smaller and can yield fewer units, which would mean a lower development risk for developers. However, the Margaret Drive site attracted only two bids, half the number of bids submitted for the Jalan Loyang Besar site.

The key reason for the varying responses is the different types of designated residential development for the two sites. The Margaret Drive site is slated for condos, while ECs will be built on the Jalan Loyang Besar site.

In the face of ever-increasing home prices, affordability is a major concern for many homebuyers. Prices for new ECs have always trended lower than that for new leasehold condos. This year, the average price for new leasehold condos is $2,301 psf, which is $870 psf higher than that for new ECs ($1,431 psf) (see Chart 6). As such, ECs would be a significantly more affordable choice for many homebuyers.

The comparative affordability, coupled with the privatization of ECs 10 years after the development obtains TOP, means that many homebuyers use ECs as a stepping stone into the private residential market. This makes EC sites very enticing to developers. Lumina Grand is an EC located along Bukit Batok West Avenue 5. The 512-unit development was launched in January and achieved a take-up rate of 53% during its launch weekend. At the time of writing, 403 sale caveats have been lodged for the development.

On the flip side, the recent price growth for new leasehold condos in the Rest of Central Region (RCR) is on par with their counterparts in the Core Central Region (CCR) but lower than their counterparts in the Outside Central Region (OCR). Since 2022, the average price for new RCR leasehold condos has grown by 8% to $2,579 psf (see Chart 7). In contrast, new leasehold condos in CCR increased by 20.7% to $3,262 psf, while the average price for their counterparts in OCR rose by 20.9% to $2,131 psf. The significantly slower price growth for new RCR condos could have reduced investor demand for such condos and hence make RCR sites less attractive to developers.

Check out the latest listings for Eastvale, Watercolours, Sea Horizon, Commonwealth Towers, Queens, Queens Peak properties

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