SINGAPORE (EDGEPROP) - Recent tender closings for Government Land Sales (GLS) sites have seen lacklustre responses from developers. The tender for a site along Upper Thomson Road closed last month without any bids, and the lone bid for the Marina Gardens Crescent site was rejected by the URA in February for having a bid price that was too low.

The tenders for three GLS sites will close on July 18. In this article, we examine the three sites to determine whether they will attract any bids.

Site #1: Zion Road (Parcel B)

The Zion Road (Parcel B) GLS site is bounded by Zion Road, Kim Seng Road, and Havelock Road. The 99-year leasehold site is located within the Bukit Merah Planning Area and in District 3. It is also within walking distance of Great World and Havelock MRT Stations, Great World City, and Zion Riverside Food Centre. Schools located within a 1 km radius include Alexandra Primary School and River Valley Primary School.

Read also: Government launches tender for mixed-use GLS site at Tampines St 94

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The site has a maximum gross floor area (GFA) of 559,750 sq ft (52,002 sq m), and the URA estimates that it can yield approximately 610 housing units.

Additionally, the successful tenderer must provide a pedestrian side gate and sheltered walkway to connect the future development with the future covered linkway along Kim Seng Road. The successful tenderer must also design and build a public park at their own cost and expense. The park’s design will be subject to evaluation and approval by relevant government authorities, such as NParks. Furthermore, the public park must be completed before the issuance of the development’s temporary occupation permit (TOP) and must be handed over to NParks before the issuance of the certificate of statutory completion (CSC) for the development. (see Map 1).

The site was initially on the reserve list but was put up for tender after URA received a commitment from a developer to bid at least $604.57 million ($1,080 psf ppr) for the site.

Only four leasehold condos within walking distance

There are a total of 17 condos, representing 3,358 units, within a 500m radius of the site. However, only four of them are 99-year leasehold developments (see Map 2), and three are 999-year leasehold developments. The remaining 10 developments have freehold tenures.

Two of the four leasehold condos are boutique developments with fewer than 100 units, and the other two obtained their TOP before 2000. Up@Robertson Quay and Riviere, which were completed after 2000, have average prices above $2,000 psf, while the average prices for their older counterparts are below $1,500 psf. Among the four condos, Riviere is the newest and largest development. (see Table 1).

Prospective buyers have numerous options

There are three uncompleted condos with at least 300 units located within a 1 km radius of the Zion Road (Parcel B) GLS site. (see Map 3). Additionally, there are a total of four GLS sites within walking distance.

Read also: Government releases 19 sites under 2H2024 GLS Programme

Irwell Hill Residences, featuring 540 units, is the largest uncompleted nearby condo. The 99-year leasehold development is expected to obtain its TOP in 2026. During its launch weekend in April 2021, approximately 51.5% of its units were sold at an average price of $2,700 psf. Based on the caveats lodged with URA, the development is almost fully sold at the time of writing.

The Landmark is the second largest development with 396 units and is expected to obtain its TOP in 2025. The 99-year leasehold condo achieved subdued sales during its launch weekend in November 2020, with only 28% of its units sold at an average price of $2,250 psf. However, the take-up rate improved to 96.5% at the time of writing. (see Chart 1).

The Avenir is the only freehold development among the three uncompleted condos. It features 376 units and is expected to obtain its TOP in 2025. Like The Landmark, sales for The Avenir started slow, with only 20 units sold during its launch weekend in January 2020, but all units were sold by August last year.

Of the four nearby GLS sites, three are on the confirmed list and were launched or will be launched for tender this year. The remaining site is on the reserve list (see Map 4).

Source: EdgeProp LandLens (as at 26 June 2024)

The Zion Road (Parcel A) GLS site, located adjacent to the Zion Road (Parcel B) site, received only one bid when its tender closed in April. The land parcel is the first GLS site with a requirement for long-stay serviced apartments. A consortium comprising City Developments Limited (CDL) and Mitsui Fudosan submitted the sole bid of $1.07 billion ($1,202 psf ppr) and was awarded the site. The successful tenderer plans to build a mixed-use development comprising approximately 740 residential units for sale, 290 rental units, and a retail podium.

The tender for River Valley Green (Parcel A) GLS site closed in June and attracted two bids. Wing Tai Holdings submitted the higher bid of $464 million ($1,325 psf), and was awarded the site. The land parcel can yield an estimated 380 residential units. Of the three sites in River Valley Green, Parcel A has the closest proximity to Great World MRT Station.

Read also: Wing Tai Holdings submits top bid of $1,325 psf ppr for residential GLS site at River Valley Green

At the time of writing, River Valley Green (Parcels B and C) GLS sites have not been placed for tender. Parcel B was on the reserve list for the 1H2024 GLS program but was moved to the confirmed list for the 2H2024 GLS program and will be available for tender in October. Parcel C is on the reserve list for the 2H2024 GLS program and hence will not be put up for tender unless triggered. According to URA, Parcel B can yield approximately 580 units while Parcel C can yield approximately 470 units.

Potential competition?

The three uncompleted condos are unlikely to pose significant competition to the future development on the Zion Road (Parcel B) GLS site because they are either fully sold or have very few available units.

The three GLS sites on the confirmed list can yield a total of approximately 1,700 units if all three sites are awarded. The number of potential units will increase to 2,170 units if the site on the reserve list is triggered and awarded.

The consortium that was awarded the Zion Road (Parcel A) site has an opportunity to develop a larger project by also bidding for the Zion Road (Parcel B) site. Furthermore, intense competition can be avoided if both sites are developed by the same developer.

Some competition from the future development on the River Valley Green (Parcel A) site is inevitable due to its proximity to the subject site. Moreover, River Valley Green (Parcel A) is arguably in a better location as it is adjacent to Great World City and Great World MRT Station.

The River Valley Green (Parcel B) site is likely to pose less competition because it will be available for tender in October, giving the successful tenderer of the Zion Road (Parcel B) site a head start in their marketing efforts. The same applies to River Valley Green (Parcel C), as interested developers can only apply to trigger the site from December onwards.

Prospective buyers stand to benefit the most because the numerous future developments give them an array of options that allows them to do comparisons before choosing a home that best fits their budget and lifestyle.

Strong price growth for condos in District 3

Since 2014, average prices for new and resale 99-year leasehold condos in District 3 have surged by 62.4% and 60.2%, respectively. Prices continued to grow strongly even during the pandemic. The average price for new leasehold condos in District 3 has increased by 35.1% since 2020 to the current price of $2,821 psf, while the average price for their resale counterparts has grown by 30.2% to $2,108 psf. (see Chart 2).

Site #2: De Souza Avenue

The site is located at the junction of Old Jurong Road and Jalan Jurong Kechil as well as within the Bukit Timah Planning Area and District 21. It is directly across the road from Bukit Batok Nature Park. Beauty World MRT Station, Bukit Timah Shopping Centre, Beauty World Plaza, and Beauty World Centre are located within a 1 km radius of the 99-year leasehold site. The main drawback is the lack of schools within the same radius.

The site has a maximum GFA of 331,456 sq ft (30,793 sq m) and a maximum height limit of 10 storeys. URA estimates that the site can yield approximately 355 housing units. Strata-landed houses are not permitted. A minimum GFA of 5,382 sq ft (500 sq m) must be allocated for an early childhood development centre, and this required GFA is included in the stipulated maximum GFA for the overall development.

Several infrastructure works are required to be carried out at the successful tenderer's expense. These include relocating an existing pedestrian crossing along Jalan Jurong Kechil, constructing cycling paths and footpaths along Old Jurong Road and Jalan Jurong Kechil, as well as widening a pedestrian crossing at the junction of Jalan Jurong Kechil and Old Jurong Road. Additionally, the successful tenderer must demolish several existing buildings on the site and adjoining land parcels. These buildings may contain asbestos, necessitating removal by specialists. Finally, several existing trees on the land parcel must be retained. (see Map 5).

Up-and-coming district

The site is located in the up-and-coming District 21, where there have been many new launches, especially in the area near Beauty World MRT Station. In recent years, there have been nine new condo launches. Two of them are within a 2 km radius of the De Souza GLS site, namely Forett at Bukit Timah and The Reserve Residences.

Freehold Forett at Bukit Timah is still under construction and will feature 633 units upon completion. During its launch in August 2020, 30% of its units were sold, and was fully sold by September last year.

The Reserve Residences is also under construction, and will feature 892 units upon completion. This 99-year leasehold integrated development is located adjacent to Beauty World MRT Station. Its connectivity and convenience helped boost sales during its launch weekend in May last year to a take-up rate of 71%, which improved to 76.8% at the time of writing. (see Chart 3).

There is a GLS site that was awarded in November 2022 to Bukit Sembawang Estates for $200 million ($1,343 psf ppr). The land parcel is situated along Bukit Timah Link and is a short walk from Beauty World MRT Station. Additionally, the 99-year leasehold site is located in District 21 and within a 2 km radius of the De Souza Avenue GLS site. According to the developer’s annual report for 2023, the upcoming development will feature 155 units comprising one- to four-bedroom units. (see Map 6).

The stellar sales performances of Forett at Bukit Timah and The Reserve Residences indicate strong demand for new condos in the district. Furthermore, the newest GLS site in the district was awarded in 2022, and there are no nearby GLS sites slated for this year. Consequently, the De Souza Avenue GLS site is expected to appeal to developers keen to capitalise on the current demand for condos in this neighbourhood. Moreover, the De Souza Avenue GLS site is not large in size, which could mean lower development risk and capital outlay for the successful tenderer.

No new condo sales from 2008 to 2017

There were no new sales of 99-year leasehold condos in District 21 from 2008 to 2017, which could be attributed to a lack of supply during those years. Since new condo sales resumed in 2018, the average price has grown by 35.7% to the current average price of $2,511 psf, compared to a price growth of 28.7% from 2001 to 2007. Even stronger price growth was observed for resale condos. From 2018 to 2024, the average price for leasehold condos in District 21 surged by 52.1% to $1,603 psf. (see Chart 4).

It is notable that the gap between average prices for new and resale condos has widened significantly since new sales resumed in 2018. The price gap is $908 psf this year, up from $796 psf in 2018. In 2007, the average price for new sale condos ($597 psf) actually dipped below that for resale condos ($625 psf).

Furthermore, new sales have consistently constituted at least 56% of the total sale transactions for 99-year leasehold condos in District 21 since 2018. (see Chart 5). This is a strong testament to the continued demand for new leasehold condos in the district.

Site #3: Canberra Crescent

The Canberra Crescent GLS site is bounded by Crescent Canberra and Canberra Street. Bukit Canberra Hawker Centre, Bukit Canberra Swimming Complex, Canberra Plaza, Wellington Primary School, and Canberra MRT Station are within a 1 km radius of the site.

The 99-year leasehold site is located in the Sembawang Planning Area and District 27. The site has a maximum GFA of 351,982.8 sq ft (32,700 sq m) and a minimum GFA of 316,784.5 sq ft (29,430 sq m). URA estimates that the site can yield 375 housing units. Additionally, there is a minimum GFA requirement of 6,458.4 sq ft (600 sq m) for an early childhood development centre. The site can feature a combination of strata-landed housing and flats with prior written approval from relevant government authorities.

The successful tenderer must also provide pedestrian side gates along Canberra Crescent, Sembawang Road, and Canberra Street to facilitate easy connectivity to existing bus stops (see Map 7).

Only two ECs within walking distance

There are only two Executive Condos (ECs) within walking distance of the Canberra Crescent GLS site, namely Parc Canberra and Provence Residence. Two other ECs, namely The Brownstone and The Visionaire, are within a 1 km radius. Additionally, two condos, D’Banyan and Canberra Residences, are located within the same 1 km radius. The site also abuts a landed housing estate.

During its launch in February 2020, 64% of the 496 units in Parc Canberra were sold. Provence Residence, with 413 units, achieved a take-up rate of 53% during its launch in May 2021. Parc Canberra obtained its TOP last year, while Provence Residence is still under construction.

Despite their launches during COVID-19, Parc Canberra and Provence Residence achieved stellar sales performances. This could be attributed to the lack of competition, as both ECs were the only new residential property launches within a 1 km radius in the past three years. Furthermore, demand from upgraders likely contributed to the strong sales performance.

D’Banyan is an 18-unit development along Jalan Sendudok with a 999-year leasehold tenure. Canberra Residences features 320 units. The 99-year leasehold development is located along Canberra Drive. Both condos are also located within a short walk from each other. (see Map 8).

Based on transactions over the past 12 months, the older D’Banyan (TOP in 2005) has a lower average price of $1,082 psf compared to the newer Canberra Residences (TOP in 2013), which has an average price of $1,119 psf.

Steady price growth for District 27

A steady price growth can be observed for new and resale 99-year leasehold condos in District 27. From 2014 to last year, the average prices for new and resale condos in the district increased by 35.1% and 57.4%, respectively. Last year, the average prices for new and resale condos were $1,509 psf and $1,239 psf, respectively. This year, the average price for resale condos rose to $1,257 psf. There have been no sale transactions for new condos in the district this year. (see Chart 6).

Will we see a site without bids again?

It is unlikely that the three GLS sites will not receive any bids when their tenders close later this month. The Zion Road (Parcel B) GLS site will definitely attract at least one bid because the site was launched for tender only after URA received an application from a developer committing to bid at least $604.57 million ($1,080 psf ppr). The only question is whether the winning bid for Zion Road (Parcel B) will exceed $1,202 psf ppr, which was the winning bid for the Zion Road (Parcel A) GLS site.

There are several reasons why the winning bid for the Zion Road (Parcel B) site might surpass that of Zion Road (Parcel A) site. Firstly, Parcel B is in closer proximity to Great World MRT Station than Parcel A. Secondly, Parcel B does not have a requirement for long-stay serviced apartments, unlike Parcel A, which reduces risk for developers since the demand for long-stay serviced apartments is untested. However, anticipated competition from numerous nearby GLS sites is expected to limit the number of bidders and put downward pressure on their bid prices.

The De Souza Avenue GLS site is expected to appeal to developers because District 21 is an up-and-coming neighbourhood that has proven popular with buyers. Recent launches of new condos in the district have achieved stellar sales performances. Furthermore, the strong price growth for new and resale condo developments is expected to attract buyers and investors.

There are no condos within walking distance of the Canberra Crescent GLS site, which might appeal to developers who appreciate the lack of competition. Additionally, there are no new condos slated for District 27 this year, and there are no other GLS sites within a 1 km radius that were launched or will be launched for tender this year. However, there are only two ECs within walking distance and the nearest completed condos are approximately 1km away. As such, some developers may view the neighbourhood as an untested market for condos and hence opt not to submit a bid.

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