ANALYSIS: These three GLS sites could revive developers’ interest
By Elizabeth Choong
/ EdgeProp Singapore |
The tender for the Holland Drive GLS site will close in May. (Image: URA)
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SINGAPORE (EDGEPROP) – The tender for a government land sale (GLS) site along Holland Drive will close on May 14, while the tenders for the River Valley Green (Parcel A) and Upper Thomson Road (Parcel A) GLS sites will close on June 19.
We did an in-depth analysis of the three sites to examine whether they will attract interest from developers in contrast to two recently awarded GLS sites. The tenders for Upper Thomson Road (Parcel B) and Zion Road (Parcel A) closed in April with only one bidder each. Both sites were awarded to their respective bidders.
Site #1: Holland Drive
The Holland Drive GLS site is bounded by Holland Drive, North Buona Vista Road, Holland Road, and Holland Village Way. The 99-year leasehold site is located in District 10 within the Queenstown Planning Area. The land parcel has a minimum gross floor area (GFA) of 626,508 sq ft (58,204 sq m) and a maximum GFA of 626,723 sq ft (58,224 sq m). URA estimates that the plot can yield approximately 680 housing units.
Source: EdgeProp LandLens (as at 30 April 2024)
The GLS site is within walking distance of One Holland Village, Holland Village MRT Station, Holland Village, and Holland Road Shopping Centre. The main drawback of the site is the absence of schools within a 1km radius. However, there are plenty of reputable schools within a 2km radius, including Fairfield Methodist School (Primary and Secondary), Henry Park Primary School, Nanyang Primary School, Anglo-Chinese School (Independent) Secondary, Hwa Chong Institution (Secondary), and Anglo-Chinese Junior College.
There is an existing open-air car park on the site that must be demolished by the successful tenderer. Additionally, there must be a communication plan in place six weeks before the closure of the car park to inform the occupants of the surrounding buildings and users of the car park. The required demolition will add to the construction cost for the future development.
There is a height restriction of six storeys for part of the GLS site facing North Buona Vista Road. The height restriction will help align the future development with the character of the nearby Holland Rise Good Class Bungalow Area.
Only two leasehold condos within walking distance
There are nine condos with a total of 783 units within a 500m radius, but only The Merasaga (116 units) and One Holland Village Residences (296 units) have tenures of 99 years. The other seven condos are freehold developments. The Merasaga is an older project that obtained its temporary occupation permit (TOP) in 1995, while One Holland Village Residences is expected to obtain its TOP in 4Q2024. These two leasehold condos also have the highest number of units in the vicinity.
One Holland Village Residences achieved a take-up rate of 33.1% when it was launched in 2019 and was fully sold by August 2023. This condo is part of a mixed development that includes the recently opened pet-friendly One Holland Village.
Source: EdgeProp Research (as at 30 April 2024)
Upcoming BTO project nearby
It is interesting to note that the upcoming Build-To-Order (BTO) exercise in June will feature a project located across the road from One Holland Village. The BTO project is expected to offer 110 two-room flexi and 220 four-room flats, as well as a preschool and an active aging centre. Due to its location in a prime district and proximity to Holland Village MRT Station, the project is expected to be launched under the Prime Location Public Housing scheme.
The upcoming BTO flats are not expected to pose competition to the future development on the Holland Drive GLS site because both developments will target buyers with different housing budgets. The fully sold One Holland Village Residences is also unlikely to compete for buyers from the future development on the GLS site.
Steady price growth for leasehold condos in Queenstown
Steady price growth has been observed for new and resale condos in the Queenstown Planning Area. Since 2014, the average price for new sales of leasehold condos has risen by 53.5% to $2,548 psf this year. Similarly, the average resale price for leasehold condos has surged by 70.6% to $1,974 psf over the same time frame.
Source: EdgeProp Market Trends (as at 30 April 2024)
Site #2: Upper Thomson Road (Parcel A)
The Upper Thomson Road (Parcel A) GLS site is bounded by Upper Thomson Road and Seletar Expressway. This 99-year leasehold site is also adjacent to Springleaf MRT Station and located within the Yishun Planning Area in District 26.
Source: EdgeProp LandLens (as at 26 April 2024)
The land parcel has an overall maximum GFA of 578,339 sq ft (53,729 sq m). There is a requirement by URA that a minimum GFA of 437,664 sq ft (40,660 sq m) must be set aside for housing and a minimum GFA of 50,591 sq ft (4,700 sq m) must be used for long-stay serviced apartments. URA estimates that approximately 640 housing units can be built on the site. Additionally, this is the second GLS site with a requirement for long-stay serviced apartments, following the recently awarded Zion Road (Parcel A) GLS site.
As the site is zoned residential with commercial at the first storey, there is also a requirement for a supermarket and an early childhood centre, each with a minimum GFA of 10,764 sq ft (1,000 sq m).
The successful tenderer is required to incorporate biodiversity-sensitive urban design strategies into the future development due to the site’s proximity to the Central Catchment Area. The location near the catchment area is expected to appeal to buyers who are nature lovers. However, the lack of schools within a 1km radius may deter some parents.
Additionally, there is a height restriction of five storeys for part of the site that fronts Upper Thomson Road. That portion of the site also faces the landed homes along Thong Soon Road, Thong Soon Green, and Thong Soon Avenue.
Adjacent to recently-awarded GLS site
The site is adjacent to the Upper Thomson Road (Parcel B) GLS site, which was recently awarded to a joint venture (JV) between GuocoLand and Hong Leong Holdings in April. The successful JV tenderer submitted the sole bid of $779.6 million ($905 psf ppr). GuocoLand is likely to be capitalizing on their familiarity with the neighbourhood as they have a stake in four developments near Lentor MRT Station, which is only one stop away.
The JV partners who were awarded the Upper Thomson Road (Parcel B) site could be expected to submit a bid for the Upper Thomson Road (Parcel A) site. If awarded both land parcels, the developer will be able to develop two projects with different price points to appeal to a wide pool of buyers with varying budgets. Being awarded both sites will also allow the successful tenderer to benefit from economies of scale and create more synergy between both developments.
However, the requirement for a long-stay serviced apartment on the Upper Thomson Road (Parcel A) site could mean that the JV partners that were awarded the Upper Thomson Road (Parcel B) site might involve another partner with hospitality experience.
Nearby condos are mainly small developments
There are nine condos with 392 units within a 1km radius of the Upper Thomson Road (Parcel A) GLS site. Only three of these condos are 99-year leasehold developments, namely Forest Hills Condominium (128 units), The Essence (84 units), and Roots @ Transit (31 units). Forest Hills Condominium (TOP in 2003) is the oldest, while The Essence (TOP in 2023) is the youngest. Roots @ Transit obtained its TOP in 2019.
Source: EdgeProp LandLens (as at 30 April 2024)
Competition for the future development on the GLS site is unlikely to come from existing leasehold condos because they are smaller developments with fewer units and are located further from an MRT station. The competition is more likely to come from the future development on the Upper Thomson Road (Parcel B) GLS site especially if different developers are developing both GLS sites.
Stellar price growth for resale condos in Yishun
After 2021, there were no new sale transactions for leasehold condos in the Yishun Planning Area, which is a clear indication of the absence of launches for new condos in the neighbourhood. From 2014 to 2021, the average price for new leasehold condos in Yishun grew by 18.1% to $1,319 psf.
From 2014 to this year, the average resale price for leasehold condos in Yishun grew by 60.4% to $1,261 psf. The lack of new condos in Yishun after 2021 could have given a boost to the average resale price.
Source: EdgeProp Market Trends (as at 30 April 2024)
Site #3: River Valley Green (Parcel A)
The River Valley Green (Parcel A) GLS site is located along River Valley Green and River Valley Road. It is also adjacent to Great World City and Great World MRT Station. However, River Valley Primary School is the only school within a 1km radius.
Source:
The 99-year leasehold site is located in the River Valley Planning Area and District 9. It has a minimum GFA of 315,041 sq ft (29,268 sq m) and a maximum GFA of 350,035 sq ft (32,519 sq m). URA estimates that the site can yield approximately 380 housing units. URA also requires the future development to be integrated with Kim Seng Linear Park.
Potential competition from nearby future developments
The nearby Zion Road (Parcel A) GLS site was just awarded to a JV comprising CDL and Mitsui Fudosan, who submitted the sole bid of $1.107 billion ($1,202 psf ppr). This land parcel is the first GLS site that was awarded with a requirement for long-stay serviced apartments.
The adjacent Zion Road (Parcel B) site is on the reserve list and was recently triggered when a developer committed to submitting a minimum bid of $604.57 million ($1,080 psf ppr), which is lower than the winning bid of $1,202 psf ppr for the Zion Road (Parcel A) site. The tender for Zion Road (Parcel B) site is expected to be launched in May and to close in July.
It would make sense for the developers who won the tender for the Zion Road (Parcel A) site to submit a bid for the Zion Road (Parcel B) site, especially since the Zion Road (Parcel B) site does not have any requirement for long-stay serviced apartments unlike the Zion Road (Parcel A) site. Both GLS sites along Zion Road are within walking distance of the River Valley Green (Parcel A) GLS site.
Additionally, the River Valley Green (Parcel B) GLS site is located next to the River Valley Green (Parcel A) GLS site. However, the River Valley Green (Parcel B) site is on the reserve list and the site has not been triggered for tender at the time of writing.
Numerous condos within 500m radius
There are 55 condos with a total of 7,473 units within a 500m radius of the River Valley Green (Parcel A) GLS site. The newest development is the uncompleted Irwell Hill Residences, which is expected to obtain its TOP in 2026. Approximately half of the 540 units in this leasehold development were sold during its launch weekend in April 2021. The development is almost fully sold at the time of writing.
Source: EdgeProp Research (as at 30 April 2024)
Riviere is the newest completed condo within a 500m radius. This leasehold condo obtained its TOP last year. During its launch weekend in June 2019, 32 units were sold out of the 60 units that were released for sale. All 455 units in the development were sold by May last year.
The two aforementioned condos are not expected to compete for buyers from the future development on the River Valley Green (Parcel A) site because they are fully sold or have few available units. The future developments on the two Zion Road GLS sites are expected to pose the most competition. The River Valley Green (Parcel B) site is expected to pose more intense competition if it is triggered and awarded to a different developer this year.
Average price for leasehold condos in River Valley
From 2014 to this year, the average price for new leasehold condos in the River Valley Planning Area has declined by 11.6% to $2,638 psf. The increase in supply from the two Zion Road GLS sites and the River Valley Green (Parcel A) site is expected to add further downward pressure on the average price for new leasehold condos in River Valley. Developers are also expected to consider the weaker average price for new leasehold condos in River Valley before submitting their tender bid.
In contrast, the average price for resale leasehold condos in River Valley is still rising. From 2014 to this year, the average resale price surged by 50.3% to $2,130 psf.
Source: EdgeProp Market Trends (as at 30 April 2024)
Will the sites pique the interest of developers?
The lack of competition from surrounding leasehold condos could make the Holland Drive GLS site appealing to developers. Furthermore, the site is located in a prime district and is within walking distance of a vibrant neighbourhood with a wide variety of cafes and lifestyle shops. The recent opening of One Holland Village has added more buzz and amenities to the neighbourhood. Furthermore, the stellar sales performance of the uncompleted One Holland Village Residences is a clear indicator of robust demand for condo units in the area.
In contrast, the recently awarded Upper Thomson Road (Parcel B) GLS site attracted only one bid of $905 psf ppr. The successful tenderer for the aforementioned site can be expected to submit a bid for the adjacent Upper Thomson Road (Parcel A) site. However, other developers may prioritise other GLS sites to avoid the inevitable competition between the future developments on the two sites.
The River Valley Green (Parcel A) site is expected to attract the interest of developers despite the subdued response to the nearby Zion Road (Parcel A) site. This is because the site is adjacent to Great World City and Great World MRT Station as well as a short drive away from Orchard Road and the CBD. Furthermore, the strong sales performance of Irwell Hill Residences and Riviere could spur some developers into submitting a bid. The bid price for this site is expected to be higher than the winning bid for the Zion Road (Parcel A) site because the site along River Valley Green is in prime District 9 while the Zion Road site is in District 3.
Check out the latest listings for One Holland Village Residences, Riviere, Irwell Hill Residences properties
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