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No bids submitted for Upper Thomson Road GLS site

By Nur Hikmah Md Ali

/ EdgeProp Singapore |

June 19, 2024 5:38 PM SGT

The Upper Thomson Road (Parcel A) site spanning 262,875 sq ft (Photo: URA)

SINGAPORE (EDGEPROP) - The tender for a residential Government Land Sale (GLS) site along Upper Thomson Road closed on June 19 with no bids submitted. The tender closing is batched with another site, River Valley (Parcel A).

The Upper Thomson Road (Parcel A) site is a 99-year leasehold and spans 262,875 sq ft, with a gross plot ratio of 2.2. It is expected to yield up to 640 residential units, including 100 long-stay serviced apartments. The site is zoned for residential use with commercial at the first storey, and comes with an estimated 21,528 sq ft of commercial space.

This is the second site to include a new class of long-stay serviced apartments, with a minimum stay requirement of three months. The first was the Zion Road (Parcel A) plot which was awarded to a joint venture (JV) between City Developments Ltd (CDL) and Mitsui Fudosan on April 16. The JV partners submitted the sole bid of $1.107 billion for the 164,439 sq ft site. This translates to $1,202 psf ppr.

Mark Yip, CEO of Huttons Asia, says that the absence of bids for the Upper Thomson (Parcel A) site is unsurprising as this type of serviced apartment is relatively untested in this area.

“The Government is probably aware of this and hence reserved only 100 units for long-stay serviced apartments,” he says, adding: “Even (with) a small number of SA2 units, developers may have felt that the risks are tilted towards the high side and have chosen to sit out this tender”.

In addition to the site being untested for long-stay serviced apartments, Marcus Chu, CEO of ERA Singapore, says that the site is not located in a key commercial area, which could have otherwise supported rental demand.

Leonard Tay, head of research at Knight Frank, says that the site in the Upper Thomson/Springleaf is not typically associated with what he terms as “mid-term tenants” – and this may have deterred developers from participating in this tender.

“The minimum rental period might result in the operator competing with individual private landlords in the surrounding landed estate. Furthermore, the long-stay serviced apartment concept for GLS sites has yet to be tested in a suburban area,” Tay notes.

On top of undertaking a higher risk project (that involves) long-stay serviced apartments, the developer of the Parcel A site will also have to contend with strong competition for the same pool of buyers at the adjacent Upper Thomson Road (Parcel B) residential site, says Chu. The Parcel B plot was awarded to a JV between GuocoLand and Hong Leong Holdings in April. The JV submitted the sole bid of $779.6 million, or $905 psf per plot ratio. The site can yield up to 940 residential units.

Wong Siew Ying, head of research and content at PropNex, says that this site may wind up on the slate of the 2H2024 GLS programme, and the apparent lack of interest in this site could spur the government to review the requirements of the long-stay serviced apartment component in the process.

In view of the responses for the past two GLS sites with long-stay serviced apartments, Huttons’ Yip says that it may be better for developers to tender such sites if they are close to the city centre or major commercial areas.

The next GLS site with long-stay serviced apartment units is in Media Circle which will close on September 19. Yip expects only one bid for the site.

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