The URA closed two government land tenders on Thursday – for a residential site at Irwell Bank Road, off River Valley Road, as well as a residential site at Jalan Bunga Rampai in the Bartley area. The URA will announce its decision on the award of the tenders at a later date, after the tender bids have been evaluated.
The 137,632.6 sq ft site at Irwell Bank Road is in prime District 9 and has a maximum gross floor area of 385,379.9 sq ft. The new development is expected to yield about 445 units. The site is close to the upcoming Great World MRT Station on the Thomson-East Coast Line, Great World City shopping mall, and the Orchard Road shopping belt.
This government land sales (GLS) site attracted a total of seven bids. The highest bid of $583.9 million was submitted by CDL Perseus, a subsidiary of City Developments (CDL). This translates to $1,515 psf per plot ratio (ppr). The bid is 4.2% higher than the second highest bid of $560.1 million, which was made jointly by Far East Civil Engineering, Well Oasis, and Sekisui House.
According to Nicholas Mak, head of research and consultancy at ERA Realty, bidders displayed strong confidence in the site’s attributes, despite the fact that there are 16 upcoming new launches in the Core Central Region, with some 2,600 units that could be launched this year.
“The median transacted prices of 99-year leasehold condo in the vicinity range between $2,680 psf and $2,860 psf. With a land rate of $1,515 psf ppr for the Irwell Bank Road site, the developer could earn a reasonable profit if the future condo on this site is launched at the current condo prices,” says Mak.
However, according to Ong Teck Hui, senior director of research and consultancy at JLL, the top bid price was lower than expected. “This could be due to the hefty absolute price of nearly $584 million, as well as the current oversupply in the prime sub-market,” he says.
Meanwhile, the GLS site at Jalan Bunga Rampai attracted nine bids, and the highest was $93.39 million by Wee Hur Development. This translates to $885 psf ppr. It was followed by Sim Lian Land which submitted an $80.1 million bid.
According to Mak, “this tender attracted a relatively high number of bids as the financial commitment for the purchase and development of this site is lower. Furthermore, the level of competition is manageable. It has been six years since the last GLS non-landed residential site was sold within the Bartley Road vicinity”. He was referring to the site that has been developed into the Botanique at Bartley condo.
The Lilium and The Gazania, new developments by SingHaYi Group, are 600m away from the GLS site. According to URA data, in 2H2019, their median transacted prices were $2,134 psf and $2,227 psf, respectively.
Ong of JLL says: “This tender closing is significant, being the first for residential sites in 2020 and indicative of developers’ market outlook. Despite the current oversupply, there appears to be fairly good interest in residential sites, but at cautious prices.”
According to ERA’s Mak, “some developers are still hungry for land but they are bargain-hunting. It also shows that developers are attracted to GLS tenders, rather than private en bloc sale tenders, because the GLS land acquisition process is faster and more straightforward, without the risk of litigations”.