SINGAPORE (EDGEPROP) - The tender for the Government Land Sales (GLS) site at Jalan Anak Bukit closed on June 29 with five bids received. The 3.22 ha land parcel is zoned for a mixed-use residential and commercial development integrated with a transport hub. The tender is based on a two-envelope system. The URA will first evaluate the bids received based on their proposed concepts. Once shortlisted, the URA will open the second envelope to review the bids, and the highest of these bids will be awarded the site. (See also: Two residential GLS sites at one-north launched for tender)
Far East Organization (FEO) and its Hong Kong-based sister company Sino Group submitted three different bids through their various entities, FE Landmark, FEC Residences Trustee, and FEC Retail Trustee. They are the only ones who submitted multiple bids. All three bids are a 50:50 joint venture between FEO and Sino Group.
“With the most number of bids submitted under the two-envelop system, FEO is determined to win the site,” remarks Mark Yip, CEO of Huttons Asia. He observes that it’s the same strategy that FEO and Sino Group used when they submitted three bids for the Holland Village mixed-use GLS site, which was also conducted under a two-envelope tender system. And they won the site with a bid of $1.21 billion in May 2018. Under construction now is the new scheme, One Holland Village.
Kuok Group's Allgreen Properties and Kerry Properties submitted a bid for the Jalan Anak Bukit GLS site through its entities Dragon Commercial and Dragon Residential. The joint venture between Allgreen and Kerry Properties won the GLS white site at Pasir Ris in March 2019. It will be launched as the upcoming Pasir Ris 8, a mixed-use development with a mall and residences integrated with the Pasir Ris MRT station and bus interchange.
The remaining bidder for the Jalan Anak Bukit site was a joint venture between Wing Tai Holdings’ entity Winchoice Investment; and Perpetual (Asia), in its capacity as the trustee of Mercatus Commercial Trust, which is in turn, linked to Mercatus Co-operative Ltd, the real estate subsidiary of NTUC Enterprise.
“The upside for the three bidders is that there is now less competition, says Ong Teck Hui, senior director of research & consultancy at JLL. “And one bidder has submitted three bids to increase its chances. The market will be looking forward to a design concept that will distinctive for that part of Upper Bukit Timah.”
The response to the Jalan Anak Bukit GLS site pales in comparison to recent GLS tenders, for instance the site at Northumberland Road which attracted 10 bids at the close of its tender in April, and Ang Mo Kio Avenue 1, which closed with15 bids in May.
“I expected about five to eight bidders,” says Nicholas Mak, head of research & consultancy at ERA Realty. “The response could be a signal that most developers are not keen to participate in concept and price revenue tenders.”
JLL’s Ong agrees. “Although the subject site has the potential of being a landmark development, the tender participation is below expectations,” he says. “The timing is awkward as large projects with longer completion periods create more uncertainty for developers due to the construction delay that has resulted from the pandemic.”
The site is expected to yield gross floor area (GFA) of more than a million sq ft. Hence, the total development cost will be large as the land cost alone is expected to exceed $1 billion. These factors are likely to increase the risks for developers, notes Ong. “And it appears that the majority would rather not take the risk,” he adds.
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There are only five existing integrated transport hubs that are connected to residential developments, with three more in the pipeline, namely The Woodleigh, Pasir Ris 8 and Sengkang Grand. “The residential properties linked to integrated transport hubs usually command a premium due to their accessibility and conveniences for residents,” says ERA’s Mak.
The new residential project at Jalan Anak Bukit is expected to yield about 845 units, and Mak expects the units to be launched for sale at about $2,300 to $2,500 psf.
This is comparatively higher to the median price of recent residential projects linked to integrated hubs that have been launched.
However, the Jalan Anak Bukit site “is set to be the centrepiece that will kick start the government’s rejuvenation plan of the Beauty world area,” notes Huttons’ Yip.
A majority of the commercial buildings in the area were built in the 1970s and 1980s, for instance Beauty World Centre, Beauty World Plaza and Bukit Timah Shopping Centre. “The area is ripe for redevelopment and requires an injection of new commercial concepts to better serve the residents,” adds ERA’s Mak.
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