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IOI Properties sole bidder for Marina View GLS site with $1.5 billion bid
By Timothy Tay | September 22, 2021

The 99-year leasehold, white site at Marina View will make way for a mixed-use development with residential, hotel, and commercial or serviced apartment elements.

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SINGAPORE (EDGEPROP) - There was only one bid for the Marina View government land sales (GLS) site at the close of the tender on Sept 21.

Read also: IOI Properties Group sole bidder for Marina View GLS site with $1.5 billion bid

IOI Properties was the only developer to submit a bid because it was the developer that triggered the release of the reserve list site for sale on June 10 this year before it was launched for sale on June 28.

The developer’s bid of $1.508 billion is just $101 higher than its application bid and this price translates to a land rate of $1,379 psf.

The 84,110 site is intended for a future mixed-use development with about 905 residential units and 540 hotel rooms, with a maximum of 2,000 sqm (21,528 sq ft) for commercial space. It has a total gross floor area of 1.09 million sq ft.

The last GLS white site in the Marina Bay area was at Central Boulevard and it was also awarded to IOI Properties. The developer submitted the top bid of $2.57 billion ($1,689 psf per plot ratio) in November 2016. At the time, the GLS tender attracted seven different bids.



That site is being developed into Central Boulevard Towers, a commercial Grade A office development consisting of a 16-storey tower, a 48-storey tower and a seven-storey podium. It will have 1.29 million sq ft of Grade-A office space and 30,000 sq ft of F&B.

Alice Tan, head of consultancy at Knight Frank, says that the $1.508 billion bid for the Marina View site is 10.2% less than the winning bid for the residential site at Tan Quee Lan Street which was awarded in September 2019.

Comparing with other somewhat similar GLS residential sites in the Downtown Core, the bid is also about 5.8% less than the winning bid for the residential site at Bernam Street that was also awarded in September 2019. It is 5.4% less than the winning comparable bid for the residential site at Middle Road awarded on April 2019.

Large quantum puts off developers

The absence of other listed property developers competing for the Marina View site is surprising as many property consultants expected the site’s residential provision would have made the tender more competitive.

“In our view, developer participation was below expectations, potentially due to the large quantum of the project, coupled with uncertainties regarding the resumption of global travel and construction amidst the manpower crunch,” says Wong Xian Yang, head of research, Singapore at Cushman & Wakefield.

He adds that developers may feel there are better risk-adjusted returns from residential developments in prime districts 9, 10, and 11.

This sentiment was echoed by Mark Yip, CEO of Huttons Asia. “The absence of bigger listed developers in Singapore participating in the tender perhaps reflects their view that the risk-return ratio (of this site) is high”.

Nicholas Mak, head of research & consultancy at ERA Realty, says that any competing bid would have to surpass the application bid submitted by IOI Properties. “The absolute sum of the land price at above $1.5 billion may to too rich for some developers,” says Mak.

The tender for the Marina View GLS site is likely to have been affected by “the very high total development cost which could pose significant risks to the developer,” says Ong Teck Hui, JLL senior director of research & consultancy. “While the economy is recovering, the Covid-19 pandemic still pose uncertainties which may cause tenderers to be cautious.”

Hotel component adds complexities

“Although uncertainty continues for the hospitality sector, the long-time horizon to completion of the development was expected to mitigate short- to medium-term Covid concerns,” says Calvin Li, head of transaction advisory services, hotels & hospitality, JLL Asia Pacific.

The limited number of tenderers “suggests that most investors continue to be cautious around the large minimum requirement for a hotel and potentially high development costs associated with an upscale or luxury hotel that would be needed to position the overall development,” adds Li.

Source: URA

Most of the GLS white sites in the Marina Bay downtown area that were previously sold were predominantly used for office developments, or have a significantly large office component, says Mak.

But the white site at Marina View is different because a large portion of the space is set aside for residences and hotel rooms. “The development of the Marina View site is likely to take more than five years, and the construction cost for this project is huge,” says Mak. “There are major uncertainties due to supply chain disruption caused by the pandemic.”

The recent financial fallout from the financial troubles of Chinese property group Evergrande has increased the risk level of the market. “They may have put some developers off big-ticket projects in the meantime,” adds Mak.


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