The public tenders for a land parcel at Clementi Avenue 1 and an executive condo site at Canberra Link, both under the Government Land Sales (GLS) programme, closed on July 3. The land parcel at Clementi Avenue 1 is zoned for residential use and attracted five bids, while the EC site saw eight bids. A final decision on the award of the tenders will be made known at a later date.
Two subsidiaries of UOL Group, namely UOL Venture Investments and UIC Homes, submitted the top bid of $491.3 million for the 178,064 sq ft plot at Clementi Avenue 1. It translates to about $788 psf per plot ratio (ppr) on the maximum allowable gross floor area (GFA) of 623,229.8 sq ft. This means the potential average selling price of the new development could be about $1,400 psf, says Tricia Song, head of research for Singapore at Colliers International.
It is close to The Clement Canopy, a twin 40-storey, 505-unit condo that was completed in March this year. That development is built on a GLS site also awarded to UOL Group, in 2015, when it submitted the successful bid of $302.1 million ($615 psf ppr).
“We like this Clementi Avenue 1 site for the same attributes that contributed to the 100% sell-out for our adjoining development, The Clement Canopy. From our experience, we believe that there is very strong demand for this locale due to its close proximity to a strong educational cluster anchored by NUS, NUS High School and Nan Hua High,” says Liam Wee Sin, group chief executive of UOL Group.
Desmond Sim, head of research of Southeast Asia at CBRE, also believes that bidding sentiment for the site was encouraged by the complete sell-out at The Clement Canopy, as well as the continual need for land-bank shoring on the part of developers.
On top of the expected crowd of home buyers and upgraders, Liam sees demand coming from investors, given the catchment of potential tenants from nearby areas like one-north, Science Park, and the National University Hospital.
If successful, UOL plans to develop a 40-storey development comprising 640 units that will capitalise on the extensive views of the area. “It is definitely a timely replenishment for our land bank, given that The Tre Ver and Amber 45 are more than 75% sold,” says Liam.
The second highest bid was $471.01 million, or $755.74 psf ppr, by Vesta SG Residences. Other bids ranged from $452 million ($725.74 psf ppr) to $417.57 million ($670 psf ppr), and were submitted by MCC Land, CSC Land Group, and City Developments Ltd.
The tender for an EC site at Canberra Link also closed on the same day (July 3), and it saw MCC Land submitting the top bid of $233.89 million. This translates to about $566 psf ppr on the maximum GFA of 413,194 sq ft.
MCC Land’s relative success from its Northwave (an EC), Queens Peak, and The Alps Residences likely encouraged it to try to replenish its land bank, says Sim. “This also seems to have been a highly competitive bid, albeit cautious, with the top bid by MCC Land edging the second closest bidder by 0.2%,” he adds.
At the winning bid, the potential average selling price could come in at about $1,000 psf, says Colliers’ Song.
The second highest bid at $233.5 million came from joint-venture partners CDL and TID, followed closely by Hoi Hup Realty and Sunway Developments at $233.3 million. Other bids ranged from $178 million to $218 million.
The same-day closure of the tenders for these two sites may have impacted the level of participation of the Clementi Avenue 1 site, with more developers preferring to focus on the EC segment. Demand for ECs is seen as more resilient as the deferred payment policy gives buyers of ECs an advantage, says Lee Sze Teck, head of research at Huttons Asia.
There are about 1,871 EC units unsold from launch-ready projects like Piermont Grand and two unnamed projects at Anchorvale Crescent and Canberra Link. This doesn’t include the development at Tampines Avenue 10, which was awarded in January this year, and could yield a further 695 units, says CBRE’s Sim.
The lukewarm response for the Clementi Avenue 1 site also reflects concern over the abundant private housing supply in the West, from earlier collective sales such as Parc Clematis (former Park West) and former Normanton Park which collectively would provide over 3,000 new units, says Song.
“This impending stock might be a dampener for some developers as they may have to take into account the ABSD [additional buyer’s stamp duty] of 30% in their final bid price,” says Sim. “In addition, EC demand is governed by strict mortgage service ratio (MSR) ruling as well as HDB qualifying requirements. There is a perceived glass ceiling to the affordability for each unit.”