ANALYSIS: Three GLS sites will close on November 7. Will they be hotly contested?

By Elizabeth Choong

/ EdgeProp Singapore |

October 3, 2023 5:33 PM SGT

The Lorong 1 Toa Payoh GLs site is expected to be the most highly contested among the three GLS sites. (Source: EdgeProp LandLens)

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Singapore (EDGEPROP) - The tenders for three government land sales (GLS) sites will close on November 7. The sites in Clementi Avenue 1 and Pine Grove (Parcel B) were launched for tender in August, while the site in Lorong 1 Toa Payoh was launched last month. All three sites are on the Confirmed List of the GLS programme for2H2023.

Since all three sites have the same closing tender date, it is inevitable that developers will make comparisons, and some of them might focus their resources on only one selected site. We looked at each site individually, and provided our views on which site will be hotly contested and the possible selling prices of the future developments on these sites.

Site #1: Clementi Avenue 1 GLS site - Sandwiched between two popular condos

The Clementi Avenue 1 GLS site is located within District 5 and the Clementi Planning Area. This land parcel is bounded by the Ayer Rajah Expressway (AYE) and Clementi Avenue 1, as well as sandwiched between Clavon and The Clement Canopy, both of which are 99-year leasehold condos developed by UOL Group

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The plot has a site area of 144,788 sq ft and a maximum gross floor area (GFA) of 506,758 sq ft. URA has capped the number of dwelling units to 501 to manage traffic demand in the area.

Source: EdgeProp LandLens (as at 28 September 2023)

Clementi MRT Station is the nearest MRT station to the site, but it is not within walking distance. However, future residents who drive will be pleased to know that the AYE, Clementi Flyover, and University Flyover, are only a short drive away.

The amenities that are within walking distance include Clementi Sports Hall and Swimming Complex, as well as West Coast Plaza. Other nearby amenities comprise Clementi Bus Interchange, Clementi Avenue 2 Market, Cooked Food Centre and Shopping Centre, Grantral Mall @ Clementi, and Clementi Woods Park.

Several schools are located within a 1km radius, including Pei Tong Primary School, NUS High School of Mathematics and Science, and Nan Hua High School. Additionally, two international schools, namely International Community School and The Japanese Primary School, are in the vicinity.

According to URA’s tender documents, the successful tenderer for the plot is required to create two side gates and realign the pedestrian overhead bridge along AYE. Moreover, they must reconstruct a drain, construct a footpath, and create a covered linkway along Clementi Avenue 1, as well as a footpath and covered linkway along the southern boundary of the plot. While these additions will enhance convenience for future residents, they will also contribute to the development costs of the project.

Commenting during the launch of the GLS site, Tricia Song, Head of Research, Southeast Asia, CBRE expects the land parcel“… to attract four to six bids at a top bid of $1,000 to $1,100 psf ppr.” Wong Siew Ying, Head of Research and Content of PropNex Realty was more optimistic in her projections, saying that “… the tender for the Clementi site could attract four to five bids, with a top bid price coming in at around $557 million to $608 million (or a land rate of $1,100 to $1,200 psf).”

Condos near the Clementi Avenue 1 GLS site

When The Clement Canopy was launched in February 2017, 200 out of the 250 units that were launched were sold. During its launch weekend in December 2020, Clavon achieved a take-up rate of 70% and an average price of $1,640 psf

Source: EdgeProp LandLens (as at 3 October 2023)

The future condo on the subject site is not expected to face competition from Clavon because all units in the uncompleted development have been sold. Its stellar sales performance serves as a good indicator of the neighbourhood's popularity among buyers.

There are 17,669 HDB flats within a 1km radius of the site. Therefore, developers can expect some demand from HDB upgraders who wish to remain in a familiar neighbourhood.

The main uncertainty lies in the level of buyer demand that remains after the successful launches of neighbouring Clavon and The Clement Canopy. Furthermore, the launches for both condos took place only three and six years ago.

Site #2: Pine Grove (Parcel B) GLS site - Competition from immediate neighbours

The Pine Grove (Parcel B) GLS site is located within District 21 and the Bukit Timah Planning Area. This land parcel is located along Ulu Pandan Road, and has a site area of 269,522 sq ft and a maximum GFA of 566,003 sq ft. URA has capped the number of dwelling units to 565 to manage traffic demand in the area.

Numerous amenities are available nearby, including Clementi Arcade, Clementi Avenue 2 Market, Cooked Food Centre and Shopping Centre, Sungei Ulu Pandan, as well as Pei Tong Primary School.

The future Maju MRT Station on the Cross Island Line is the nearest MRT station, and it is expected to be completed in 2032. Dover MRT Station is the nearest operational station. However, neither of these MRT stations is within walking distance, so future residents will need to rely on driving or public buses for transportation.

URA’s tender documents for the site state that the successful tenderer may wish to provide a direct connection to an existing pedestrian overhead bridge along Ulu Pandan Road. The successful tenderer will have to apply to the Singapore Land Authority for the direct alienation of airspace and pay a processing fee. This direct linkage will offer more convenience for future residents, but it will also entail additional construction costs.

When the site was launched, Song commented that it“…may not receive the same interest as Parcel A as part of it may be out of the 1km radius from Henry Park Primary School. We expect two to four bids with a top bid of S$1,100 to $1,200 psf ppr.” Wong also expected more cautious bids from developers because of competing supply from Pinetree Hill. Wong projected that the site could “…attract up to three bids, with the top bid coming in at around $623 million to $679 million (or land rate of $1,100 to $1,200 psf ppr).”

Condos near the Pine Grove (Parcel B) GLS site

The Pine Grove (Parcel B) GLS site is located between Pinetree Hill and Pine Grove.

Pinetree Hill is being built on the Pine Grove (Parcel A) GLS site, which was awarded to a joint venture between UOL Group and Singapore Land Group for $671.5 million ($1,318 psf ppr) last year. When it was launched in July, 150 units (take-up rate of 29%) were sold at an average price of $2,460 psf.

Another collective sale for Pine Grove was launched earlier this month with an asking price of $1.95 billion. The tender is set to close in November.

Unlike the Clementi Avenue 1 GLS site, this GLS site has 21 condo developments with a total of 4,006 units within a 1km radius. Therefore, buyers keen on living in this neighbourhood have numerous options available in the resale market. However, many of these condos have 99-year tenures and were completed before 2000.

Buyers interested in purchasing a brand-new condo unit in the neighbourhood can consider Pinetree Hill. They will have even more options if Pine Grove is successfully sold via a collective sale. Depending on the outcome of the collective sale tender for Pine Grove, some owners of these older condos may decide to initiate a collective sale for their development.

Site #3: Lorong 1 Toa Payoh GLS site - Walking distance to Braddell MRT Station

Among the three GLS sites, the Lorong 1 Toa Payoh site is the only one within walking distance of a MRT station. This land parcel is bounded by Lorong 1 Toa Payoh and Lorong 4 Toa Payoh. It is located within District 12 and the Toa Payoh Planning Area. This site is expected to be the most hotly contested among the three sites closing on the same day.

Being located within a well-established HDB estate, this site boasts numerous nearby amenities, including Lorong 8 Toa Payoh Market and Hawker Centre, Lorong 5 Toa Payoh Market and Hawker Centre, Toa Payoh West Market and Food Centre, Kim Keat Palm Market and Food Centre, Toa Payoh Vista Market, Jackson Square, Toa Payoh North Flyover, Bishan Flyover, and Toa Payoh Bus Interchange.

Additionally, the site is within a 1km radius of several schools, including Raffles Institution, First Toa Payoh Primary School, Guangyang Primary School, and Raffles Girls’ School (Secondary).

URA estimates that the 169,458-sq ft land parcel, with a maximum GFA of 711,726 sq ft, can yield approximately 775 units. Currently, the site is occupied by the Police Security Command, which the successful tenderer will have to demolish at their own cost and expense.

Additionally, the successful tenderer must retain several trees as well as provide a pedestrian side gate and a covered linkway along Lorong 1 Toa Payoh. The side gate will provide future residents with easy access to an existing bus bay. The successful tenderer is required to demolish the existing bus bay and construct a new one.

When the tender for the Lorong 1 Toa Payoh site was launched, Wong projected that”…the tender could potentially attract four to five bids, with a top bid price coming in at around $783 million to $854 million (or a land rate of $1,100 to $1,200 psf).” In line with Wong’s projections, Lee Sze Teck, Senior Director, Data Analytics, Huttons Asia said that “The Lorong 1 Toa Payoh site may see up to five bidders and a top bid of around $1,200 psf ppr.”

Condos near the Lorong 1 Toa Payoh GLS site

Unlike the other two GLS sites, this particular site is surrounded by HDB flats. There are 32,385 HDB flats within a 1km radius of the site, making HDB upgraders an important group of potential buyers for the future condo.

Within a 1km radius, there are only four condos and one executive condo. Among these developments, only Gem Residences and Trevista are within a 500m radius. Gem Residences is also the newest condo, having obtained temporary occupation permit (TOP) in 2019. When Gem Residences was launched in May 2016, it was the best-selling project for that month, achieving a take-up rate of 54%.

The Lorong 1 Toa Payoh GLS site is expected to generate keen interest from developers due to its location within a well-established residential neighbourhood, the absence of recent new launches in District 12, the presence of several reputable schools, and the potential demand from HDB upgraders.

Source: EdgeProp LandLens (as at 3 October 2023)

Eeny, meeny, miny, mo - which is the best of them all?

Out of the three sites, we expect the Pine Grove (Parcel B) GLS site to receive relatively fewer bids compared to the other two sites. One possible reason is the expected competition from its immediate neighbours, including the ongoing sales for Pinetree Hill. It is also feasible that UOL may bid for the site as a defensive strategy to protect the pricing of Pinetree Hill, hence discouraging other potential bidders. Market observers estimate that tender bids for the site will be $1,100 to $1,200 psf ppr which translates to total bids of $622.6 million to $679.2 million.

On the flip side, the Lorong 1 Toa Payoh GLS site is expected to receive the most bids from developers because of its attractive location near Braddell MRT Station, numerous markets and food centres, as well as several reputable schools. Furthermore, the absence of new condos in the vicinity means less competition for the future development on the site. Like Pine Grove (Parcel B) GLS site, market observers also estimate that developers’ bids will range from $1,100 to $1,200 psf ppr. However, the larger maximum GFA of the site means that the bids are expected to be higher at $782.9 million to $854.1 million.

Additionally, UOL Group might consider submitting a bid for the Clementi Avenue 1 GLS site due to their familiarity with the neighbourhood and the strong sales performance of Clavon. They developed Clavon and The Clement Canopy, which are immediate neighbours of the subject site. Market observers estimate that the plot may fetch bids ranging from $1,000 to $1,200 psf ppr which translates to $506.8 million to $608.1 million.

Source: EdgeProp Research (as at 3 October 2023)

When the tender for Pine Grove (Parcel A) GLS site closed in June last year, the site attracted five bids and three of them were from joint ventures. The tender for the Lentor Central GLS site closed last month with two bids and the top bid is from a joint venture. The three GLS sites have large maximum GFAs that allows for the construction of at least 500 condo units. Developers can be expected to form joint ventures to bid for the sites in order to mitigate their exposure to development costs and risks.

Estimated selling prices

Natalie Yong, Managing Director of LCH Quantity Surveying, projected that construction cost for the future condo developments on the three sites will range from $4,500 psm to $5,200 psm ($418 to $483 psf) based on GFA. Yong added “The estimated construction cost largely depends on the design, particularly on the choice of façade and the basement construction. The parcel at Clementi Avenue 1 may possibly require double glazing as it is next to AYE.” Yong also noted that the three sites require the use of Prefabricated Prefinished Volumetric Construction which will drive up construction costs.

From the projections and estimates made by various market observers and building professionals, it seems that the three land parcels are expected to attract bids from developers in the range of $1,000 to $1,200 psf ppr, and construction costs are expected to range from $418 to $483 psf. Furthermore, all three sites have similar maximum GFA and are slated to be high-rise mass-market condo developments.

Based on a profit margin of 10%, we estimate that selling prices for the future condo developments on the three GLS sites will range from $2,000 to $2,400 psf. The upper end of the estimated selling price is marginally higher than the current average prices of $2,231 psf and $2,357 psf for new 99-year leasehold condos in Districts 5 (Clementi Avenue 1 GLS site) and 21 (Pine Grove Parcel B GLS site) respectively. However, the lower end of the estimated selling price range represents a 19.7% increase from the most recent average price of $1,671 psf for new leasehold condos in District 12 (Lorong 1 Toa Payoh GLS site).