Government land site in Tanah Merah could see healthy demand despite Covid-19 pall
By Cecilia Chow
/ EdgeProp Singapore |
SINGAPORE (EDGEPROP) - The government launched a private residential site at Tanah Merah Kechil Link for sale by tender on May 28. It is located between two existing private condominiums, namely the 582-unit Urban Vista, which was completed in 2016; and the 297-unit Optima @ Tanah Merah, which was completed in 2012. Both projects are also 99-year leasehold residential developments built on government land sale (GLS) sites.
The latest site at Tanah Merah Kechil Link is the second residential site offered on the Confirmed List of the 1H2020 GLS programme. The first was an executive condo (EC) site in Yishun which could be developed into a 600-unit project, and was launched at the end of April.
The Bedok-Tanah Merah neighbourhood (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The Tanah Merah Kechil site can be developed into a residential project with some 265 units, which is fewer than the 310 residential units which was the initial estimate when the site was first announced in December 2019, says Nicholas Mak, head of research & consultancy at ERA Realty. Besides residential, the site has a commercial component with another 2,000 sq m (21,529 sq ft) of space on the first level. Given the site’s proximity to the Tanah Merah MRT Station and the surrounding condominium developments, it is likely to be used for shops and F&B outlets, notes Mak.
Source: URA
Table 1: Details of the Tanah Merah Kechil Link GLS site
Location | Tanah Merah Kechil |
|---|---|
Site area | 8,880 sq m (95,587 sq ft) |
Maximum permissible gross floor area | 24,864 sq m (267,644 sq ft) |
Estimated commercial space | 2,000 sq m (21,529 sq ft) |
Lease period | 99 years |
Source: URA
‘Palatable site at favourable location’
“Conveniently located next to the Tanah Merah MRT Station and within close proximity to Changi Business Park, the residential development at this site would attract buyers’ attention and have the potential to command attractive prices,” says Mak. Compared with all the residential sites in both the Confirmed and Reserve Lists of the 1H2020 GLS Programme, the Tanah Merah Kechil site has the smallest gross floor area (GFA), which would mean less capital required, and hence less financial risk to a developer, he adds.
Median transacted prices from January to April 2020 for comparable condominiums in the immediate neighbourhood are as follows:
Table 2: Comparable residential projects to Tanah Merah Kechil Link GLS
Name | Street name | Tenure | TOP | Number of units | 2020 median price ($psf) |
|---|---|---|---|---|---|
Bedok South Avenue 3 | 99-years | Uncompleted | 720 | $1,529 | |
Tanah Merah Kechil Link | 99-years | 2016 | 582 | $1,245 | |
Bedok South Avenue 3 | 99-years | 2017 | 748 | $1,357 | |
Bedok Rise | 99-years | 2016 | 726 | $1,500 |
Source: URA, ERA Research & Consultancy
Supermarket, retail and F&B component
A major attraction of the site is that there is no shopping mall in the vicinity of Tanah Merah MRT Station. “Hence, there would be strong demand for shops and F&B stores,” notes Mak. At least 1,000 sq m (10,764 sq ft) of the commercial space must be used as a supermarket.
“This would be welcomed by the residents in the Tanah Merah neighbourhood, especially in the Covid-19 ‘new normal’ when more people could be working from home and may not wish to travel too far to buy their daily necessities,” he adds.
The nearest project where such amenities are available is East Village, a 90-unit, mixed-use development located along Upper Changi Road, 500m away from the site for sale, notes Mak. Completed in 2014, the freehold, four-storey East Village has residential units on the three upper floors, while the first level has a mix of strata-titled F&B and retail units as well as a Cold Storage supermarket. The latest transaction of a strata retail unit at East Village was for a 108 sq ft, retail unit at East Village that changed hands for $320,000 or $2,973 psf in April 2019, according to a caveat lodged with URA Realis.
The nearest supermarket is the Cold Storage at East Village on Upper Changi Road (Photo: Albert Chua/EdgeProp Singapore)
Table 3: Comparable commercial strata units to Tanah Merah Kechil Link GLS
Condominium with commercial units at 1st storey | Address | Tenure | TOP | 2019 Median price of commercial units ($psf) | Nearest MRT station | Distance to nearest MRT station |
|---|---|---|---|---|---|---|
Jalan Jurong Kechil | Freehold | 2014 | $7,943 | Beauty World | 230 m | |
Upper Changi Road | Freehold | 2014 | $2,973 | Tanah Merah | 500 m | |
Upper Serangoon Road | 99-Year LH | 2019 | $5,670 | Kovan | 220m |
Source: URA, ERA Research & Consultancy
Grandeur Park to complete by year-end
The most recent GLS residential site awarded in the area was the site for Grandeur Park Residences condominium located along Bedok South Avenue 3 – on the opposite site of Tanah Merah MRT Station. The 720-unit Grandeur Park was awarded to CEL Development, the development arm of Chip Eng Seng Corp, in 2012 at a land rate of $761 psf per plot ratio (psf ppr). The site will also contain a childcare centre.
Grandeur Park's condominium facilities include dining pavilions, swimming pool, and Himalayan salt room, there is also a childcare centre (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Grandeur Park previewed in February 2017 and attracted a crowd of 10,000 on the first weekend. It is 98% sold with only 13 units available for sale, and is expected to obtain Temporary Occupation Permit (TOP) sometime in 4Q2020. The latest transaction was for a 1,453 sq ft, five-bedroom unit that fetched $2.22 million ($1,526 psf), according to a caveat lodged at the end of April.
With Grandeur Park expected to be completed before year-end, the balance units are currently priced around $1,550 psf, says Michael Ng, executive director of CEL Development. “The project could potentially see a price increase upon TOP, given the childcare centre and upcoming amenities, such as the 20,000 sq ft of retail, F&B and supermarket space located on the opposite side of the MRT station,” he adds.
ERA’s Mak expects the new development at Tanah Merah Kechil Link to be launched in 2021. “By then, the negative impact of the Covid-19 outbreak would have weakened and the Singapore economic recovery should be underway,” he says. Hence, he expects the new project to be “among the more popular” new launches in 2021.
The balance units at Grandeur Park are now priced at an average of $1,550 psf and could increase closer to completion and at the prospect of the upcoming amenities at the 20,000 sq m commercial space at the new Tanah Merah Kechil site across the road (Photo: Samuel Isaac Chua/EdgeProp Singapore)
Bid prices to be ‘range bound’
Mak reckons the site could attract between five and 10 bids from major developers, with bid prices in the range of $255 million to $238 million, or $840 to $888 psf ppr.
Lee Sze Teck, director of research at Huttons Asia, expects the site to see “a healthy amount of interest” as it is one of the last two GLS sites next to the Tanah Merah MRT Station. He is expecting top bids of $780 to $830 psf ppr.
Apart from its proximity to the Tanah Merah MRT Station, the site is also near Bedok Mall and Changi City Point as well as Changi Business Park, the Singapore Expo and Singapore Changi Airport and Jewel Changi. Wong Xian Yang, Cushman & Wakefield’s associate director of research for Singapore and Southeast Asia, expects developers’ bids to be “range-bound” between $820 and $870 psf ppr.
“Despite the site’s strategic location, developers are expected to bid cautiously due to higher construction costs and a severe economic recession as a result of Covid-19,” adds Wong. “It may also face potential competition from Treasure At Tampines, which is currently about 50% sold and has 1,094 unsold units as of April 2020. The median transacted price for units sold at Treasure At Tampines is around $1,346 psf.”
Check out the latest listings near Optima @ Tanah Merah, Grandeur Park Residences, eCO, The Glades, Urban Vista, East Village, Suites At Bukit Timah, Stars Of Kovan, Tanah Merah MRT Station and Schools
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