Three URA residential site tenders close with lukewarm response from developers

By Charlene Chin

/ EdgeProp Singapore |

March 5, 2020 4:48 PM SGT

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SINGAPORE (EDGEPROP) - URA has closed tenders for three Government Land Sales (GLS) for two neighbouring residential sites at Canberra Drive (Parcels A and B) and Fernvale Lane on March 3. The top bids received for all sites were “conservative” and the participation “lukewarm”, says Christine Li, head of research, Singapore & Southeast Asia, at Cushman & Wakefield (C&W).

Property consultants say that the top bids of $129.196 million ($644 psf per plot ratio) and $270.2 million ($650 psf ppr) for Parcels A and B at Canberra Drive, respectively, were lower than expected.

Parcel A occupies a land size of 13,315.3 sq m (143,324.7 sq ft) and has a maximum gross floor area (GFA) of 18,642 sq m, which can potentially yield about 220 residential units. Parcel B spans an area of 27,566.1 sq m with a maximum GFA of 38,593 sq m, potentially yielding an estimated 455 units.

EDGEPROP - LAND PARCEL AT CANBERRA DRIVE

Source: URA

Both sites were previously put on the Reserve List for 1H2019 as a single 4.09ha plot, and was subsequently split into two parcels for sale on the Confirmed List in the GLS programme for 2H2019.

There is a requirement to build an Early Childhood Development Centre (ECDC) for infant care and childcare services within the proposed development for a minimum of 10 years from the date of issuance of the ECDC licence, observes Tricia Song, head of research for Singapore, Colliers International.

Ong Teck Hui - senior director, research & consultancy, JLL - believes that Parcel A (five bidders) attracted more bidders than Parcel B (four bidders) due to its smaller plot site, making it “more affordable and less risky”.

C&W’s Li reckons that the lower-than-expected bids reflect the impact of the Covid-19 outbreak. This could imply that developers are prepared for either higher construction costs or slightly lower selling prices in the face of the outbreak, she says. “Material costs have shot up quite significantly recently due to the global supply chain disruption and there could be construction delays amid manpower crunch,” Li explains.

In turn, JLL’s Ong believes that the weaker participation and response from developers reflect a cautious market outlook due to the current oversupply in Singapore’s property market, and expected weaker economic conditions from the escalation of the Covid-19 outbreak.

Property consultants estimate that the selling prices of the two Canberra Drive parcels to be in the range of $1,250 to $1,300 psf. At the bid price, both parcels should achieve breakeven at a cost of $1,140, says Li.

Both sites are close to the recently opened Canberra MRT Station on the North-South Line, and amenities such as Sembawang Shopping Centre and Canberra Plaza.

The EC site at Fernvale Lane received seven bids, with the top bid at $286,538,000 ($555 psf per plot ratio), 3.6% lower than that of the Anchorvale Crescent EC site sold in September 2018 (which is being developed into Ola), at $576 psf ppr.

Property consultants expect the estimated selling price for the site to range from $1,050 to $1,110 psf. At the bid price, Christine Li, head of research, Singapore & Southeast Asia, at Cushman & Wakefield, expects the breakeven cost to be around $966 psf.

EC project Ola, received 1,163 e-applications for 548 units available (Credit: Albert Chua/ The Edge Singapore)

The top bid was submitted by Frasers Property. If awarded, this will mark the firm’s first EC in almost six years, following Parc Life in Sembawang, which was awarded in July 2014, says Tricia Song, head of research for Singapore, Colliers International.

The site at Fernvale Lane is located about 800m away from Fernvale LRT station.

Recently, EC project Parc Canberra sold 64%, or 316 units, over its first weekend of launch. Another EC project, Ola, received 1,163 e-applications for 548 units available.

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