URA awards Zion Road site to CDL-Mitsui Fudosan JV, and Upper Thomson Road site to GuocoLand-Hong Leong JV

/ EdgeProp Singapore |

April 16, 2024 4:24 PM SGT

CDL and Mitsui Fudosan submitted a $1.107 billion bid for the 164,439 sq ft site, which translates to $1,202 psf per plot ratio (ppr).

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URA has awarded the tender for two recently closed government land sale (GLS) sites. A residential site at Zion Road was awarded to a joint venture (JV) between City Developments Ltd (CDL) and Mitsui Fudosan, while a different GLS site at Upper Thomson Road was awarded to a JV between GuocoLand and Hong Leong Holdings.

The CDL-Mitsui Fudosan JV was the only one to submit a bid for the Zion Road site when the tender closed on April 4. Likewise, the GuocoLand-Hong Leong JV also submitted the sole bid for the Upper Thomson Road GLS site when that tender closed on April 4. Eugene Lim, key executive officer, ERA Singapore, commented that both GLS sites are relatively 'untested'. "The government may have considered the tender prices submitted for these sites to be reasonable, considering the risks that these developers are prepared to take on," he says.

Wong Siew Ying, head of research and content at PropNex Realty, notes that although the land rates were below market expectations URA likely considered other factors in assessing the bids. "For example, the Upper Thomson Road plot being in a relatively untested new housing precinct, and the Zion Road plot being the first development to comprise the long-stay serviced apartments," she says.

This was echoed by Tricia Song, head of research, Singapore and Southeast Asia, CBRE. She notes that the bid for the Zion Road site is a "significant" 30% lower than the comparable land parcel across the road, which has been developed into the 455-unit Riviere. "The acceptance of the lower-than-expected bid price despite its being the sole bid, is a recognition that market conditions have changed over the past 5-6 years since the neighboring site was awarded, given factors such as increased ABSD, higher construction costs, financing costs, as well as risk premium for the (long-stay serviced apartments) component which is a new asset class," says Song.

CDL and Mitsui Fudosan submitted a $1.107 billion bid for the 164,439 sq ft site, which translates to $1,202 psf per plot ratio (ppr). The site has a plot ratio of 5.6 and is zoned residential with commercial on the first floor. The new development could yield up to 1,170 new residential units. This is also the first site released by the government that included units under the new long-term serviced apartment scheme.

The JV partners have already indicated that they intend to develop the site into a mixed-use development comprising two residential blocks, one that is 69 storeys and the other 64 storeys, with about 740 residential units for sale in total. The planned development will also comprise a retail podium, and a 35-storey block with about 290 rental apartment units.

"At a land price of S$1,202 psf ppr, the breakeven cost could possibly range between S$2,400 psf and S$2,600 psf depending on technical, material and design considerations, with launch prices starting from S$2,700 psf," says Alice Tan, head of consultancy at Knight Frank Singapore. She adds that the new development could launch at about S$3,000 psf and this price would not only be palatable, but attractive for Singaporean homebuyers and permanent residents, whether for occupation or investment.

Mark Yip, CEO of Huttons Asia, says that the eye-watering price for the site is a "huge commitment in the face of high interest rates. Taking into consideration these risks, the bid of $1,202 psf ppr is fair".

The GuocoLand-Hong Leong JV submitted the sole bid for the Upper Thomson Road GLS site when that tender closed on April 4. EdgeProp estimates that the new development could see a selling price of about $1,856 psf. (Map: EdgeProp)

Meanwhile, the GuocoLand-Hong Leong JV submitted a bid of $779.6 million for the 344,700 sq ft site along Upper Thomson Road. The price translates to $905 psf ppr.

According to a GuocoLand spokesperson: "The Upper Thomson Road site is situated in an exclusive landed housing area, similar to the Lentor Hills estate which we have established as a new premium private residential estate through our developments such as Lentor Modern and Lentor Mansion. We are excited to have the opportunity to uplift another new neighbourhood at Springleaf through our placemaking capabilities. The future development, which is served by the Springleaf MRT station on the Thomson-East Coast Line, will have around 940 units."

The $905 psf ppr bid put in by GuocoLand-Hong Leong is "fair" as it is a much larger site compared to the Zion Road plot, says Yip, adding: "Hence the quantum is larger, and with a larger quantum the risks are correspondingly higher as well".

Tan predicts that the new development might see a possible launch start price of just under S$2,000 psf. "As the Upper Thomson Road Parcel B site would be the first in a fairly undeveloped area without high-rise residences, there is some first mover advantage in a scenic precinct," she says.

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