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Closed Tender at Pine Grove and Duman Road GLS
The closed bids for two state-owned plots were a bit of a mixed bag. Developers were eager to open their wallets for a site in Pine Grove, but they didn’t seem too interested in a large site in Dunman Road.
The results show how developers feel. They want to bid on sites in areas where there is a lot of pent-up demand, but only up to a certain point because some mega-plots cost much more.
This seems to have been the problem with the Dunman Road site, which was the largest Government Land Sales (GLS) plot sold after the land sales at Silat Avenue site (now Avenue South Residence) in May 2018.
Lesser Bid at Dunman Road GLS
Analysts say that it only got two bids because the price was so high and there were risks from the latest measures to cool the economy, rising construction costs, and uncertainty about the economy.
The winning bid was for $1.28 billion, which is $1,350 per square foot per plot ratio (psf ppr). The developer wouldn’t say anything about what he had planned for the site.
“The highest bid for the Dunman Road site was $1.067 billion, or $1,122 per square foot per year, which was 20.3% more than the next highest bid,” he said.
Pine Grove Site Highly Contested
The Pine Grove (Parcel A) plot was a different story. It got five bids in what analysts called one of the highly contested site in recent years.
With a bid of $671.5 million, or $1,318 psf ppr, a joint venture between UOL Group and Singapore Land Group won. This was just $800 more than a bid from a unit of Allgreen Properties.
Even though it was a close race, there were still fewer bids than the average of seven for tenders that ended earlier this year, said Ms. Catherine He, who is in charge of research at Colliers in Singapore.
Both leasehold sites are on the edge of the city, and 1,555 homes are expected to be built on them all together.
Jesline Goh, the chief investment and asset officer for UOL Group, said that a 520-unit estate will be built on the Pine Grove site that is near Mount Sinai Rise.
Given how close it is to Holland Village, One-North, The Clementi Mall, The Star Vista, and the soon-to-be-built Clementi Nature Trail, Ms. Goh expects home buyers and investors to be very interested.
Concerns on Economy
Mr. Lam Chern Woon, of Edmund Tie, said that despite the site’s good qualities, developers are “more cautious given the gloomy economic outlook, rising interest rates and material cost, and concerns about competition if the neighboring Parcel B plot in Pine Grove is triggered and awarded.”
Analysts said that the race for the Pine Grove (Parcel A) plot was one of the closest they had ever seen.
Still, there may be pent-up demand because there haven’t been any big new projects in the Pine Grove and Ulu Pandan area in the last ten years, and there may be a Cross Island MRT station upcoming at Sunset Way, said Mr. Lee Sze Teck, of Huttons Asia.
Mr. Ong Teck Hui, who is the senior director of research and consultancy at JLL, said that the lack of interest in tenders for larger sites like Dunman Road shows that developers are generally cautious, even though unsold inventory is low and sales at new launches like Liv@MB and Piccadilly Grand have seen strong sales results.
Ms. Tricia Song, who is in charge of research for CBRE in South-East Asia, said that the site has a high risk of development. If the developer doesn’t sell all of the units within five years, they will have to pay an Additional Buyer’s Stamp Duty of 35%.
“There is also competition from a nearby GLS site at Jalan Tembusu, where as many as 640 units could be built, and Thiam Siew Avenue enbloc, where as many as 800 units are planned,” she said.
But the winning bid of $1.238 billion, or $1,350 psf ppr, for the site at Dunman Road was more than the previous record of $768 million, or $1,302 psf ppr, for the Jalan Tembusu site, which was set in January of this year, said Wong Siew Ying, who is in charge of research and content at PropNex Realty.
Mr. Steven Tan, CEO of OrangeTee & Tie, said that the success of mega projects like Normanton Park may have given bidders more confidence that there is still demand for large projects. He added, “The most recent launch in the area was Liv@MB, which sold at an average price of $2,407 psf, indicating healthy demand.”