On September 5, the tender for the one-north Gateway site generated nine offers. TID Residential, a subsidiary of TID Pte Ltd, made the highest offer of $155.7 million (a joint venture between Hong Leong Holdings and Japanese developer Mitsui Fudosan). TID’s offer price equates to a land expense of $1,001 per square foot per plot ratio (psf ppr).
The nine bids for the one-north Gateway site were unsurprising, given that it is the smallest site on the Confirmed List, with a possible yield of around 165 units. “It’s a more palatable development quantum that would cater to more developers,” says Tricia Song, Colliers International’s Singapore head of science. She also mentions that the possibility of not being able to sell out the project’s units within the five-year time frame is minimized.
Song estimates that the current project’s breakeven point would be about $1,500 to $1,550 per square foot. She predicts that the developer may be staring at sale rates north of $1,600 psf if the proposed project has a minimum average unit size of 85 sq m.
According to Colliers International, the neighboring project, one-north Residences, was constructed in 2009, and units in the 900 to 1,000 sq ft range have sold for about $1,500 psf year-to-date in 2019.
In reality, the next-door site for the construction of one-north Residences, one-first north’s condominium estate, was the last residential site to be released for sale at one-north. That was in 2005, according to Desmond Sim, CBRE’s Southeast Asia head of science. “The location is next to the one-north MRT stop, providing excellent accessibility.”
According to CBRE’s Sim, the high level of interest for the one-north site represents “pent-up desire.” “The growing tenant pool, as well as the small alternatives available in the private residential sector, possibly attracted the bidders.” The location, however, is situated on top of MRT tracks, which could have a bearing on the development phase and prices, prompting an accomplished developer to submit a proposal for the project, according to Sim.
The recent architecture at one-north Gateway, according to Christine Li, Cushman & Wakefield’s (C&W) head of research for Singapore and Southeast Asia, “further enhances the work-live-play model at one-north.” Due to the relative lack of housing stock in the one-north precinct, she anticipates “high demand for units in the project.”
Furthermore, according to C&W, Grab and Razer are currently building their headquarters at one-north, with Grab’s facilities planned to accommodate up to 3,000 workers. “This may be a source of future demand because wealthier tech employees who work long hours may choose to remain near their workplace to shorten their commute,” Li explains.