SINGAPORE - Two 99-year leasehold government land sites in Marina Gardens Crescent and Media Circle in one-north drew fewer-than-expected bids and land rates that were below those of recent state land tenders, reflecting greater caution among developers stung by several rounds of cooling measures and higher financing costs.
The Marina Gardens Crescent site drew just one bid of $770.5 million, or $984 per square foot per plot ratio (psf ppr), from GuocoLand and two entities of Hong Leong Group Singapore (Intrepid Investments and TID Residential).
This sole bid, according to analysts, was below expectations. It was nearly 30 per cent below that for the neighbouring Marina Gardens Lane site, which was awarded in July 2023 to Chinese developer Kingsford Huray Development and its two partners at $1.03 billion, or $1,402 psf ppr.
The two state land parcels were put on the block to kick-start development in the 45ha Marina South precinct.
The Media Circle site – the first residential site with commercial at first-storey use in Mediapolis – attracted three bids, with a top bid of $395.3 million or $1,191 psf ppr submitted by a joint venture between Qingjian Realty and China Communications Construction Company.
In comparison, the top land rates submitted for three government land sales (GLS) tenders in November 2023 in Clementi Avenue 1, Pine Grove (Parcel B) and Toa Payoh Lorong 1 were each above $1,200 psf ppr, noted Mr Nicholas Mak, chief research officer of property search portal Mogul.sg.
He said the Marina Gardens Crescent site drew less interest because foreign buyers – who had been a major source of demand for previous city projects – are now sidelined by the punitive additional buyer’s stamp duty (ABSD) of 60 per cent.
Another dampener was increased competition from existing projects and upcoming launches in the city, he added.
Analysts say the tender results also showed developers’ risk aversion towards large and investor-focused sites in undeveloped precincts.
Ms Tricia Song, CBRE’s head of research for Singapore and South-east Asia, said the bid reflects “deteriorating developer sentiment” for city sites that require larger capital outlay and face uncertain demand after the April 2023 round of cooling measures. “Existing city project launches have also been deferred,” she added.
“The breakeven for Marina Gardens Crescent may be around $2,000 psf and $2,100 psf. The selling price (for new homes there) could take a cue from the (future project at the) Marina Gardens Lane site,” she noted.
The Marina Gardens Crescent site can yield 775 residential units and a maximum of 6,000 sq m of commercial space. Up to 30 per cent of total gross floor area can be serviced apartments, and office use, if proposed, shall not exceed 5,000 sq m.
Together with the 790 residential units and up to 8,073 sq ft of commercial space offered by the Marina Gardens Lane site, the two future projects will provide 1,565 new homes in the next four to five years.
Ms Chia Siew Chuin, JLL’s head of residential research for Singapore, said the GuocoLand-Hong Leong consortium has taken another stab at establishing a presence in the emerging growth precinct, having lost out at the previous state land tender in Marina Gardens Lane to Kingsford.
But she added that the potential benefits of being a first mover in offering essential commercial amenities in the Marina South precinct may not outweigh concerns about the white site and prevailing market conditions.
Ms Wong Siew Ying, PropNex’s head of research and content, said it would be interesting to see if the Government will award the site at $984 psf ppr, and whether this meets the reserve price.
For GLS sites, the reserve price is pegged to 85 per cent of the estimated market value as assessed by the Chief Valuer, taking into consideration the proposed land use, site conditions and relevant sales transactions, among other factors, she said.
Meanwhile, the muted interest for the Media Circle site could be because it is not near MRT stations, Ms Chia said. In comparison, two smaller GLS sites in the one-north area – parcels A and B at Slim Barracks Rise – which were awarded at more than $1,200 psf ppr in 2021, benefited from being closer to the Buona Vista and one-north MRT stations.
Nonetheless, developers see the advantages of the Media Circle site, which can yield 355 units. “With growing risks and compressed profit margins, there has been an inclination towards smaller sites. The shorter project timeline and faster sales turnaround allow developers to complete and sell projects more quickly within the stipulated five years to qualify for a 35 per cent ABSD tax remission,” Ms Chia added.
Ms Wong noted that the site could offer developers a first-mover advantage in Media Circle as another nearby GLS plot is slated for long-stay serviced apartments.
ERA Singapore chief executive officer Marcus Chu said the Qingjian and China Communications Construction Company joint venture had unsuccessfully bid for a GLS site at Clementi Avenue 1 in November 2023.
“The consortium’s strong confidence in the location’s potential must have led them to try again to secure a site in District 5,” he said.
“The Media Circle site is also attractive to investors seeking rental income, and wanting to leverage the sizeable tenant pool from one-north where many biomedical and media firms are located.”
Ms Song said the future residential project at Media Circle could launch at between $2,350 psf and $2,400 psf.
