SINGAPORE – A plum residential-cum-commercial site in Orchard Boulevard and an executive condominium (EC) site in Plantation Close in Tengah attracted four bids each, reflecting risk aversion among developers amid heightened development risks.
UOL Group and Singapore Land Group (SingLand) jointly submitted the top bid of $428.3 million for the Orchard Boulevard site, based on the Urban Redevelopment Authority’s (URA) provisional tender results on Feb 1. This works out to a land rate of $1,617 per square foot per plot ratio (psf ppr).
It is the first residential land parcel to be released in the Orchard/Tanglin area since 2018.
Most analysts say the top bid for the Orchard Boulevard site, which can yield 280 units and about 500 sq m of commercial space, was below expectations.
This is because the top bid is 32 per cent below the record price of $2,377 psf ppr set by the nearby Cuscaden Road government land sales site (now Cuscaden Reserve) in 2018, they noted.
“While the site is attractive in terms of location and scale, the tepid response and measured bid prices reflect... prevailing market challenges and factored in the impact of the 60 per cent additional buyer’s stamp duty (ABSD) on foreign buyers and higher ABSD rates for investors,” said Ms Chia Siew Chuin, JLL’s head of residential research for Singapore.
The more conservative bid price also reflects caution about higher construction costs amid the current inflationary environment, CBRE said.
The top bid is 2.5 per cent higher than the second-highest bid at $1,578 psf ppr from Allgreen Properties, noted Ms Wong Siew Ying, head of research and content at PropNex.
The closeness of the bid-price spreads indicates developers’ prudence at a time when home ownership costs are high for foreigners, who account for a bigger proportion of prime area property buyers, said OrangeTee & Tie chief executive Justin Quek.
Nonetheless, “the smallish plot size and development scale is palatable for developers with a proven track record in building high-end homes”, JLL’s Ms Chia said.
UOL and SingLand are planning to develop “a high-rise luxury development, of 36 storeys or more, capitalising on the panoramic views”, said Mr Liam Wee Sin, group chief executive of UOL.
He said that the site is “a timely addition to our luxury collection in Nassim, Meyer and Watten”.
ERA Singapore CEO Marcus Chu said the site could “pique the interest of potential investors looking to capitalise on medical tourism, renting out spaces to tenants seeking long-term medical treatment”.
The selling price for the future project’s units could start from $3,000 psf, he added.
After the lacklustre tender bids for the white site in Marina Gardens Crescent in January, some developers appear to have their mojo back for the Orchard Boulevard site, said Mr Nicholas Mak, chief research officer of property search portal Mogul.sg.
“There is a good chance the Orchard Boulevard site will be awarded to the top bidder because the top bid is at the high end of the expected land price range for this site,” he said.
Meanwhile, the tender for the Plantation EC site, which can yield 560 units, closed with only four bidders, at the lower end of the usual four to nine bids.
The top bid price of $701 psf ppr was within most analysts’ expectations.
The $423.4 million bid came from Hoi Hup Realty and Sunway Developments, which had also been awarded an adjacent EC site in Plantation Close at $703 psf ppr in 2023.
PropNex’s Ms Wong believes the bid was a “strategic move to defend the earlier site they won”. She noted that their bid in this latest tender was only 1.6 per cent higher than the second-highest bid of $690 psf ppr by Qingjian Realty and Forsea Residence.
Ms Chia said that the 2023 award of the adjacent Plantation Close parcel – which can yield 495 new EC units – to Hoi Hup and Sunway, could have discouraged some developers from participating in the latest EC site tender.
“The future project on the earlier-awarded Plantation Close site would benefit from being the first to capitalise on existing demand in the area,” she said.
Ms Tricia Song, CBRE’s head of research for Singapore and South-east Asia, said Hoi Hup and Sunway would likely “capitalise on economies of scale by amalgamating the sites to form a single mega project of over 1,000 units”.
Interest for this site was subdued, partly because of competition from nearby Bukit Batok West Avenue projects Altura and Lumina Grand, she said.
But she said that the bids reflect developers’ confidence in the EC market, as this segment is not as affected by the cooling measures due to the higher proportion of owner-occupiers and first-time buyers. There is also a limited supply of new EC units, she added.
The launch price for the new EC project is estimated to be between $1,400 psf and $1,500 psf, analysts say.
