URA awards Zion Road site to CDL-Mitsui Fudosan JV, and Upper Thomson Road site to GuocoLand-Hong Leong JV
Wong Siew Ying, head of research and information at PropNex Realty, notes that even though the land fees were below market expectations URA likely looked into various other factors in examining the bids. “For instance, the Upper Thomson Roadway story remaining in a fairly untried new housing district, and the Zion Road plot being the very first development to comprise the long-stay serviced apartments,” she states.
Tan foresees that the brand-new property development might see a possible launch start-off cost of only under S$ 2,000 psf. “As the Upper Thomson Roadway Parcel B site would be the very first in a fairly undeveloped area without skyscraper homes, there is some very first mover benefits in a breathtaking district,” she states.
According to a GuocoLand speaker: “The Upper Thomson Road spot is positioned in a restricted landed housing area, similar to the Lentor Hills estate which we have actually developed as a brand-new superior exclusive residence estate with our developments such as Lentor Modern and Lentor Mansion. We are excited to have the possibility to boost another new area at Springleaf through our placemaking capabilities. The future growth, which is offered by the Springleaf MRT station on the Thomson-East Coast Line, are going to have around 940 units.”
The JV partners have previously suggested that they plan to create the spot right into a mixed-use property consisting of 2 residential blocks, one that is 69 storeys and the some other 64 floors, with about 740 house devices available in overall. The planned development is going to even make up a retail podium, and a 35-storey block with about 290 rental apartment or condo units.
Meanwhile, the GuocoLand-Hong Leong JV sent a proposal of $779.6 million for the 344,700 sq ft place along Upper Thomson Road. The cost equates to $905 psf ppr.
The CDL-Mitsui Fudosan JV was the only one to submit a proposal for the Zion Road spot the moment the tender closed up on April 4. Likewise, the GuocoLand-Hong Leong JV even handed in the sole proposal for the Upper Thomson Road GLS location when that tender closed on April 4. Eugene Lim, key executive officer, ERA Singapore, commented that both GLS locations are relatively ‘untested’. “The government may have thought about the tender costs provided for these locations to be sensible, regarding the problems that these programmers are prepared to take on,” he says.
This was reiterated by Tricia Song, head of research, Singapore and Southeast Asia, CBRE. She notices that the quote for the Zion Road location is a “significant” 30% less than the comparable land parcel throughout the road, which has been developed into the 455-unit Riviere. “The acceptance of the lower-than-expected proposal cost in spite of its being the sole quote, is a recognition that market conditions have transformed over the previous 5-6 years because the bordering site was awarded, given aspects such as increased ABSD, higher building and construction expenses, funding expenses, in addition to risk premium for the (long-stay serviced apartments) element which is a brand-new property class,” declares Tune.
Mark Yip, CEO of Huttons Asia, states that the eye-watering cost for the spot is a “significant commitment in the face of high rate of interest. Taking into consideration these dangers, the proposal of $1,202 psf ppr is fair”.
The $905 psf ppr bid placed in by GuocoLand-Hong Leong is “reasonable” as it is a much bigger site compared to the Zion Road plot, says Yip, adding: “Thus the quantum is larger, and with a larger quantum the chances are similarly bigger as well”.
CDL and Mitsui Fudosan sent a $1.107 billion offer for the 164,439 sq ft spot, which converts to $1,202 psf per plot ratio (ppr). The area has a story ratio of 5.6 and is zoned residence with industrial on the first level. The new property development could generate as much as 1,170 new non commercial units. This is also the very first spot released by the federal government that included devices under the new long-term serviced condominium arrangement.
” At a land price of S$ 1,202 psf ppr, the breakeven price could perhaps extend between S$ 2,400 psf and S$ 2,600 psf depending on technical, material and design considerations, with launch rates beginning with S$ 2,700 psf,” says Alice Tan, head of consultancy at Knight Frank Singapore. She adds that the new project might go for about S$ 3,000 psf and this price would certainly not only be palatable, but appealing for Singaporean buyers and long-term homeowners, whether for occupation or financial investment.
URA has recently allocated the tender for 2 recently shut government land sale (GLS) locations. A residential location at Zion Road was awarded to a shared venture (JV) between City Developments Ltd (CDL) and Mitsui Fudosan, while a several GLS location at Upper Thomson Roadway was awarded to a JV among GuocoLand and Hong Leong Holdings.
