Developers “continue to adopt a more prudent approach to land bids, amid market uncertainties, ample upcoming supply, and the cooling measures which remain in place”, said Tricia Song, head of research for Singapore at Colliers International. Photo: URA
The Urban Redevelopment Authority (URA) has announced the closings tenders for Government Land Sales (GLS) sites at Irwell Bank Road and Jalan Bunga Rampai yesterday (9 Jan).
Though Colliers International noted that the sites received healthy interest from developers, the bids submitted were lower than expected.
This comes as developers “continue to adopt a more prudent approach to land bids, amid market uncertainties, ample upcoming supply, and the cooling measures which remain in place”, said Tricia Song, head of research for Singapore at Colliers International.
She also noted that developers are more conservative in bidding for sites, mindful of the subdued economy, as well as the ABSD penalty that developers have to incur if they don’t build and sell all units within five years of being awarded the site.
The 12,786.5 sq m site at Irwell Bank Road attracted seven bids, with City Developments (CDL) offering the highest bid of $583.89 million.
“The top bid price was about 11% lower than our earlier expectations of $1,700 psf ppr, probably due to developers provisioning a higher margin for the 25% remittable ABSD should they not be able to build and sell the project within the stipulated timeframe of five years,” noted Song.
A consortium comprising Far East Organization, Sino Group and Sekisui House submitted the second highest bid of $560.1 million, while Winvale Investment came up with the lowest bid of $409.89 million.
Meanwhile, the 4,666.6 sq m site at Jalan Bunga Rampai received nine bids, with Wee Hur Development placing the highest bid of $93.39 million or $885 psf ppr – which is slightly below Colliers’ expectation of $900 psf ppr.
Nonetheless, the healthy interest received for the site came as no surprise given that it is the smallest residential site under the second half of 2019 GLS programme, with the potential to yield just 115 housing units, said Song.
“It is hence of a palatable development quantum which appeals to more developers. It is also deemed to be at a lower risk of not being able to sell-out within the ABSD timeline of five years,” she added.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org