The muted sales take-up rates seen in existing projects in the vicinity of both sites are possible reasons that developers have placed lower bids.
The cautious approach employed by developers towards bidding for land has caused an 8% to 20% drop in land prices including the 5% Additional Buyer Stamp Duty (ABSD), for the first batch of Government Land Sales (GLS) tenders for the year.
Analysed: The Three GLS Residential Confirmed Sites For 1H 2020
There were nine and seven bids for two residential sites in Outside Central Region (OCR) and Core Central Region (CCR) respectively, with City Development having the highest bid for the Irwell Bank Road site in River Valley with $584 million ($1,515 psf ppr) and Wee Hur bidding for the Jalan Bunga Rampai, Bartley site for $93 million ($885 psf ppr).
While these bids were lower compared to that of previously awarded GLS or en-bloc sites within the vicinity, land prices have eased by 8% (Irwell Bank site) to 20% (Bartley site) in contrast to the nearest comparison (most recent land sale in the vicinity), reported Singapore Business Review citing DBS Group Research.
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“The muted sales take-up rates seen in existing projects in the vicinity of both sites are possible reasons that developers have placed lower bids, taking a more cautious approach in terms of their bidding strategy,” said Rachel Tan, analyst for DBS Group Research.
“Key observations include: i) the bigger developers, except CapitaLand, were bidding for the Irwell Bank site despite a number of CCR projects expected to be launched this year, ii) the smaller developers and Chinese developers bid for the Jalan Bunga Rampai, Bartley site which most likely would target the local mass-market suburban segment,” she added.
The next GLS tender is seen to end on 3 March 2020 with three OCR sites that include an EC site. These will be two sites located at Canberra and one site at EC site at Fernvale Lane, Sengkang.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
