URA awards Zion Road site to CDL-Mitsui Fudosan JV, and Upper Thomson Road site to GuocoLand-Hong Leong JV
URA has allocated the tender for 2 just recently shut government land sale (GLS) sites. A residential site at Zion Roadway was granted to a joint project (JV) between City Developments Ltd (CDL) and Mitsui Fudosan, while a several GLS site at Upper Thomson Road was presented to a JV within GuocoLand and Hong Leong Holdings.
The $905 psf ppr bid put in by GuocoLand-Hong Leong is “reasonable” as it is a much larger site compared to the Zion Roadway plot, says Yip, adding in: “Hence the quantum is bigger, and with a larger quantum the possibilities are similarly bigger too”.
Mark Yip, CEO of Huttons Asia, states that the eye-watering price for the site is a “significant dedication in the face of high interest. Thinking about these risks, the quote of $1,202 psf ppr is fair”.
CDL and Mitsui Fudosan sent a $1.107 billion attempt 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 residential with business on the 1st floor. The new development can generate approximately 1,170 new home units. This is also the first location launched by the federal government that included devices under the new long-term serviced residence arrangement.
At the same time, the GuocoLand-Hong Leong JV sent a quote of $779.6 million for the 344,700 sq ft site near Upper Thomson Road. The price equates to $905 psf ppr.
The CDL-Mitsui Fudosan JV was the only one to send a quote for the Zion Road spot when the tender closed up on April 4. Furthermore, the GuocoLand-Hong Leong JV even submitted the sole proposal for the Upper Thomson Road GLS spot when that tender closed on April 4. Eugene Lim, key executive officer, ERA Singapore, commented that both GLS locations are relatively ‘untried’. “The government may have thought about the tender costs provided for these sites to be reasonable, considering the hazards that these designers are prepared to handle,” he states.
This was reiterated by Tricia Song, head of study, Singapore and Southeast Asia, CBRE. She notes that the quote for the Zion Road site is a “significant” 30% lower than the equivalent land parcel throughout the road, which has been developed into the 455-unit Riviere. “The approval of the lower-than-expected bid cost despite its being the sole proposal, is a recognition that market conditions have changed over the previous 5-6 years since the neighboring site was granted, given aspects such as increased ABSD, greater building and construction expenses, financing expenses, along with risk premium for the (long-stay serviced residences) component which is a brand-new asset class,” says Track.
Tan foresees that the new development could see a potential launch start-off cost of only under S$ 2,000 psf. “As the Upper Thomson Roadway Parcel B site would certainly be the initial in a fairly underdeveloped location without high-rise homes, there is some initial mover benefits in a beautiful district,” she says.
Wong Siew Ying, head of research and information at PropNex Real estate, notes that although the land fees were listed below market assumptions URA likely considered other aspects in evaluating the quotes. “For instance, the Upper Thomson Road story remaining in a reasonably untested brand-new housing district, and the Zion Road story being the first development to make up the long-stay serviced flats,” she says.
The JV partners have previously shown that they plan to create the location into a mixed-use development making up 2 housing blocks, one that is 69 floors and the other 64 storeys, with around 740 house devices up for sale in overall. The scheduled development will even comprise a retail platform, and a 35-storey block with about 290 rental home units.
According to a GuocoLand representative: “The Upper Thomson Road site is positioned in an exclusive landed real estate area, comparable to the Lentor Hills estate which we have established as a brand-new superior exclusive non commercial estate via our developments such as Lentor Modern and Lentor Mansion. We are excited to have the chance to uplift another new neighbourhood at Springleaf via our placemaking abilities. The future advancement, which is offered by the Springleaf MRT terminal on the Thomson-East Coast Line, will have around 940 units.”
” At a land price of S$ 1,202 psf ppr, the breakeven cost can perhaps vary in between S$ 2,400 psf and S$ 2,600 psf basing on technical, material and layout factors, with kick off costs starting from S$ 2,700 psf,” states Alice Tan, head of consultancy at Knight Frank Singapore. She includes that the new property development might go for about S$ 3,000 psf and this price would not only be tasty, but attractive for Singaporean property buyers and permanent citizens, whether for career or investment.
