Caution reigns at state land tenders, despite developers’ low unsold private housing inventory
Caution reigns at state land tenders, despite developers’ low unsold private housing inventory. The latest government land sales (GLS) tender closings for two 99-year leasehold private housing sites near Beauty World and Hillview MRT stations were met with skepticism. The number of offers received was lower than expected by the market. The highest offers for both plots, however, were within the range of estimates given by property consultants polled by The Business Times before to the bidding for the two sites closing on Thursday (Nov 3).
Four proposals were received for the Hillview Rise site, which has the potential to yield around 335 dwellings. Far East Organization and Sekisui House teamed up to put the winning bid of S$320.78 million, or almost S$1,024 per square foot per plot ratio (psf ppr). Five offers were received for a site on Bukit Timah Link, near the Beauty World MRT station. Bukit Sembawang Estates’ maximum bid of S$200 million, or S$1,343.13 psf ppr, was 15.7% higher than Wing Tai’s second-highest bid.
“It was expected that the Bukit Timah Link property, which is relatively small and so less hazardous, would create greater interest among developers,” said JLL Singapore’s senior director of research and consultancy, Ong Teck Hui. The top bid, on the other hand, was far more hopeful than the second-highest bid. While the inventory of unsold units remains low and developers need to refill their land banks, there appears to be more caution in bidding for sites in light of rising interest rates, the consequences of recent cooling measures, and macroeconomic uncertainty.” This is the first tender to close since the late-September property cooling measures.
Nicholas Mak, the head of research and consultancy at ERA Realty Network, also pointed out that the maximum bid of S$1,023.85 psf ppr for the Hillview Rise site is lower than the S$1,068 psf ppr land rate paid in 2018 for the neighbouring Midwood condo site. “The Midwood and Hillview Rise sites are only approximately 230 meters apart,” Mak remarked.
The top price of S$1,023.85 psf ppr for the current Hillview Rise site was only 1.3 percent more than City Developments’ second-highest bid. One reason for the relatively close bids for this site, according to Edmund Tie’s head of research and consulting, Lam Chern Woon, could be that developers are concerned about supply and price competition from the future development on the Dairy Farm Walk site, which was awarded in March this year at a significantly lower S$980 psf ppr.
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