New Reporter
03-05-23, 11:22
GuocoLand’s foothold in Lentor may be a boon, but there are potential risks
Apr 25, 2023
GUOCOLAND was dubbed “King of Lentor Hills” this month after being awarded its third 99-year leasehold private housing site in the locale in less than two years.
The mainboard-listed property group had bagged the first Lentor plot on its own at a state tender by the Urban Redevelopment Authority (URA) that closed in July 2021.
It then teamed up with two Hong Leong Group Singapore entities – Intrepid Investments and TID Residential – to win the URA tender for another site in January last year. The new condo project on this site, Lentor Hills Residences, is expected to be launched soon.
GuocoLand’s latest site win in the locale this month was in partnership with Intrepid Investments.
The three sites – which can generate a total of 1,700-plus private homes – are part of the five sites that URA has sold for the development of a new private housing estate near Lentor MRT Station in the Yio Chu Kang area.
Nearly a fortnight ago, URA put on the market another two plots in the estate – one each on the confirmed and reserve lists.
The total potential supply from the seven plots is over 3,400 housing units.
https://i.imgur.com/CiRAfWM.png
GuocoLand stands to enjoy a first-mover advantage in Lentor Hills Estate. However, it might now have to keep bidding at future state land tenders in the area to defend its exposure.
The property group’s focus on Lentor also raises some other questions: What is the risk of rival developers clinching these sites at prices significantly below what GuocoLand has paid for its plots, potentially undercutting the group’s selling prices for its projects?
Will there be enough buyers to mop up all the new homes that will come up in the locale? And is GuocoLand heading for concentration risk, putting too many eggs in the Lentor Hills basket?
The URA’s plans to develop the new Lentor Hills Estate have been cooking for a while. They were first unveiled as part of the public exhibition for the Draft Master Plan 2013.
In URA’s latest Master Plan 2019, it was mentioned that a new neighbourhood near the then-upcoming Lentor MRT station on the Thomson-East Coast Line (TEL) is planned around an existing hillock.
The new private housing estate would feature new parks, seamless pedestrian and cycling connectivity between Teachers Estate and Lentor station, as well as commercial amenities to serve the community.
URA launched the maiden plot in this locale in April 2021, ahead of the August 2021 opening of Lentor MRT station.
Lentor Modern – the project that GuocoLand is developing on this site – has created a positive start for the area, with 84 per cent, or 508 of the 605 apartments in the project, sold over two days during its launch weekend in September last year.
The 533 units sold to date have achieved an average price of S$2,103 per square foot (psf), based on URA Realis data as at Apr 23. This implies that buyers accept a price premium for this new estate over typical mass-market condo projects in the suburbs.
For one, the Lentor Hills area is surrounded by landed homes. Moreover, developers of condos in the area can tap an extensive buyer catchment due to the connectivity boost from the TEL. The line stretches from Woodlands to the affluent residential areas in Orchard and River Valley through the CBD, and will also go all the way to the east coast.
Located above Lentor MRT station, the Lentor Modern project will incorporate a retail mall on the street level. The site is zoned residential with commercial at the first storey.
Uplifting neighbourhoods
Given GuocoLand’s philosophy of uplifting neighbourhoods through its developments, one can expect the group to give careful consideration – to not only the retail tenant mix but also how residents are likely to walk around the estate, for instance – and come up with a project that will benefit the whole area.
And if the group is investing so much effort in its first project – and cognisant of the value that will add to the estate – it would follow that the group would also want to benefit from its own efforts and grow its presence in the area by bidding for more sites.
That said, GuocoLand’s continued success with launching projects in Lentor Hills will also hinge on getting the end-unit selling price right. It will need to be careful not to overpay for land.
One strategy would be for GuocoLand and its partners in the Hong Leong family to bid lower at future URA tenders in the area to average down their cost.
In doing so, they can still seek to defend their exposure to their earlier projects in the locale, but at a land price at which they would be happy to win the tenders.
This tactic would limit the capacity of other developers, should they clinch sites in the area, to undercut selling prices of GuocoLand and its partners’ projects.
Some market watchers believe that URA, in launching seven sites for this locale in the past couple of years, might be hoping that developers will temper their land bids so as to be in a position to launch their projects at more affordable prices.
The government has also made substantial investments in key infrastructure and amenities in the area – including Lentor MRT station as well as the hillock and linear parks. It would make sense for the planning authority to inject a critical mass of new homes – and population – in the area to optimise the investments.
Another benefit of selling sites in the area in relatively quick succession is that it can avoid turning the area into a perpetual construction yard, which can be disruptive and distressing to residents.
If URA keeps selling residential development sites in the Lentor Hills area, it could turn out to be a boon for GuocoLand. Primarily, it will provide the property group with that vital raw material – land – to drive its Singapore residential development business.
If it manages to clinch a few more sites in the locale, GuocoLand could end up being a master developer of sorts. And that would be a sweet reward for a developer hungry for opportunities to build and shape a precinct.
https://www.businesstimes.com.sg/opinion-features/guocolands-foothold-lentor-may-be-boon-there-are-potential-risks
Apr 25, 2023
GUOCOLAND was dubbed “King of Lentor Hills” this month after being awarded its third 99-year leasehold private housing site in the locale in less than two years.
The mainboard-listed property group had bagged the first Lentor plot on its own at a state tender by the Urban Redevelopment Authority (URA) that closed in July 2021.
It then teamed up with two Hong Leong Group Singapore entities – Intrepid Investments and TID Residential – to win the URA tender for another site in January last year. The new condo project on this site, Lentor Hills Residences, is expected to be launched soon.
GuocoLand’s latest site win in the locale this month was in partnership with Intrepid Investments.
The three sites – which can generate a total of 1,700-plus private homes – are part of the five sites that URA has sold for the development of a new private housing estate near Lentor MRT Station in the Yio Chu Kang area.
Nearly a fortnight ago, URA put on the market another two plots in the estate – one each on the confirmed and reserve lists.
The total potential supply from the seven plots is over 3,400 housing units.
https://i.imgur.com/CiRAfWM.png
GuocoLand stands to enjoy a first-mover advantage in Lentor Hills Estate. However, it might now have to keep bidding at future state land tenders in the area to defend its exposure.
The property group’s focus on Lentor also raises some other questions: What is the risk of rival developers clinching these sites at prices significantly below what GuocoLand has paid for its plots, potentially undercutting the group’s selling prices for its projects?
Will there be enough buyers to mop up all the new homes that will come up in the locale? And is GuocoLand heading for concentration risk, putting too many eggs in the Lentor Hills basket?
The URA’s plans to develop the new Lentor Hills Estate have been cooking for a while. They were first unveiled as part of the public exhibition for the Draft Master Plan 2013.
In URA’s latest Master Plan 2019, it was mentioned that a new neighbourhood near the then-upcoming Lentor MRT station on the Thomson-East Coast Line (TEL) is planned around an existing hillock.
The new private housing estate would feature new parks, seamless pedestrian and cycling connectivity between Teachers Estate and Lentor station, as well as commercial amenities to serve the community.
URA launched the maiden plot in this locale in April 2021, ahead of the August 2021 opening of Lentor MRT station.
Lentor Modern – the project that GuocoLand is developing on this site – has created a positive start for the area, with 84 per cent, or 508 of the 605 apartments in the project, sold over two days during its launch weekend in September last year.
The 533 units sold to date have achieved an average price of S$2,103 per square foot (psf), based on URA Realis data as at Apr 23. This implies that buyers accept a price premium for this new estate over typical mass-market condo projects in the suburbs.
For one, the Lentor Hills area is surrounded by landed homes. Moreover, developers of condos in the area can tap an extensive buyer catchment due to the connectivity boost from the TEL. The line stretches from Woodlands to the affluent residential areas in Orchard and River Valley through the CBD, and will also go all the way to the east coast.
Located above Lentor MRT station, the Lentor Modern project will incorporate a retail mall on the street level. The site is zoned residential with commercial at the first storey.
Uplifting neighbourhoods
Given GuocoLand’s philosophy of uplifting neighbourhoods through its developments, one can expect the group to give careful consideration – to not only the retail tenant mix but also how residents are likely to walk around the estate, for instance – and come up with a project that will benefit the whole area.
And if the group is investing so much effort in its first project – and cognisant of the value that will add to the estate – it would follow that the group would also want to benefit from its own efforts and grow its presence in the area by bidding for more sites.
That said, GuocoLand’s continued success with launching projects in Lentor Hills will also hinge on getting the end-unit selling price right. It will need to be careful not to overpay for land.
One strategy would be for GuocoLand and its partners in the Hong Leong family to bid lower at future URA tenders in the area to average down their cost.
In doing so, they can still seek to defend their exposure to their earlier projects in the locale, but at a land price at which they would be happy to win the tenders.
This tactic would limit the capacity of other developers, should they clinch sites in the area, to undercut selling prices of GuocoLand and its partners’ projects.
Some market watchers believe that URA, in launching seven sites for this locale in the past couple of years, might be hoping that developers will temper their land bids so as to be in a position to launch their projects at more affordable prices.
The government has also made substantial investments in key infrastructure and amenities in the area – including Lentor MRT station as well as the hillock and linear parks. It would make sense for the planning authority to inject a critical mass of new homes – and population – in the area to optimise the investments.
Another benefit of selling sites in the area in relatively quick succession is that it can avoid turning the area into a perpetual construction yard, which can be disruptive and distressing to residents.
If URA keeps selling residential development sites in the Lentor Hills area, it could turn out to be a boon for GuocoLand. Primarily, it will provide the property group with that vital raw material – land – to drive its Singapore residential development business.
If it manages to clinch a few more sites in the locale, GuocoLand could end up being a master developer of sorts. And that would be a sweet reward for a developer hungry for opportunities to build and shape a precinct.
https://www.businesstimes.com.sg/opinion-features/guocolands-foothold-lentor-may-be-boon-there-are-potential-risks