New Reporter
19-01-24, 08:51
Sole bid for Marina South site way below expectations, raising doubts it will be awarded
GuocoLand-Hong Leong Group consortium’s bid of S$984 psf ppr on Thursday tender closing is 30% lower than sale price of neighbouring plot last year
Jan 19, 2024
https://i.imgur.com/icFlLMN.jpg
The Marina Gardens Crescent site (in orange and dark grey) drew just one bid at a URA tender that closed on Jan 18, 2024. In contrast, the nearby Marina Gardens Lane plot (in purple) received four bids at a URA tender In June 2023.
MAP: URA
AT A closely watched state tender closing on Thursday (Jan 18), a white site in Marina South designated for residential and commercial development fetched just one bid, and that too significantly below market expectations.
The sole bid – from a consortium comprising GuocoLand, Intrepid Investments and TID Residential – for the 99-year leasehold plot in Marina Gardens Crescent was nearly S$770.5 million or S$984 per square foot per plot ratio (psf ppr).
The land rate was nearly 30 per cent lower than the S$1,402 psf ppr that Kingsford Group paid for a neighbouring plot in Marina Gardens Lane at a state tender that closed in June last year. Kingsford’s S$1.03 billion plot is zoned for residential use with commercial space at first storey. It can generate about 790 private homes, similar to the 775 units for the plot on offer at the latest tender close.
The Marina Gardens Crescent site can be developed to a maximum gross floor area (GFA) of nearly 783,000 sq ft, about 6 per cent more than the 738,000 sq ft maximum GFA stipulated for the plot that went to Kingsford.
Observers also noted that the sole bid for the Marina Gardens Crescent plot, right next to Marina South MRT station, was lower than the S$1,191 psf ppr fetched for a site in Media Circle that was offered at the same tender closing on Thursday. Zoned residential with commercial space at the first storey, the Media Circle plot is much further away from the city and not as close to an MRT station. The tender was conducted by the Urban Redevelopment Authority (URA).
Property consultants polled this week by The Business Times had expected the Marina Gardens Crescent site to fetch anywhere from zero to five bids, with the highest bid coming in at between S$1,100 psf ppr and S$1,500 psf ppr.
Most market watchers told BT on an anonymous basis on Thursday evening that they do not expect the government to award the Marina Gardens Crescent site. “The Chief Valuer has a clear comparable transaction in the site sold to Kingsford. Moreover, only one bid was received for the latest site,” said a seasoned property consultant who declined to be named.
Another analyst, Wong Siew Ying of PropNex Realty, said: “It would be interesting to see if the government will award the Marina Gardens Crescent site at S$984 psf ppr, and whether this meets the government’s reserve price. For Government Land Sale sites, the reserve price is pegged to 85 per cent of the estimated market value as assessed by the Chief Valuer, taking into consideration factors including the proposed land use, site conditions, and relevant sales transactions.”
Wong, who is head of research and content at PropNex, cited a few reasons for the Marina Gardens Crescent plot drawing just one bid. One is the large quantum involved.
Upcoming supply in area
“There’s also a fair bit of upcoming supply of new homes in the area, namely the nearby Marina Gardens Lane plot, Marina View Residences, Skywaters Residences and Newport Residences – which can collectively offer about 1,900 new homes.
“Meanwhile, the higher Additional Buyer’s Stamp Duty rates for foreigners and investors since April 2023, and the lack of schools in the surrounding area may potentially impact demand for future homes to be built in the location,” Wong said.
Agreeing, CBRE’s head of research for Singapore and South-east Asia, Tricia Song, said: “Developers are generally shying away from large and investor-focused sites in the city area. This comes as developer sales of new private homes islandwide slumped to a 15-year low of 6,452 units in 2023.”
On the other hand, The Media Circle plot, which can yield about 355 residential units, is more palatable to risk-averse developers, said Song. Besides property cooling measures, the high interest rate environment and macroeconomic headwinds are also causing developers to be cautious.
In similar vein, JLL Singapore’s Chia Siew Chuin noted that escalating costs and shrinking profit margins are also weighing down developers.
GuocoLand’s spokesperson said that if awarded the Marina Gardens Crescent site, the consortium will develop a “new and exciting mixed development catering to local residents and a variety of businesses, and contribute to the government’s vision of making Marina South an attractive, sustainable and community-centric district”.
Singapore Exchange-listed GuocoLand’s partners for the bid, Intrepid Investments and TID Residential, are part of the Hong Leong Group in Singapore.
At last year’s tender close for the Marina Gardens Lane plot, a tie-up involving GuocoLand, Guoco Group and Intrepid Investments was the second-highest bidder at S$985 psf ppr – just a tad above the sole bid for the nearby plot on Thursday. Said JLL’s Chia: “After having missed out on the previous opportunity, GuocoLand and Hong Leong Group are now making another attempt to establish a presence in the emerging growth precinct.”
Potential for tidy profit
Observers noted that the consortium stands to reap a tidy profit if it is awarded the Marina Gardens Crescent site.
CBRE’s Song estimates the breakeven cost at around S$2,000 psf to S$2,100 psf. “The selling price is likely to take the cue from the earlier-tendered Marina Gardens Lane site,” she said.
Nicholas Mak, chief research officer of Mogul.sg, estimates that a residential development on the Marina Gardens Crescent site could be launched at S$2,800 psf to S$3,200 psf in 2026.
An analyst said that if GuocoLand were to be awarded the site, residential developers may come under pressure to write down the values of similar sites in the city area.
Located next to Marina South MRT station, the site consists of four plots, the largest of which is 186,422 sq ft. A second plot measuring 58,238 sq ft has been set aside as an open space for a pedestrian mall. Two smaller underground spaces are designated for pedestrian links.
A “white” site is a land parcel where a range of uses is allowed, although the government typically stipulates a minimum component, or even a maximum component, of one or more specific uses to meet its planning intentions.
https://www.businesstimes.com.sg/property/sole-bid-marina-south-site-way-below-expectations-raising-doubts-it-will-be-awarded
GuocoLand-Hong Leong Group consortium’s bid of S$984 psf ppr on Thursday tender closing is 30% lower than sale price of neighbouring plot last year
Jan 19, 2024
https://i.imgur.com/icFlLMN.jpg
The Marina Gardens Crescent site (in orange and dark grey) drew just one bid at a URA tender that closed on Jan 18, 2024. In contrast, the nearby Marina Gardens Lane plot (in purple) received four bids at a URA tender In June 2023.
MAP: URA
AT A closely watched state tender closing on Thursday (Jan 18), a white site in Marina South designated for residential and commercial development fetched just one bid, and that too significantly below market expectations.
The sole bid – from a consortium comprising GuocoLand, Intrepid Investments and TID Residential – for the 99-year leasehold plot in Marina Gardens Crescent was nearly S$770.5 million or S$984 per square foot per plot ratio (psf ppr).
The land rate was nearly 30 per cent lower than the S$1,402 psf ppr that Kingsford Group paid for a neighbouring plot in Marina Gardens Lane at a state tender that closed in June last year. Kingsford’s S$1.03 billion plot is zoned for residential use with commercial space at first storey. It can generate about 790 private homes, similar to the 775 units for the plot on offer at the latest tender close.
The Marina Gardens Crescent site can be developed to a maximum gross floor area (GFA) of nearly 783,000 sq ft, about 6 per cent more than the 738,000 sq ft maximum GFA stipulated for the plot that went to Kingsford.
Observers also noted that the sole bid for the Marina Gardens Crescent plot, right next to Marina South MRT station, was lower than the S$1,191 psf ppr fetched for a site in Media Circle that was offered at the same tender closing on Thursday. Zoned residential with commercial space at the first storey, the Media Circle plot is much further away from the city and not as close to an MRT station. The tender was conducted by the Urban Redevelopment Authority (URA).
Property consultants polled this week by The Business Times had expected the Marina Gardens Crescent site to fetch anywhere from zero to five bids, with the highest bid coming in at between S$1,100 psf ppr and S$1,500 psf ppr.
Most market watchers told BT on an anonymous basis on Thursday evening that they do not expect the government to award the Marina Gardens Crescent site. “The Chief Valuer has a clear comparable transaction in the site sold to Kingsford. Moreover, only one bid was received for the latest site,” said a seasoned property consultant who declined to be named.
Another analyst, Wong Siew Ying of PropNex Realty, said: “It would be interesting to see if the government will award the Marina Gardens Crescent site at S$984 psf ppr, and whether this meets the government’s reserve price. For Government Land Sale sites, the reserve price is pegged to 85 per cent of the estimated market value as assessed by the Chief Valuer, taking into consideration factors including the proposed land use, site conditions, and relevant sales transactions.”
Wong, who is head of research and content at PropNex, cited a few reasons for the Marina Gardens Crescent plot drawing just one bid. One is the large quantum involved.
Upcoming supply in area
“There’s also a fair bit of upcoming supply of new homes in the area, namely the nearby Marina Gardens Lane plot, Marina View Residences, Skywaters Residences and Newport Residences – which can collectively offer about 1,900 new homes.
“Meanwhile, the higher Additional Buyer’s Stamp Duty rates for foreigners and investors since April 2023, and the lack of schools in the surrounding area may potentially impact demand for future homes to be built in the location,” Wong said.
Agreeing, CBRE’s head of research for Singapore and South-east Asia, Tricia Song, said: “Developers are generally shying away from large and investor-focused sites in the city area. This comes as developer sales of new private homes islandwide slumped to a 15-year low of 6,452 units in 2023.”
On the other hand, The Media Circle plot, which can yield about 355 residential units, is more palatable to risk-averse developers, said Song. Besides property cooling measures, the high interest rate environment and macroeconomic headwinds are also causing developers to be cautious.
In similar vein, JLL Singapore’s Chia Siew Chuin noted that escalating costs and shrinking profit margins are also weighing down developers.
GuocoLand’s spokesperson said that if awarded the Marina Gardens Crescent site, the consortium will develop a “new and exciting mixed development catering to local residents and a variety of businesses, and contribute to the government’s vision of making Marina South an attractive, sustainable and community-centric district”.
Singapore Exchange-listed GuocoLand’s partners for the bid, Intrepid Investments and TID Residential, are part of the Hong Leong Group in Singapore.
At last year’s tender close for the Marina Gardens Lane plot, a tie-up involving GuocoLand, Guoco Group and Intrepid Investments was the second-highest bidder at S$985 psf ppr – just a tad above the sole bid for the nearby plot on Thursday. Said JLL’s Chia: “After having missed out on the previous opportunity, GuocoLand and Hong Leong Group are now making another attempt to establish a presence in the emerging growth precinct.”
Potential for tidy profit
Observers noted that the consortium stands to reap a tidy profit if it is awarded the Marina Gardens Crescent site.
CBRE’s Song estimates the breakeven cost at around S$2,000 psf to S$2,100 psf. “The selling price is likely to take the cue from the earlier-tendered Marina Gardens Lane site,” she said.
Nicholas Mak, chief research officer of Mogul.sg, estimates that a residential development on the Marina Gardens Crescent site could be launched at S$2,800 psf to S$3,200 psf in 2026.
An analyst said that if GuocoLand were to be awarded the site, residential developers may come under pressure to write down the values of similar sites in the city area.
Located next to Marina South MRT station, the site consists of four plots, the largest of which is 186,422 sq ft. A second plot measuring 58,238 sq ft has been set aside as an open space for a pedestrian mall. Two smaller underground spaces are designated for pedestrian links.
A “white” site is a land parcel where a range of uses is allowed, although the government typically stipulates a minimum component, or even a maximum component, of one or more specific uses to meet its planning intentions.
https://www.businesstimes.com.sg/property/sole-bid-marina-south-site-way-below-expectations-raising-doubts-it-will-be-awarded