ANALYSIS: Reasons behind the record-high bid for Dairy Farm Walk GLS site
ANALYSIS: Reasons behind the record-high bid for Dairy Farm Walk GLS site
March 23, 2022
https://i.imgur.com/nThyAHn.jpg
To recap
A Government Land Sales (GLS) site along Dairy Farm Walk was awarded to Sim Lian Group in March 2022 for a record-high price of $347 million or $980 psf per plot ratio (ppr). The land price for the subject GLS site is at least $150 psf ppr higher than the prices paid for neighbouring GLS sites in the past 10 years.
The 99-year leasehold site was hotly contested and attracted seven bids. A joint venture between United Engineers (UEL) and Soilbuild Group submitted the second-highest bid of $343.4 million ($970 psf ppr) which was only 1% below the top bid. The record-high price paid for the land will translate to higher selling prices for the upcoming condominium.
https://i.imgur.com/z3Bk5HS.jpg
https://i.imgur.com/C5tYPE7.jpg
The high land price and numerous bids could be signs of developers’ confidence in the Singapore residential market; underpinned by limited new supply and continued robust demand despite the cooling measures introduced last December and the ongoing Russia-Ukraine conflict.
Prices for condominiums in Singapore are still trending upwards. Prices in the Bukit Panjang area have increased from $974 psf in 2012 to $1,475 psf in 2022; a 51% growth driven largely by new launches in the neighbourhood.
https://i.imgur.com/tjVxwKm.jpg
Familiarity with Dairy Farm area prompted UEL to come close
A joint venture between UEL and Soilbuild Group placed the second-highest bid for the subject GLS site which could have been motivated by UEL’s familiarity with the area and their success with nearby 460-unit Dairy Farm Residences which has only 21 unsold units. The project is almost sold-out after being in the market for 34 months. The average price for the uncompleted development also increased from $1,563 psf in 2019 to $1,677 psf in 2022.
https://i.imgur.com/yF599R4.jpg
Sim Lian’s familiarity and success with mass-market projects
Sim Lian Group who submitted the highest bid has an excellent track record with mass-market projects in Outside Central Region (OCR) which could help explain their confident bid for the GLS site. Their 2,203-unit Treasure at Tampines sold out within 39 months of launch at an average price of $1,422 psf. Since then, the developer has been looking to purchase land.
https://i.imgur.com/ufBrbv0.jpg
Land prices paid for neighbouring condominiums
The subject site is surrounded by a number of leasehold condominiums with the uncompleted Dairy Farm Residences being the newest and nearest. Dairy Farm Residences is developed by United Engineers who also submitted the second-highest bid for the subject GLS site. The developer’s familiarity in the area and the success of this project could have motivated the developer to up their bid for the GLS site.
https://i.imgur.com/1XUo8hv.jpg
The GLS site for Dairy Farm Residences was awarded to United Engineers in September 2018 for $368.8 million ($830 psf ppr); $150 psf ppr lower than Sim Lian’s bid for the subject site but still surpassing land prices for other nearby plots.
The land for The Skywoods and Eco Sanctuary were also sold under GLS. The site for Skywoods was awarded in September 2012 for $244.3 million ($616 psf ppr) while the plot for Eco Sanctuary was awarded in November 2011 for $180 million ($426 psf ppr).
As such, the price of $980 psf ppr achieved for the GLS site that was just awarded to Sim Lian is the highest ever paid for a residential GLS site in Bukit Panjang.
Potential market for upcoming condominium on Dairy Farm Walk site
The GLS site is nestled within a residential enclave with numerous private properties within a 1km radius, including the GCB area in Chestnut Avenue. Potential buyers could include parents looking to purchase a condominium unit near their landed property for their children or for investment.
https://i.imgur.com/AbyAWbf.jpg
There are also 3,068 HDB flats within 1km radius of the upcoming project. These flats have an average age of 33.8 years which could prompt some owners to cash in on the recent strong demand for resale HDB flats and upgrade to a new condominium in the vicinity. Potential buyers could also include couples looking to purchase a new condominium unit near their parents living in the HDB flats.
https://i.imgur.com/QNqE14s.jpg
There is a healthy demand for owner-occupied housing in the Bukit Panjang area with 95% of the residents being owners and 5% being tenants. Additionally, 90.7% of the buyers of Dairy Farm Residences are Singaporeans with 8.2% and 1.2% being PRs and foreigners respectively.
The majority of the private housing within the 1km radius of the GLS site has three bedrooms indicating that residents are mainly families who could have been attracted by the numerous nearby schools. Sim Lian Group should take note and ensure that their upcoming project has larger units that can meet the spatial needs of families.
https://i.imgur.com/vJGmail.jpg
Average prices for surrounding leasehold condominiums
Dairy Farm Residences has the highest average price compared to four nearby leasehold condominiums. The Skywoods and Eco Sanctuary were completed in 2016 while Foresque Residences and Tree House were completed in 2014 and 2013 respectively. Unsurprisingly, average prices for the newer developments are higher than their older counterparts.
https://i.imgur.com/6dkHOQu.jpg
Bearing in mind the high land cost, Sim Lian Group is expected to launch their upcoming condominium at prices higher than the neighbouring developments. EdgeProp estimates that the selling price for the new condominium could be in the $2,000 psf to $2,100 psf range. The popularity of Dairy Farm Residences and transaction volume of the surrounding leasehold developments indicates demand for condominiums in the area.
https://i.imgur.com/LNDf7pF.jpg
Potential future developments
Surrounding developments can have a huge impact on residential prices. As such, it is important to check for potential future developments especially if there are any open spaces in the vicinity. A quick check using EdgeProp LandLens will provide users with such essential information.
There is a large plot of open space across the Dairy Farm Walk GLS site which is divided into three land lots. Two of them are planned for residential use and the remaining lot is slated for educational use. Buyers of the upcoming condominium will have to put up with construction noise if the three land parcels are sold after they move in. Heavier traffic along Dairy Farm Walk can be expected after the open space is developed. Units that face the open space may find their view blocked.
On the bright side, the planned plot ratio for the two residential lots is lower than Dairy Farm Residence and the GLS site so future residential developments on the two sites will be less densely built. Additionally, the prices of nearby houses will be given a boost if a reputable school takes up the land lot slated for educational use. Importantly, buyers of the upcoming condominium can be assured that there are no nearby incompatible uses.
https://i.imgur.com/wep5c3R.jpg
The presence of the German European School (an international school) behind the GLS site gives a boost to the attractiveness of the upcoming condominium to investors. According to information provided by EdgeProp Landlens, tenants make up 5% of residents in Bukit Panjang. The nearby leasehold condominiums are achieving monthly rentals of $2.60 psf to $3.30 psf and rental yields of 2.8% to 3.0%.
https://i.imgur.com/4msNqNO.jpg
Key observations
- The record high price paid by developers for the Dairy Farm Walk GLS sites is a positive sign of developers’ confidence in the Singapore residential market; supported by rising average price for condominiums in Bukit Panjang.
- It is important for potential buyers to check for future developments before signing on the dotted line. Beautiful views may be blocked by future developments and heavier traffic will increase noise pollution in the area. However, new amenities such as malls or schools will add to property value.
- EdgeProp Landlens provides useful information on land sales, unit mix, demographics, new launches as well as recent sales and rental transactions. Such information helps buyers do their due diligence and developers zero in on potential buyers.
- Potential buyers of the upcoming development on the Dairy Farm Walk GLS site could include HDB upgraders, owners of nearby landed property and couples who wish to be near their parents living in HDB flats in the neighbourhood.
- EdgeProp estimates that the selling price for the upcoming condominium by Sim Lian could be in the $2,000 psf to $2,100 psf range.
- Across the road from the Dairy Farm Walk GLS site is an open space that is slated for residential and educational uses. Potential buyers should note that these future developments will contribute to more noise and traffic along Dairy Farm Walk which could have a negative impact on the value of their assets. However, a reputable school moving to the currently empty space will give a boost to demand for the property.
https://www.edgeprop.sg/property-new...-walk-gls-site
Re: ANALYSIS: Reasons behind the record-high bid for Dairy Farm Walk GLS site
https://sbr.com.sg/residential-prope...s-en-bloc-sale
A potential asking price is at $1.68b, beating that of Farrer Court and Pacific Mansion.
The Dairy Farm Estate, located at No.3 to 37 Dairy Farm Road, is eyeing to make its en bloc sale "a huge success and break some huge sale records at the same time." The price is "confidential," said Teakhwa Real Estate (TRE), but other media reports suggest $1.68b.
The 750,019 sqft freehold development has 477 residential units and 10 small retail shops. It has a plot ratio of 2.1 and a potential gross floor area of about 1.58 million sqft. It can be redeveloped up to 24 storeys.
https://sbr.com.sg/sites/default/fil...?itok=Iifwy5KX
Among them is the Dairy Farm estate, which just raised its reserve price from S$1.688 billion to S$1.84 billion as a sweetener to lure owners, ahead of an April 2019 deadline. According to the law, homeowners have 12 months from the first signature on their Collective Sales Agreement (CSA) to get the mandate to launch a public en bloc tender.
In the case of Dairy Farm, the higher reserve price also comes with a higher development charge (DC) of about S$75 million for the 750,019 sq ft site after the DC rate was increased in September. The figure in April was estimated at S$61 million.
But Mr Tay believes that the per square foot per plot ratio (psf ppr) price of about S$1,216 is still reasonable, compared to Goodluck Garden in Toh Tuck Road which sold for S$1,210. The Goodluck deal however, closed in March last year before July's property cooling measures, which altered the en bloc scene in a major way.
They include Horizon Towers, which relaunched its collective sale tender at an unchanged S$1.1 billion reserve price.
Cavenagh Gardens on Thursday relaunched its collective sale as well, also at an unchanged S$480 million, as it seeks to find a buyer and apply to STB by mid-April 2019.
Another mega site, Pine Grove, raised its reserve price to S$1.86 billion from S$1.72 billion at the last minute, which helped clinched the 80 per cent mandate, though that also led to the resignation of previous marketing agent Huttons Asia.
The 99-year leasehold Mandarin Gardens also upped its asking price by close to 12.5 per cent to S$2.79 billion in November, though that was after owners discovered that the land parcel it sits on was undervalued.
Re: ANALYSIS: Reasons behind the record-high bid for Dairy Farm Walk GLS site
