Latest GLS tenders see firm land prices, keener interest from developers

[reporter2]

Latest GLS tenders see firm land prices, keener interest from developers

Mar 09, 2022





THE latest Government Land Sales (GLS) tenders for 2 99-year leasehold housing sites have drawn keen interest, reflecting developers’ hunger for land in the suburbs following strong sales last year.

It also reflects their confidence that the segment will continue to post healthy demand from first-time homebuyers and HDB upgraders.

The top bid for an executive condo (EC) housing site in Bukit Batok West Avenue 8 was S$661.67 per square foot per plot ratio (psf ppr), setting a new record price for EC development land.

ECs are a public-private housing hybrid with initial buyer eligibility and resale conditions, which are completely lifted 10 years after the project has been completed.

The top bid, from a tie-up involving Qingjian Realty and Santarli Group, toppled the previous record for EC land price of S$658.93 psf ppr in July 2021 by the same consortium for an EC plot in Tampines Street 62.

The Bukit Batok land parcel, which is about 1 km from the Bukit Gombak MRT station, drew 9 bids at the tender closing on Tuesday (Mar 8, 2022).

The other site on offer, along Dairy Farm Walk and designated for private housing, drew 7 bids. The S$980.07 psf ppr top bid - by Sim Lian Land and Sim Lian Development - was just 1 per cent higher than the second highest bid of S$970 psf ppr from a tie-up between United Engineers’ unit UED Alpha and Soilbuild Group.

Located about 700 m from Hillview MRT station on the Downtown Line, the 168,600 sq ft plot can yield about 385 housing units.

The winning margin for the Bukit Batok site was 4.8 per cent.

Observers note that the top bidders for both plots are part of groups that have their own construction arms - which probably gave them an edge over developers without a construction arm. An air of uncertainty continues to linger about construction costs, which have risen significantly in the past couple of years amid supply-chain disruptions and a labour shortage.

Edmund Tie’s head of research and consulting, Lam Chern Woon, noted that the top 3 bids for the Dairy Farm site were within 3 per cent of each other. For the Bukit Batok EC plot, the top 3 bids were within 6 per cent of each other.

ERA Realty Network’s head of research and consultancy, Nicholas Mak, noted that the EC market is expected to be less affected by the mid-December 2021 cooling measures as practically all buyers of new EC units are either first-time homebuyers or HDB upgraders.

In a release on Tuesday evening, Qingjian Realty said the proposed scheme for the Bukit Batok EC site is a 15-storey project with 360 residential units.

PropNex Realty’s head of research and content, Wong Siew Ying, projects the development’s average selling price at about S$1,300 psf and above.

Ong Teck Hui, senior director at JLL, too, expects the selling price to be above current levels. Some 80 new EC units have been sold so far this year with prices averaging S$1,224 psf.

“A major factor contributing to the robust bidding for the subject site is the limited supply of new ECs on the market. Projects currently on the market are substantially sold, and there are only 3 EC projects in the launch pipeline,” he added.

As for the new private residential project that will arise on the Dairy Farm Walk plot, CBRE’s South-east Asia research head, Tricia Song, estimates the launch price could be S$1,800-1,900 psf. In the first 2 months of 2022, units at the neighbouring Dairy Farm Residences have sold at an average price of about S$1,680 psf.

Summing up Tuesday’s tender results, Colliers Singapore’s research head, Catherine He, said: “The tenders closed with robust bids, reflecting still-strong developer interest for residential land in the suburbs, even post-cooling measures.”

Song of CBRE noted that sentiment appears to have improved with more bids at the latest tenders, compared with the 4-8 bids received for the Lentor Hills Road and Jalan Tembusu private housing sites at the GLS tender that closed in January.

[reporter2]

Sim Lian Group is top bidder for Dairy Farm Walk GLS site at $980 psf ppr

March 8, 2022



At the close of the tender for two government land sale (GLS) sites this evening, there were seven bids for the residential site at Dairy Farm Walk and nine bids for the executive condo (EC) site at Bukit Batok West Avenue 8.

For the Dairy Farm Walk GLS site, at the top of the heap is Sim Lian Group’s entities, Sim Lian Land and Sim Lian Development. The group submitted a bid of $347 million, which works out to $980 psf per plot ratio (psf ppr).



The second highest bid of $970 psf ppr came from a joint venture between United Engineers and Soilbuild Group, which is just 1% below the top bid, points out Nicholas Mak, head of research at ERA Realty.

With the land rate of $980 psf ppr, the new condo project at the Dairy Farm Walk residential site could be launched at $1,880 to $1,980 psf, Mak estimates.

The 354,060 sq ft, 99-year leasehold site, has the potential to yield about 350 to 400 residential units.



Sim Lian Group has been an active participant in the last few government land sale (GLS) tenders, but was unsuccessful until now. The group’s 2,203-unit Treasure at Tampines private condo (a redevelopment of the former Tampines Court collective sale site) was fully sold as of February 13, 2022. With that, SIm Lian’s development pipeline was completely depleted. Notably, Treasure at Tampines was considered the biggest private condominium project launched in Singapore to date, and it was fully sold within three years of its launch in February 2019.

Second highest bidder, United Engineers Ltd, is the developer of the 460-unit Dairy Farm Residences, located just one street away from the Dairy Farm Walk GLS site. Launched in late 2018, the 99-year leasehold condo is over 95% sold with average price at $1,612 psf psf, based on caveats lodged to date.

“It is not surprising that the tenders for the two plots [at Dairy Farm Walk and Bukit Batok West] - both located in the Outside Central Region (OCR) - have witnessed keen bidding among developers,” says Wong Siew Ying, PropNex head of research and content. “Following the robust new home sales last year, many developers are eager to top up their land inventory, especially for OCR sites.”



According to PropNex, as at the end of 2021, the unsold stock of new private homes (excluding ECs) in the OCR was at a record low of 3,972 units, based on data from URA. “At that level, the balance inventory of unsold mass market homes could potentially be snapped up in less than a year – going by the annual average sales of about 4,900 new OCR units (ex. ECs) between 2017 and 2021,” adds Wong.

Another factor contributing to the enthusiastic tender for the site is its medium size and palatable price of $347 million, which poses lower risks compared to larger land parcels, observes Ong Teck Hui, JLL senior director of research and consultancy. “Developers are also keen to acquire residential sites to replenish their land banks as the inventory of unsold private residential units is at a record low of 14,333 units as at 4Q2021.”