Consortium led by UOL, CapitaLand places top bid of S$805.39 million for Holland Drive site

Top bid works out to S$1,285 psf ppr, below market expectations, reflecting developers’ continuing risk aversion for large, prime residential sites

May 14, 2024



A PLUM, 99-year leasehold private housing site in Singapore near Holland Village MRT station drew three bids at a state tender on Tuesday (May 14). However, they were below market expectations as developers continue to be cautious about large, prime sites.

The top bid, from a consortium led by UOL Group and CapitaLand Development, was S$805.39 million, or about S$1,285 per square foot per plot ratio (psf ppr).

This is lower than the S$1,350 psf ppr to S$1,500 psf ppr that analysts polled by The Business Times on Monday had forecast generally for the top bid for the site, which can yield about 680 private homes. They had predicted one to five bids for the site.



Justification to award

The second-highest bid, of S$765.26 million or S$1,221 psf ppr, came from a partnership between Intrepid Investments (a unit of Hong Leong Holdings) and Hong Realty. “The difference between the top two bids is 5 per cent, which signifies that this is the market value developers placed on this location. It may be a strong justification to consider awarding the site,” said Huttons Asia project director Ngiam Juyong.

The lowest bid, of S$632 million or about S$1,008 psf ppr, was from Japura Development, linked to CK Asset, which was founded by Hong Kong tycoon Li Ka-shing. The tender was conducted by Singapore’s Urban Redevelopment Authority (URA).

Market watchers noted that the S$1,285 psf ppr top bid is about 32 per cent below the S$1,888 psf ppr fetched in 2018 for the adjacent commercial and residential site. A consortium led by Far East Organization is developing that site into the One Holland Village residential, serviced apartment, retail and office project.

Knight Frank Singapore head of research Leonard Tay said: “Although the pure residential Holland Drive site is not really comparable with the mixed-use One Holland Village parcel, developers are clearly submitting more conservative bids compared with six years ago”.

Additionally, the large number of private housing units that can be generated on the Holland Drive site might have been a dampener on bids.

Wong Siew Ying, head of research and content at PropNex Realty, said: “Given that One Holland Village Residences, with 296 units – far fewer than the estimated 680 units for the Holland Drive plot – took about four years to sell out, developers are likely cautious about the site in Holland Drive, which is slightly further away from the Holland Village MRT station.”

Tricia Song, head of research for Singapore and South-east Asia at CBRE, said that while developers can leverage the Holland Drive site’s substantial size of 680 housing units to reap economies of scale from more facilities, “its larger size also comes with higher developmental risks”.

“This is especially since this site falls just outside the 1 km radius of the popular Henry Park Primary School, and thus may appeal less to locals and young families.” Its prime location would have appealed more to foreign buyers and investors, had it not been for the increases in Additional Buyer’s Stamp Duty (ABSD) rates for such buyer profiles under the April 2023 cooling measures, she added.

The stakes in the consortium that placed the highest bid at the latest tender are: 35 per cent each for CapitaLand Development and UOL, 20 per cent for Singapore Land, and 10 per cent for Kheng Leong.

ERA Singapore’s chief executive officer, Marcus Chu, noted that this is the second joint venture between CapitaLand and UOL, after the Tampines Avenue 11 mixed-use state land sale site the duo clinched last year.

A spokesperson for the consortium said that if awarded the tender, it plans to develop two 40-storey condominium towers accommodating 680 units on the site. “The consortium is confident that the site will be a draw for discerning homebuyers, given its excellent location adjacent to the iconic Holland Village, which offers a compelling lifestyle proposition and is popular with both local and expatriate communities,” she added.

The 296-unit One Holland Village Residences, launched in November 2019, was fully sold by the developer by August 2023, at an average price of S$2,804 psf. The last 63 units were sold in 2023 at an average price of S$2,943 psf.

Selling-price projections

Song of CBRE said the future condo project on the Holland Drive plot has the potential to achieve an average selling price starting from $2,800 psf.

Knight Frank’s Tay estimates the breakeven cost at between S$2,500 psf and S$2,700 psf, depending on technical, material and design considerations. “Launch prices are likely to start from S$2,800 psf, with a possible average price of about S$2,900 psf,” he added.

ERA’s Chu, too said the selling price could start from S$2,800 psf.

Wong of PropNex estimates the average selling price “could come in at above S$2,700 psf”.

According to Ngiam of Huttons, the Holland Drive site is the last plot of land for private residential development in the popular Holland Village enclave. “The neighbouring parcel will be launched as a Build-To-Order HDB project in June 2024,” he noted. It is right next to the One Holland Village mixed-use development and a short walk to Holland Village MRT station.

The Holland Drive site, which measures 133,343 square feet (sq ft) and has frontages on Holland Drive, North Buona Vista Road and Holland Road, can be built to a maximum gross floor area of 626,717 sq ft.

It is close to existing public housing estates along Holland Drive as well as private condominiums and Good Class Bungalow areas along North Buona Vista Road and Holland Road. The site is also near established schools such as Nanyang Primary, Henry Park Primary and Fairfield Methodist (Primary).

The future project on the site will be well-served by amenities such as retail, and food and beverage offerings in Holland Village.

Summing up the bids for the Holland Drive site at Tuesday’s tender, PropNex’s Wong said: “Notwithstanding the appealing location, developers are circumspect, as we once again witnessed relatively conservative bidding.”

https://www.businesstimes.com.sg/pro...and-drive-site