URA releases state land sale sites in Margaret Drive, Media Circle

Analysts expect bidding for these two land parcels to be conservative amid slowing housing market

May 30, 2024

THE Urban Redevelopment Authority (URA) on Thursday (May 30) released two residential sites – one in Margaret Drive and the other in Media Circle – for sale under the first half of the 2024 government land sales (GLS) programme.

Developers are likely to remain conservative in bidding for these plots, as was the case in recent tender exercises, as the housing market slows further, say analysts.

The two land parcels launched for sale are on the confirmed list. Confirmed list sites are launched according to schedule regardless of demand; sites on the reserve list, on the other hand, are put up for tender only when a developer makes an offer acceptable to the government.

The 9,522.3-square-metre (sq m) plot on Margaret Drive in the Queenstown area is expected to yield 460 private residential homes. It has a maximum gross floor area (GFA) of 39,994 sq m, including a minimum 500 sq m for a childcare centre, and a 99-year lease.

The other land parcel along Media Circle in the Buona Vista area will be launched for tender as a dedicated long-stay serviced apartment site with a commercial element on the first floor. It is on a 60-year lease.

At 5,764.3 sq m and a maximum GFA of 24,211 sq m, this plot could provide around 520 long-stay serviced apartments. These apartments are a new rental category introduced last year to help meet short-term supply needs.



Between the two sites, Wong Siew Ying, PropNex head of research and content, expects stronger interest for the Margaret Drive site, given its attractive location in a “well-established residential estate in the city fringe”.

This is also the first GLS residential site in the area since 2017, she noted. The last one was at Stirling Road, where 99-year leasehold condo Stirling Residences now stands. The tender drew 13 bidders then, with a winning bid of more than S$1 billion and a land rate of S$1,051 per square foot per plot ratio (psf ppr).

ERA chief executive Marcus Chu pointed out that the plot comes with “relatively lower development risks for developers”, thanks to its “palatable size and regular layout”.

Market watchers, therefore, expect the Margaret Drive plot to receive around three bids, with a top bid at between S$494 million and S$537 million, based on a unit land cost of S$1,150 to S$1,250 psf ppr.

The land parcel in Media Circle, on the other hand, is likely to draw only a muted response from developers, probably just a bid or two, coming in at around S$222 million to S$261 million, or a land rate of S$850 to S$1,000 psf ppr, said PropNex’s Wong.

Ngiam Juyong, Huttons Asia project director, attributes the caution to the new business model calling exclusively for long-stay serviced apartments. This means developers will require a longer time to recoup their initial capital investment, he said.

Wong also noted that the previous tender exercise for Zion Road (Parcel A) – the government’s pilot project for this new asset class – attracted just one bid in April. The bid came from a City Developments Ltd-Mitsui Fudosan tie-up at S$1.1 billion or S$1,202 psf of GFA.

Still, she listed some upsides with the new asset class: “Apart from the ability to tap recurring income from leasing the units, developers do not have to worry about marketing and selling the residential units, or falling foul of the five-year Additional Buyer’s Stamp Duty deadline,” she pointed out.

The Media Circle parcel also holds the potential to attract a large pool of tenants who are working or studying in the area, said the chief executive officer of OrangeTee & Tie, Justin Quek.

“(This) may result in a healthy rental income for the landlords,” he added. “With future government plans to establish more business spaces in one-north…we may see a greater number of workers in the area.”

ERA’s Chu noted that many plots of land in the one-north area are still subject to more detailed planning by the government. “More high value-added firms could relocate or establish their footprint at Media Circle in the future, which can further drive housing demand,” he said.

The tender for the Margaret Drive site closes at noon on Aug 1, and that for the Media Circle plot, at noon on Sep 19.

https://www.businesstimes.com.sg/pro...e-media-circle