THE tenders for two state-owned plots that closed on Thursday were a mixed bag, with developers keen to open their cheque books for a site in Pine Grove while a mega-site in Dunman Road got a bit of a cold shoulder.
The results reflect the mood among developers, which are keen to bid for sites in areas with pent-up demand but only up to a point, given the high price tags some mega-plots command.
That seems to have been the issue with the Dunman Road site – the largest Government Land Sales plot sold since the Silat Avenue site (now Avenue South Residence) in May 2018.
It drew just two bids due to the sizeable price quantum, and risks from the latest cooling measures, rising construction costs and economic uncertainty, analysts say.
A unit of the SingHaiyi Group submitted the top bid of US$1.28bil (RM5.6bil), or US$1,350 (RM5,921) per sq ft per plot ratio (psf ppr). The developer declined to comment on its plans for the site.
It was a different story for the Pine Grove (Parcel A) plot, which attracted five bids in what analysts described as one of the tightest races in recent memory.
A joint venture between UOL Group and Singapore Land Group came out tops with a bid of US$671.5mil (RM2.95bil) or US$1,318 (RM5,780) psf ppr – just US$800 (RM3,508) ahead of a bid from a unit of Allgreen Properties.
Despite the tight race, the number of bids was still lower than the average of seven received for tenders that closed earlier this year, noted Catherine He, Colliers’ head of research in Singapore.
Both leasehold sites are in the city-fringe area and are expected to yield a total of 1,555 homes.
UOL Group chief investment and asset officer Jesline Goh said the Pine Grove plot near Mount Sinai Rise will be developed into a 520-unit estate.
Keen interest from home buyers and investors is expected, given its proximity to One-North, Holland Village, The Clementi Mall and The Star Vista, as well as the upcoming Clementi Nature trail, Goh said.
Lam Chern Woon, head of research and consultancy at Edmund Tie, said that despite the site’s positive attributes, developers are “more cautious, given the sombre economic outlook, rising prices and interest rates, and concerns about competition should the neighbouring Parcel B plot in Pine Grove be triggered and awarded”.
Still, there is likely to be pent-up demand, given the absence of new large projects in the Ulu Pandan and Pine Grove area in the past decade, and the possibility of a Cross Island MRT station near Sunset Way, said Lee Sze Teck, Huttons Asia’s senior director of research.
Lacklustre participation
Ong Teck Hui, senior director of research and consultancy at JLL, said the lacklustre tender participation for larger sites like Dunman Road showed developers are mostly cautious despite low unsold inventory and robust sales at new launches Piccadilly Grand and Liv@MB.
“The top bid for the Dunman Road site was 20.3% higher than the next bid at US$1.07bil (RM4.69bil), or US$1,122 (RM4,921) psf ppr, which shows a restrained attempt to compete,” he said.
Tricia Song, CBRE’s head of research for South-East Asia, noted that the site carries heightened development risk – a 35% additional buyer’s stamp duty if the developer fails to sell all units within five years.
“There’s also competition from ongoing launches, and upcoming launches of a neighbouring GLS site at Jalan Tembusu, which could be built up to 640 units and an en-bloc site at Thiam Siew Avenue where 800 units are planned,” she added.
But the US$1.238bil (RM5.43bil) bid, or US$1,350 (RM5,921) psf ppr, for the Dunman Road land topped the previous record of US$768mil (RM3.37bil) or US$1,302 (RM5,710) psf ppr for the Jalan Tembusu site, awarded in January this year, noted PropNex Realty head of research and content Wong Siew Ying.
Steven Tan, chief executive of OrangeTee & Tie, said the strong performance of mega projects such as Normanton Park could have boosted bidders’ confidence that there is still demand for large projects.
“The most recent launch in the vicinity was Liv@MB, which transacted at an average price of US$2,407 (RM10,557) psf, indicating healthy demand,” he added. — The Straits Times/ANN