State land tender closings for three 99-year leasehold sites on Tuesday (Jun 27) reflect cautious sentiment among developers for biggish sites, which entail higher risks. These include cooling measures, a reduction in saleable area for non-landed residential projects due to changes in definitions of floor area, and continuing high interest rates and construction costs.

On offer at Tuesday’s tenders were the maiden residential plot in Marina South; and a commercial and residential site in Tampines Avenue 11 that will be integrated with a bus interchange, community club, hawker centre and the future Tampines North MRT station on the Cross Island Line.

The third offering was an executive condominium site in Plantation Close between two future MRT stations on the Jurong Region Line. The plot, which can generate about 500 homes, drew nine submissions, reflecting the positive outlook for this segment, which is least affected by the additional buyer’s stamp duty (ABSD) hikes rolled out in the April property cooling measures. The ABSD increase is aimed primarily at foreign buyers and local investors.

Li Ka-shing unit bottom fishing

The Marina South plot, which can yield about 790 private homes, drew four bids, including a bottom-fishing expedition by Japura Development, an entity linked to Hong Kong billionaire tycoon Li Ka-shing’s CK Asset Holdings.

The Tampines site, which can generate about 1,190 private housing units, drew three bids.

The top bid from Kingsford Group (helmed by Cui Zhengfeng), for the plot along Marina Gardens Lane, was S$1.03 billion or about S$1,402 per square foot per plot ratio (psf ppr). This is 42.3 per cent above the next highest bid, of S$985 psf ppr (from a GuocoLand, GuocoGroup and Hong Leong Holdings tie-up).

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Far East Organization and its sister company Sino Group joined forces with City Developments to place a bid of S$703.3 million or about S$953 psf ppr.

Japura offered S$148 million or S$200.51 psf ppr for the site, which is zoned for residential use with commercial space on the first storey.

A spokesperson for Kingsford said: “The Marina Gardens Lane prized site will feature a first-of-its-kind seafront residential project counting Singapore’s icons Marina Bay Sands and Gardens by the Bay as neighbours. The project will offer homebuyers unblocked sea views and a first-mover advantage in the Marina South precinct.”

CBRE head of research for South-East Asia Tricia Song said only the top bid by Kingsford was in line with expectations for the Marina Gardens plot.

Chia Siew Chuin, head of residential research at JLL Singapore, said: “Although the successful tenderer will have a first-mover advantage in the transformative plans for the Marina South precinct, the area is undeveloped; and the high development cost due to the land size and downtown location as well as development risks could have tempered the confidence of other contenders.”

Edmund Tie’s Lam Chern Woon said the caution that prevailed among the other bidders for the site is likely due to the potential impact on foreign demand after ABSD rates were doubled to 60 per cent for foreigners. “Developers might also be concerned that there are limited amenities and schools in the vicinity that could meet the needs of (local) households.”

Agreeing, PropNex Realty’s head of research and content Wong Siew Ying also highlighted that unlike the more established residential estates, the area does not have public housing that could feed demand from HDB upgraders to support new private home sales.

Developers will also be mindful of the supply of homes in the area – at the adjacent Marina Gardens Crescent site (that is scheduled for tender launch this month) and also projects in the CBD such as in Marina View, Newport Residences and Skywaters Residences that are yet to launch.

The top bid for the Tampines site, about S$1.21 billion or S$885 psf ppr, was from a 50:50 joint venture by a UOL-Singapore Land consortium and CapitaLand Development. It was nearly 14 per cent above the second highest bid, from Allgreen Properties (S$1.06 billion or about S$777 psf ppr).

The remaining bid, from Sim Lian Land and Sim Lian Development, was S$909.09 million or S$666.59 psf ppr.

The top bid was towards the lower end of expectations of S$800-1,100 psf ppr indicated for the site by property consultants polled by The Business Times on Monday. “Despite the attractiveness of the site, developers are careful in their bidding in view of the huge capital resource commitment as well as the uncertain economic environment,” said Chia.

The mixed-use development on the site can be built up to a maximum gross floor area of 1.36 million sq ft.

Spokespersons for UOL and CapitaLand Development said that the proposed project’s roughly 1,190 housing units will capitalise on the low residential inventory in the area. “Moreover, the retail and community amenities in the mixed-use development are expected to cater to the lifestyle needs of the growing residential population in Tampines North. The last awarded Government Land Sale residential site in Tampines was in 2017,” they added.

Commenting on the outcomes for the Tampines and Marina Lane Gardens tenders, Huttons Asia senior director of research, Lee Sze Teck, said: “The higher risks and thinner margins for developers meant they are highly selective of the sites they want to secure. Furthermore, a number of mid- to large-sized developers have secured land in the past 12 months.”

“Some developers may want to reserve their cash for other attractive sites in the second-half 2023 GLS programme,” he added.