UOL-SingLand JV tops bids for prime Orchard site at lower-than-expected S$1,617 psf ppr 

DEVELOPERS turned in subdued bids for a prime Orchard area site in a state tender on Thursday (Feb 1), reflecting the elevated risk facing residential projects in the Core Central Region (CCR) in the current market.

A UOL Group-Singapore Land joint venture topped bids for a small Orchard Boulevard plot, with a S$428.3 million bid that valued the District 10 residential parcel at S$1,616.75 per square foot per plot ratio (psf ppr).

Bids were close, but came in at the low end of expectations. Offers were also markedly lower – by 30 to 40 per cent – than a Cuscaden Road state-land lot in the same district that was sold in 2018 at S$2,377 psf ppr.

The UOL-SingLand’s joint venture bid on Thursday is just 2.5 per cent higher than the next highest bid of S$1,577.95 psf ppr, from an AllGreen Properties unit. A Wing Tai-linked entity came third with its offer of S$1,541 psf ppr, and Sustained Land was fourth at about S$1,487 psf ppr.

The tight bid-price spread among the four bids reflected cautious developer sentiment, said Wong Siew Ying, PropNex head of research and content.

This was also the first land tender to close in the CCR since the increase in Additional Buyer’s Stamp Duty (ABSD) was introduced in April 2023, said Tricia Song, CBRE’s head of research for Singapore and South-east Asia. 

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Demand for prime residential property has been hit hard by a sharp hike in stamp duties for foreign buyers and investors, as well as increased property tax rates and higher interest rates. “Foreigners typically gravitated towards the Orchard Road area before the increased ABSD,” said Leonard Tay, Knight Frank Singapore’s head of research.

Growth in home prices in the CCR lagged other regions in 2023, rising 1.9 per cent, compared to 3.1 per cent in the city fringe Rest of Central Region and 13.7 per cent in the suburban Outside Central Region.

In the current environment, market watchers had expected to see up to four bids for the Orchard Boulevard plot, with offers ranging from S$1,600 to S$2,000 psf ppr and future selling prices pitched at over $3,000 psf. 

Chia Siew Chuin, JLL’s head of residential research, said: “While the subject site is attractive in terms of its location, plot size and scale, the tepid response and measured bid prices reflect that developers are cognisant of prevailing market challenges and have factored in the impact of the 60 per cent ABSD on foreign buyers and higher ABSD rates for investors.”

The tender closing today also comes about two weeks after the state sale of a Marina South site closed with just one offer that came in far below expectations. The Urban Redevelopment Authority (URA) has yet to announce if the site will be awarded at the bid price of nearly S$770.5 million or S$984 psf ppr, which came from a GuocoLand-Hong Leong Group consortium.

The Orchard Boulevard site is the first government land sales (GLS) site made available in the Orchard area since the Cuscaden Road site was awarded in May 2018. 

SC Global Developments and two Hong Kong-listed players, New World Development and Far East Consortium, paid S$2,377 psf ppr for the Cuscaden Road site, beating eight other bidders and setting a record for GLS sites then.

The finished project, Cuscaden Reserve, was first marketed in 2019 at prices ranging from S$3,300 to S$3,500 psf. To date, only 12 units of the 192-unit project have been sold, according to URA caveats data. The last transacted unit sold for S$3.5 million, or S$3,777 psf in December 2023.

The Orchard Boulevard site can yield an estimated 280 residential units, with commercial units on the first floor. The 99-year leasehold site is 7,031.4 square metres (sq m) and has a maximum gross floor area of 24,610 sq m.

Liam Wee Sin, group chief executive of UOL, said it plans to develop a high-rise luxury development with 36 storeys or more together with SingLand. “The site has very attractive locational attributes and direct MRT connection to the Orchard Boulevard station. This Orchard Road site is also a timely addition to our luxury collection in sought-after locations such as Nassim, Meyer and Watten,” he said.

The freehold Watten House project surprised on the upside when it sold 57 per cent, or 102 out of 180 units, at a private preview in November 2023 at an average price of S$3,230 psf.

This year, UOL and SingLand are expected to launch their Meyer project, coming up on land acquired through the collective sale of Meyer Park condominium in February 2023.

Analysts put the break-even cost for the Orchard Boulevard project in the range of S$2,500 psf to S$2,900 psf, and foresee selling prices of S$3,200 psf to S$3,500 psf.

“With a possible average price for the project at above S$3,000 psf when launched, this price range might just prove not only palatable, but also attractive for Singaporean homebuyers and permanent residents, whether for occupation or investment, and therefore be a compelling project in the prime Orchard Road area,” said Knight Frank’s Tay.

The Orchard Boulevard location could also pique the interest of investors looking to capitalise on medical tourism, said Marcus Chu, ERA’s chief executive officer.