THERE was a sharp contrast in demand for two 99-year leasehold residential sites at state land tenders on Tuesday (Jul 18).

A private housing site in Jalan Tembusu – off Haig Road and Tanjong Katong Road – fetched just two bids. It can yield about 840 residential units. A site for executive condominium (EC) housing development in Tampines Street 62, meanwhile, drew seven bidders.

Analysts attribute this to the difference in supply dynamics in the two regions. In addition, ECs – a public-private housing hybrid – are less affected by property cooling measures.

The higher of the two bids received for the plot in Jalan Tembusu, near the upcoming Tanjong Katong MRT station on the Thomson-East Coast Line, was S$828.8 million or about S$1,069 per square foot per plot ratio (psf ppr). The bid was from a tie-up between Sim Lian Land and Sim Lian Development.

This was just S$800,000 more than the only other bid, by a tie-up between City Developments Limited (CDL) and Frasers Property. The 0.1 per cent gap is one of the lowest in recent years, noted Edmund Tie head of research and consulting, Lam Chern Woon.

Lam also noted that the bids for the Jalan Tembusu plot are about 18 per cent lower than the S$1,302.26 psf ppr winning bid by CDL for the site across the road (which is being developed into the Tembusu Grand condominium) in a Government Land Sales (GLS) tender in January 2022.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

He added that they are also about 21 per cent lower than the S$1,350.50 psf ppr winning bid by SingHaiyi for a GLS site in Dunman Road in June 2022 (to be developed into the Grand Dunman condominium).

CBRE’s head of research for South-east Asia, Tricia Song noted too that the two bids at the latest tender in Jalan Tembusu is a far cry from the eight bids for the neighbouring plot at the January 2022 tender.

Saturation in District 15

Observers such as Wong Siew Ying of PropNex Realty said that “developers may be wary about the supply of new private homes in the vicinity, with some potentially giving it a miss on concerns that there may be a saturation of sites in this locale, despite District 15’s popularity among buyers”.

Three projects were launched for sale in District 15 between April and July this year: Tembusu Grand, with 638 units; The Continuum, with 816 units; and Grand Dunman, with 1,008 units. This adds up to a total of 2,462 units.

“These launches have seen healthy sales, but collectively, there are still about 1,300 units of new private homes that are unsold at the three projects,” Wong said.

Edmund Tie’s Lam said market headwinds have intensified in the past 12 months, while hikes in Buyer’s Stamp Duty and Additional Buyer’s Stamp Duty (ABSD), as well as elevated financing costs will continue to weigh on home-buying affordability.

“Rising construction costs, coupled with lower effective saleable area as a result of gross floor area definition changes, will threaten the overall profitability if a winning bid is too aggressive.”

He added: “Perhaps the topmost factor in the consideration of developers is that the overall private home price trajectory appears more fluid.

“With multiple moving parts, a conservative bid price appears to be the logical and prudent approach, in order to ensure sufficient pricing manoeuvre, amid the competition to achieve a project sell-out and qualify for the ABSD remission on residential land purchase.”

The seven bidders for the EC site in Tampines Street 62 included CDL; CSC Land Group (Singapore); and a partnership between Frasers Property and MCL Land.

Four consortiums also took part in the tender.

One included Forsea Residence, Qingjian Realty and Santarli Realty. Second, Hoi Hup Realty teamed up with its long-standing partner Sunway Developments for a bid. A third consortium comprised Intrepid Investments, TID Residential, Apricot Capital and SLB Development. Sim Lian Land and Sim Lian Development were the remaining consortium to bid for the site.

The four consortiums each chose to submit an alternative proposal, on top of a base prefabricated, pre-finished volumetric construction (PPVC) bid.

PPVC is a building method in which large modules, complete with finishes, are manufactured in factories and assembled on-site. The alternative bid could use non-PPVC technology or a hybrid of technologies to potentially enhance the project’s productivity.

The tender for the Tampines EC site was conducted by the Housing and Development Board. Bids received for the site will be evaluated under a modified concept-and-price revenue tender system; the results of the tender will be published later.

The Tampines plot, which is next to the Tenet EC project and near the future Tampines North MRT station on the Cross Island Line, can generate about 700 homes.

Property consultants polled by The Business Times on Monday said they expected the site to draw four to 11 bids. Their forecasts for the top bid were in the S$620 to S$700 psf ppr range.

The next-door Tenet site drew nine bids at a tender in July 2021, with the winning bid of S$659 psf ppr cast by a consortium that included Qingjian and Santarli.

Justin Quek, deputy chief executive officer of OrangeTee & Tie, said: “The price gap between new private condos in the suburbs and ECs remains significant. ECs will continue to be attractive for their affordability to eligible buyers.

“The increases in ABSD rates in late April make new ECs more appealing as HDB upgraders do not need to pay ABSD upfront even if they keep their flats until the completion of their new EC.”

Tampines Street 62 (Parcel B) is near the Tampines Avenue 11 GLS plot, which was awarded recently. The site is slated for an integrated development with a bus interchange, community club and hawker centre, as well as connection to the upcoming Tampines North MRT station.

“This could be an attractive factor for prospective EC buyers, as it will offer greater convenience and improved transport connectivity,” said PropNex’s Wong.