Record bid for Tengah EC site, 15 bids for Ang Mo Kio condo plot signal developers' hunger for land

Singapore

DEVELOPERS continue to be hungry for residential development land with the latest state tenders for two 99-year leasehold plots attracting top bids that were above market expectations.

One of the two plots, in the new estate of Tengah in Singapore's western part, fetched a record top bid of S$603.17 per square foot per plot ratio (psf ppr) for an executive condominium (EC) development. This is the first site in Tengah for ECs, which are a public-private housing hybrid. The plot attracted seven bids.

The second plot, along Ang Mo Kio Avenue 1, opposite the Bishan-Ang Mo Kio Park and near Mayflower MRT Station which will open this year and also in close proximity to various popular schools, fetched a top bid of nearly S$1,118 psf ppr.

The top bid was from a joint venture between UOL Group, Singapore Land Group and Kheng Leong Group. They paid 6.3 per cent more than the second-highest bid (from a tie-up between City Developments Ltd or CDL and MCL Land).

The strategy of sharing risk by participating through a consortium, as well as fairly manageable size of the development, which can yield about 370 units, would have been considerations in formulating their land bid price.

UOL chief investment and asset officer, Jesline Goh, said the site will be "a timely replenishment for our land bank, given that Avenue South Residence and Clavon are more than 65 per cent and 80 per cent sold respectively".

In all the Ang Mo Kio plot drew 15 bids, towards the high end of market expectations.

Market observers say Tuesday's tender closings reflect keener competition among developers for sites amid declining unsold inventory.

JLL Singapore's senior director of research and consultancy, Ong Teck Hui said: "The current tightening of measures due to Covid-19 has not dampened demand for sites, showing developers' positive outlook on demand from buyers and firm prices."

CDL and MCL missed out on placing the top bid for the Ang Mo Kio private housing site, but they emerged the top bidder for the EC plot in Tengah Garden Walk.

Their bid price busts the previous record of S$583 psf ppr set in 2018, by CDL in partnership with TID for a site in Sumang Walk in Punggol now being developed into the Piermont Grand EC.

But CDL can take comfort in the fact that the bid on Tuesday was "by a razor-thin margin of only 0.03 per cent versus the next bid", as the group's chief executive Sherman Kwek put it.

The second-highest bid, from CSC Land Group (Singapore), was S$602.99 psf ppr. The plot is about 500 metres to Tengah MRT station and 600 metres to Hong Kah and Tengah Plantation stations - all on the upcoming Jurong Regional Line.

CDL and MCL's scheme envisages a project of about 620 units.

ERA Realty head of research and consultancy, Nicholas Mak, estimates that the new EC project in Tengah could be launched at about S$1,200 psf, higher than the average prices of the current launched EC projects.

For the Ang Mo Kio Avenue 1 private housing site, Mr Mak said the new condo on the site may be launched at S$1,900-2,000 psf.

The two plots were from the H2 2020 Government Land Sales (GLS) confirmed list, where sites are launched according to schedule regardless of demand.

This is in contrast to sites on the reserve list, which are put up for tender when a developer makes an offer acceptable to the government.

Leonard Tay, head of research at Knight Frank Singapore, noted that given the strong interest for the two sites at Tuesday's tender closing, along with developers' dwindling unsold residential inventory and the fact that minimal land for private residential development was acquired during the pandemic year of 2020, perhaps developers should now look towards the sites on the GLS reserve list.

"In the H1 2021 GLS reserve list, there are five private residential sites (including an EC plot) that could yield about 3,095 units in addition to three more white sites where mixed developments there can potentially create another 2,345 homes. Instead of pursuing the same sites in tender exercises from the confirmed list, developers could look towards triggering sites on the reserve list.

"The present climate remains a cautious one amid community infections and the prospect of further restrictions or even lockdowns. However, the possibility of a land-binging frenzy looms once the economy is firmly poised in recovery and vaccinations have significantly reduced the dangers of Covid-19.

"And as long as developers are not willing to dip into the reserve list for the essential raw material in their business, the government might show reticence in expanding the selection of sites for the next-half's GLS Programme by very much."