CBRE's Commentary on GLS site launches - Jalan Tembusu and Tampines Street 62 (Parcel B) (EC)

By Tricia Song (宋明蔚), Head of Research, Southeast Asia, CBRE

The Urban Redevelopment Authority (URA) and the Housing & Development Board (HDB), released two sites at Jalan Tembusu and an EC site at Tampines Street 62 (Parcel B) for sale today under the first half 2023 (1H2023) Government Land Sales (GLS) Programme on the Confirmed List. Together, these two sites can yield up to 1,540 residential units. Both site tenders will close on 18 July 2023.

Jalan Tembusu (2)

Located in the popular East Coast/Katong precinct, this site can potentially yield approximately 840 residential units on a maximum GFA of 775,033 sq ft.

The site is 400m away from the upcoming Tanjong Katong MRT station on the Thomson-East Coast Line, which offers easy access to the city centre. The land parcel is also within 1km radius to popular secondary schools such as Chung Cheng High School (Main), Tanjong Katong Girls’ School, and Tanjong Katong Secondary School, as well as primary schools such as Tanjong Katong Primary School and Haig Girls’ School. Popular schools within a 2km radius include Kong Hwa School and Tao Nan School.

This site follows the award of a similar but smaller 589,743 sqft GFA land parcel situated directly across the road in January 2022. The latter site received 8 bids and was awarded to a CDL and MCL consortium for S$768.00 mil (S$1,302 psf ppr). It is expected to be launched in Q2 as Tembusu Grand with 638 units. 

Two other new launches in the area are likely to follow shortly, including Grand Dunman (1,012 units) and The Continuum (807 units). Grand Dunman, the Dunman Road GLS site received 2 bids and was awarded to a Sing-Haiyi Group unit for S$1.284 bn (S$1,350 psf ppr) in June 2022. The Continuum, the only freehold project among the three, sits along Thiam Siew Avenue and was sold enbloc to Hoi Hup and Sunway Development in November 2021 for S$815.00 mil (S$1,440 psf ppr incl balconies).

Excluding this new site offered today, over 2,450 new homes in the vicinity are expected to be launched this year.

Despite the large supply, we believe there should be ample pent-up demand in this popular neighbourhood. The last new comparable project should be the 99-year leasehold Liv @ MB at Mountbatten Road, which received overwhelming response upon launch, selling 248 units (of total 298 units) at a median price of S$2,423 psf in 2022.

Older 99-year leasehold projects nearby include The Shore (completed 2013) and Dunman View (completed 2004) transacted at S$1,767 psf and S$1,292 psf in 2022 respectively, while freehold projects such as OLA Residences (completed 2011) and Haig Court (completed 2004), transacted at S$1,448 psf and S$1,703 psf respectively through 2022.

Given the tender for this site will close only on 18 July 2023, developers are likely to take the cue from the sales performance of the new launches. For now, we expect the site could draw 4-6 bids with a top bid at S$1,300 –S $1,400 psf ppr, and developers looking to sell at an average price of $2,350-2,450 psf.

Jalan Tembusu (2) (orange) and surrounding former GLS sites (in purple)

Source: URA Space, onemap

Tampines Street 62 (Parcel B)

The EC site can potentially yield up to 700 units on a maximum GFA of 753,484 sqft. The site’s key draw is its location as it is sits next to the future Tampines North MRT station on the Cross Island Line.

It is located adjacent to EC project, Tenet (618 units), which was newly launched in December 2022 and has since sold 607 units at a median price of S$1,385 psf. Tenet is being built on the Tampines Street 62 (Parcel A) site which was awarded in Jul 2021 to Qingjian Realty and Santarli Construction. Back then, the site was hotly-contested, drawing 9 bids with a top bid of S$422.00 mil ($659 psf ppr) which was a record for EC land.

Considering the robust performance of Tenet which has already sold 98% of its total units about 4 months after its launch, Tampines Street 62 (Parcel B) is expected to see a healthy level of interest from developers, despite the uncertain economic environment and elevated interest rates. Developers’ preference for ECs could stem from the fact that ECs are generally not as affected by the property cooling measures and wealth property taxes, as they are typically for owner-occupiers and first-timers. There is also a limited supply of new EC units in the market, and developers are seeking a less risky development site to add to their inventory.

Another mixed-use GLS site in the vicinity, Tampines Avenue 11 is also currently opened for tender. The private residential site can yield up to 1,190 units and would feature an estimated 150,695 sq ft of commercial space. This site is unlikely to compete with demand for the new project on Tampines Street 62 (Parcel B) as ECs, characterised by their relative affordability and limited supply generally appeal to a different pool of buyers.

CBRE Research estimates that the site could draw 6-8 bids with a top bid of S$650 – S700 psf ppr, and an eventual launch price of S$1,350 – S1,400 psf.

Tampines Street 62 (Parcel B) (location marker) and surrounding former GLS sites

Source: URA Space, onemap