Singapore

CBRE commentary on tender closing for URA sale sites at Lentor Central (2), Lentor Hills Road (Parcel B) and Bukit Batok West Avenue 5 (EC) sites

September 13, 2022

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

These sites were released in May and June under the 1H 2022 GLS Confirmed List programme.

In general, the number of bids for the three sites were underwhelming, coming in at 2 to 4 bids. Interest in the Lentor Central and Lentor Hills Road (Parcel B) sites was understandingly lukewarm, mainly due to the ample supply in the vicinity and heightened macroeconomic headwinds. Including the Lentor Modern and Lentor Hills Parcel A site sold in January 2022, the Lentor area will see up to 1,935 new homes being developed. There are two more sites – Lentor Gardens which could yield 530 units on the Confirmed List, and Lentor Central (3) which could yield 475 units on the Reserved List on the H2 2022 GLS. 

Surprisingly, the typically popular EC site, received just 4 bids, the fewest since February 2015 when Anchorvale Crescent site drew three bids. While top bid prices are generally holding up, the results showed that developers are turning more cautious, in the face of potential cooling measures, rising interest rates and recessionary risks, despite their need to replenish landbank.  

Lentor Central (2)

The Lentor Central site attracted 3 bids, with a consortium between China Communications Construction Company, Soilbuild Group and United Engineers emerging the highest tenderer at S$481.03 million or $1,108 psf ppr. This is a lower unit price than the $1,204 psf ppr set for Lentor Modern site in July 2021, but higher than the S$1,060 psf ppr set for the Lentor Hills Road (Parcel A) in January 2022. At this top bid price, we expect the developer could be eyeing a launch price of at least S$2,000 psf.

This site spans a site area of 13,443 square metres (sq m) with a maximum gross floor area (GFA) of 40,333 sq m. The site, which has a maximum building height of 23 storeys, can accommodate 470 units.

Lentor Hills Road (Parcel B)

The Lentor Hills Road (Parcel B) site attracted 2 bids, with a joint venture between Hong Leong Holdings and Mitsui Fudosan Co. being the highest tenderer at S$276.36 million or $1,130 psf ppr. This is higher than the Lentor Central (2) site despite being further away from the Lentor MRT station, potentially due to its smaller size and partially low-rise landed housing views. At this top bid price, we expect the developer could be eyeing a launch price of at least S$2,000 psf.

The Lentor Hills Road (Parcel B) site has a land area of 10,819 sq m with a maximum GFA of 22,720 sq m. A development up to eight and 19 storeys respectively may be built within the site's low-rise and high-rise zones to yield a total of 265 units.

Bukit Batok West Avenue 5 (EC)

ECs are a public-private hybrid housing, and have typically attracted strong bidding due to limited supply and relative affordability.

This plot drew 4 bids and a top bid of S$336.07 million or $626 psf ppr submitted by a CDL entity, below the S$661.7 psf ppr for the Bukit Batok West Avenue 8 site in March 2022, which attracted nine bids and was awarded to Qingjian and Santarli.

It was a tight race as CDL barely edged out the second contender Sim Lian, by just 0.17%. All 4 bids were also tightly bundled within 2% (lowest bid at S$617 psf).  At the top bid land rate of S$626 psf ppr, we expect it could be launched at an average price above S$1,250 psf.

The less-than-stellar interest can be attributed to looming headwinds such as the uncertain economic environment and steeper interest rates which not only increase development costs but could also undermine the demand for new homes. Yielding 495 housing units, demand for the project is likely to be supported by a ready pool of upgraders, on the back of a strong HDB resale market.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.