Singapore
CBRE commentary on tender closings for Residential sites at Marina Gardens Lane, Plantation Close EC and Resi/Comm site at Tampines Ave 11
June 28, 2023
Associated Contact
Melvin Lin
Head of Marketing & Communications, Singapore
By Tricia Song (宋明蔚), Head of Research, Southeast Asia, CBRE
The tender closings for the URA site at Marina Gardens Lane, and HDB sales sites at Plantation Close EC and Tampines Avenue 11 showcased the cautious sentiment in the market post the 27 April 2023 cooling measures. Marina Gardens Lane, which is in the city centre, saw 4 bids but only one serious bidder at a price in line with expectations. On the other hand, the second EC site at Tengah new town saw fierce competition among 9 bids. The mixed-use site at Tampines Ave 11 saw lukewarm response but 3 decent bids due to its complexity and relatively large residential component. Developers, in general, have lower risk appetites and are leaning towards projects that require less outlay, and those in the suburbs with lower exposure to foreigners and investors segment.
Marina Gardens Lane site:
The Marina Gardens Lane site saw 4 bids with a top bid, from a Kingsford Development JV, of S$1.035 bn or S$1,402 psf ppr, generally in line with expectations. However, the bid-spread with the next highest bidder is a whopping 42.3%, the widest since the 31.3% seen for the Jalan Jurong Kechil site awarded in Sep 2018, which saw only 3 bids and also shortly after the July 2018 cooling measures. The second and third highest bidders for this Marina Gardens Lane site were at S$985 and S$953 psf ppr respectively, while the fourth bid was a fraction at S$201 psf ppr -- all sharply lower than transacted land rates in the location. The top price is credible, compared to nearby and larger white site tender at Marina View, awarded to IOI Properties, in September 2021 which fetched S$1.508 billion or S$1,379psf ppr from just one bidder.
While the attractions are aplenty, including proximity to Marina South MRT station on the Thomson-East Coast Line, and unblocked view over Gardens by the Bay and the signature city skyline of Marina Bay and the CBD, developers might have been cautious due to:
• the most recent cooling measures. In particular, the doubling of ABSD for foreigners to 60% may weigh on the demand risk perceived for prime sites such as Marina Gardens Lane site which typically appeal to foreigners and investors. As proximity to schools, amenities and/or family members are critical factors to attract locals’ owner-occupation, sites like Marina Gardens in the city centre would attract investor and foreigner demand which has been impacted most by the measures.
• It is also a relatively large site with 790 units, and a capital outlay of over S$1bn. With the 35% ABSD rate, developers now face greater risks should they fail to complete and sell all units within the 5-year deadline.
The closest new launch comparable is One Bernam, which is still under construction at Tanjong Pagar, and has sold 47 units in 2023-to-date at a median price of S$2,611psf. Marina One Residences, which is nearest to this site, has seen 8 resales transactions at a median price of S$2,348psf this year.
At the land rate of S$1,402psf ppr, we expect the developer could be looking to launch at prices above S$2,600psf.
Residential/ Commercial site at Tampines Avenue 11
The mixed use site drew 3 bids, with a top bid from the UOL Group of S$1.206bn or S$885 psf ppr, which is 13.9% higher than the second top bid of S$777 psf ppr from Allgreen Properties and Kerry Properties. This will be integrated with a bus interchange and community elements, similar to Jalan Anak Bukit GLS awarded for S$1.028bn or S$989psf ppr in Aug 2021 and the Sengkang Central GLS awarded for S$777.8 mil or S$924psf ppr. However the number of bids and top bid price psf were lower than for those for Jalan Anak Bukit and Sengkang Central probably as it is not the centre of the Tampines town, with a smaller commercial component, and the residential component (and development risk) is also larger with 1,190 dwelling units.
The site is next to the future Tampines North MRT station on the Cross Island Line, and in a relatively mature housing estate from which upgraders’ demand can be drawn in the future. Recent private residential projects, Tenet, Tapestry and Treasure at Tampines have continued to sell very well after continued supply, signalling its popularity with upgraders.
The latest nearby launch is Tenet EC which sold 173 units at S$1390psf in 2023-to-date. Relatively newer projects nearby include The Tapestry which saw resale transactions at median prices of S$1,642 psf, and Treasure at Tampines saw subsale transactions at median prices of S$1,610psf in 2023- to-date.
We expect the developer could be looking to launch the residential units at S$1,750psf.
Plantation Close EC site
The site drew 9 bids from CDL, Qingjian Realty/Santarli Construction, Evia Real Estate/Sinar Mas Land/FRX Capital, Frasers Property/Sekisui House, Hoi Hup Realty/Sunway Developments, Kingsford Development, Hong Leong Group/Mitsui Fudosan Co., Sim Lian Group, and CapitaLand, signalling strong confidence in the EC market. As there were 2 tenderers who submitted an alternative proposal, the bids will go through a Concept Evaluation chaired by BCA to qualify.
In general, the number of bids exceeded the 4 bids in the last EC tender at Bukit Batok West Avenue 5 EC site awarded in Sep 2022 for S$336mil or S$626psf ppr. But this is generally in line with those EC tenders earlier such as the 9 bids at Bukit Batok West Avenue 9 EC site awarded in Mar 2022 for S$266 mil or S$662psf ppr, and the 7 bids for the Tengah Garden Walk, maiden EC site in Tengah to be awarded in Jun 2021 for S$400mil or S$603psf ppr.
We forecast this site which can build some 495 homes will receive a top bid of S$330 mil or S$670 psf ppr with a target launch price of S$1,400psf.
Details:
https://www.ura.gov.sg/Corporate/Media-Room/Media-Releases/pr23-20
https://www.hdb.gov.sg/about-us/news-and-publications/press-releases/27062023-Provisional-Tender-Results-for-Mixed-Use-Development-Site-at-Tampines-Avenue-11-and
The tender closings for the URA site at Marina Gardens Lane, and HDB sales sites at Plantation Close EC and Tampines Avenue 11 showcased the cautious sentiment in the market post the 27 April 2023 cooling measures. Marina Gardens Lane, which is in the city centre, saw 4 bids but only one serious bidder at a price in line with expectations. On the other hand, the second EC site at Tengah new town saw fierce competition among 9 bids. The mixed-use site at Tampines Ave 11 saw lukewarm response but 3 decent bids due to its complexity and relatively large residential component. Developers, in general, have lower risk appetites and are leaning towards projects that require less outlay, and those in the suburbs with lower exposure to foreigners and investors segment.
Marina Gardens Lane site:
The Marina Gardens Lane site saw 4 bids with a top bid, from a Kingsford Development JV, of S$1.035 bn or S$1,402 psf ppr, generally in line with expectations. However, the bid-spread with the next highest bidder is a whopping 42.3%, the widest since the 31.3% seen for the Jalan Jurong Kechil site awarded in Sep 2018, which saw only 3 bids and also shortly after the July 2018 cooling measures. The second and third highest bidders for this Marina Gardens Lane site were at S$985 and S$953 psf ppr respectively, while the fourth bid was a fraction at S$201 psf ppr -- all sharply lower than transacted land rates in the location. The top price is credible, compared to nearby and larger white site tender at Marina View, awarded to IOI Properties, in September 2021 which fetched S$1.508 billion or S$1,379psf ppr from just one bidder.
While the attractions are aplenty, including proximity to Marina South MRT station on the Thomson-East Coast Line, and unblocked view over Gardens by the Bay and the signature city skyline of Marina Bay and the CBD, developers might have been cautious due to:
• the most recent cooling measures. In particular, the doubling of ABSD for foreigners to 60% may weigh on the demand risk perceived for prime sites such as Marina Gardens Lane site which typically appeal to foreigners and investors. As proximity to schools, amenities and/or family members are critical factors to attract locals’ owner-occupation, sites like Marina Gardens in the city centre would attract investor and foreigner demand which has been impacted most by the measures.
• It is also a relatively large site with 790 units, and a capital outlay of over S$1bn. With the 35% ABSD rate, developers now face greater risks should they fail to complete and sell all units within the 5-year deadline.
The closest new launch comparable is One Bernam, which is still under construction at Tanjong Pagar, and has sold 47 units in 2023-to-date at a median price of S$2,611psf. Marina One Residences, which is nearest to this site, has seen 8 resales transactions at a median price of S$2,348psf this year.
At the land rate of S$1,402psf ppr, we expect the developer could be looking to launch at prices above S$2,600psf.
Residential/ Commercial site at Tampines Avenue 11
The mixed use site drew 3 bids, with a top bid from the UOL Group of S$1.206bn or S$885 psf ppr, which is 13.9% higher than the second top bid of S$777 psf ppr from Allgreen Properties and Kerry Properties. This will be integrated with a bus interchange and community elements, similar to Jalan Anak Bukit GLS awarded for S$1.028bn or S$989psf ppr in Aug 2021 and the Sengkang Central GLS awarded for S$777.8 mil or S$924psf ppr. However the number of bids and top bid price psf were lower than for those for Jalan Anak Bukit and Sengkang Central probably as it is not the centre of the Tampines town, with a smaller commercial component, and the residential component (and development risk) is also larger with 1,190 dwelling units.
The site is next to the future Tampines North MRT station on the Cross Island Line, and in a relatively mature housing estate from which upgraders’ demand can be drawn in the future. Recent private residential projects, Tenet, Tapestry and Treasure at Tampines have continued to sell very well after continued supply, signalling its popularity with upgraders.
The latest nearby launch is Tenet EC which sold 173 units at S$1390psf in 2023-to-date. Relatively newer projects nearby include The Tapestry which saw resale transactions at median prices of S$1,642 psf, and Treasure at Tampines saw subsale transactions at median prices of S$1,610psf in 2023- to-date.
We expect the developer could be looking to launch the residential units at S$1,750psf.
Plantation Close EC site
The site drew 9 bids from CDL, Qingjian Realty/Santarli Construction, Evia Real Estate/Sinar Mas Land/FRX Capital, Frasers Property/Sekisui House, Hoi Hup Realty/Sunway Developments, Kingsford Development, Hong Leong Group/Mitsui Fudosan Co., Sim Lian Group, and CapitaLand, signalling strong confidence in the EC market. As there were 2 tenderers who submitted an alternative proposal, the bids will go through a Concept Evaluation chaired by BCA to qualify.
In general, the number of bids exceeded the 4 bids in the last EC tender at Bukit Batok West Avenue 5 EC site awarded in Sep 2022 for S$336mil or S$626psf ppr. But this is generally in line with those EC tenders earlier such as the 9 bids at Bukit Batok West Avenue 9 EC site awarded in Mar 2022 for S$266 mil or S$662psf ppr, and the 7 bids for the Tengah Garden Walk, maiden EC site in Tengah to be awarded in Jun 2021 for S$400mil or S$603psf ppr.
We forecast this site which can build some 495 homes will receive a top bid of S$330 mil or S$670 psf ppr with a target launch price of S$1,400psf.
Details:
https://www.ura.gov.sg/Corporate/Media-Room/Media-Releases/pr23-20
https://www.hdb.gov.sg/about-us/news-and-publications/press-releases/27062023-Provisional-Tender-Results-for-Mixed-Use-Development-Site-at-Tampines-Avenue-11-and
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