CBRE commentary on tender closings for residential sites at Jalan Tembusu and Tampines St 62 EC

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

The tender closings for the URA site at Jalan Tembus, and HDB sales site at Tampines St 62 EC saw a repeat of the contrasting sentiments between suburban and non-suburban sites just seen in last month’s tenders of Marina Gardens Lane and Tengah EC.  Jalan Tembusu, which is in the city fringe (Rest of Central Region), saw just 2 bids, at a price much below expectations. On the other hand, the EC site at Tampines St 62 (Parcel B) saw robust competition among 7 bids. Developers appear to have lower risk appetites and avoid projects that require large capital outlay, and continue to prefer ECs in the suburbs which are less exposed to cooling measures.  

Jalan Tembusu site

The Jalan Tembusu site saw 2 bids with a top bid, from Sim Lian Group, of S$828.8 mil or S$1,069 psf ppr, significantly below expectations. The bid-spread with the next highest bidder, CDL and Frasers Property JV is a mere 0.1% or $800,000 difference, one of the smallest margins, implying a consensus on the value of the site. The number of bids as well as top bid are a far cry from the Tembusu Grand site, just across the road, which was tendered in January 2022, received 8 bids and was awarded to a CDL and MCL consortium for $768.00 mil ($1,302 psf ppr). 

Response to this site has been lacklustre possibly due to: this site is not within 1 km from Kong Hwa Primary School which has been a key draw for Tembusu Grand; this site is also larger at 840 residential units on a maximum GFA of 775,033 sqft, and concerns of ABSD should developer be unable to sell all in 5 years; there is quite a lot of supply in this area with 2,500 units launched this year – Tembusu Grand (638 uints), The Continuum (816 units), and Grand Dunman (1,008 units).

Tembusu Grand was launched in April 2023 with a total of 638 units, and has sold 364 units (57%) at a median price of S$2,462psf as of caveats downloaded on 16 July.

At this top bid price of S$1,069psf ppr, we expect the developer could launch at $2,300 psf. 

Tampines St 62 (Parcel B) EC site

The site drew 7 bids from CDL, CSC Land Group, China Communications Construction Co./Qingjian Realty/Santarli Construction, Grand Brilliance Group, Hoi Hup Realty/Sunway Developments, Hong Leong Group/Mitsui Fudosan Co./Otto Solutions, and Sim Lian Group, signalling strong confidence in the EC market. As there were 4 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 is in line with the 7-9 bids seen in most EC tenders 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. Developers’ preference for ECs could stem from the fact that ECs are generally not as affected by the recent property cooling measures, as they are 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.

It is located next to another EC project, Tenet (618 units). 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 $422.00 mil ($659 psf ppr) which was a record for EC land. 

Tenet was newly launched in Dec 2022 and has since sold 614 units at a median price of $1,386 psf as of caveats downloaded on 16 July.  

We forecast this site which can build some 700 homes will receive a top bid $650 – 700 psf ppr ppr with a target launch price of S$1,400psf. 

Details:

https://www.ura.gov.sg/Corporate/Media-Room/Media-Releases/pr23-27

https://www.hdb.gov.sg/about-us/news-and-publications/press-releases/18072023-Particulars-Of-Tenders-Submitted-For-EC-HDB-Site-At-Tamp-St-62-Parcel-B