Commentary on no award for tender of master developer site at Jurong Lake District

After nearly 6 months of evaluation, the Urban Redevelopment Authority (URA) announced on Friday, 13 September, that the Master Developer site at Jurong Lake District (JLD) has not been awarded as the shortlisted concept’s price of $6,888.9 per sqm or S$640 psf ppr is assessed to be too low. 

URA reiterated that the government is committed to the development of JLD as a model for sustainable development, integrating business, residential and recreational spaces, outside of the city centre. To advance this major undertaking, URA will continue to engage with industry stakeholders for feedback on JLD’s plans and review the approach for the Master Developer site. Meanwhile, the Master Developer site at JLD will be placed on the Reserve List, to allow interested tenderers to activate the launch of the site under the Concept and Price Revenue Tender approach, subject to a minimum price that is acceptable to the government.

CBRE comments
We understand that URA had deliberated on this for a long time and after considering many factors, including the soft office market, relatively volatile interest rate expectations between March and now, construction cost uncertainties, and developers’ low risk appetites, pushing through the decentralised vision regardless of land pricing may not be the best idea for now. Nonetheless, we believe it could be a matter of timing and confidence. The site is now placed in the Reserve List and once the macro environment stabilises, more developers could be enticed, and it could still be triggered some time down the road, at an acceptable price. 
   
On the office market, we believe this is a medium-term relief to the islandwide office supply, as some 0.7 million sq ft of potential JLD phase 1 office stock will be pushed back beyond 2030, but unlikely to go away totally as the government remains committed to JLD.   

Recap
• The 6.5-hectare White site at JLD was launched for sale on 22 June 2023 for a Master Developer to kickstart the next phase of development in JLD. The Concept and Price Revenue Tender approach was adopted to evaluate the tender submissions for the site, to ensure that the selected proposal is aligned with the vision for the JLD.  
• The tender for the JLD site closed on 26 March 2024, with a sole tenderer submitting two concept proposals. The sole bidder group consists of CapitaLand Development, City Developments Limited (CDL), Frasers Property, Mitsubishi Estate Co., Ltd. and Mitsui Fudosan (Asia) Pte Ltd. The strategic partnership brings together the combined expertise of the five companies with CapitaLand Development, CDL and Frasers Property holding a 25% stake each in the consortium, and Mitsubishi Estate and Mitsui Fudosan (Asia) holding a 12.5% stake each. 
• After evaluating both concept proposals, one of the proposals was thereafter shortlisted. However, the tender has not been awarded as the shortlisted concept, at the tendered price of $6,888.90 per square metre of GFA, was assessed to be too low.

Read URA's press release here.