Singapore
Commentary on URA tender closings of Zion Road Parcel B, Canberra Crescent and De Souza Avenue
July 18, 2024
Associated Contact
Melvin Lin
Head of Marketing & Communications, Singapore
By Tricia Song (宋明蔚), Head of Research, Southeast Asia, CBRE
As expected, developers continued to display heightened caution, with tame bidding observed at the URA tender closings today (18 Jul 2024) for the residential sites at Zion Road Parcel B (610 units buildable), Canberra Crescent (375 units) and De Souza Avenue (355 units).
Consistent with the lacklustre interest observed at neighbouring site Zion Road Parcel A in April and nearby River Valley Green Parcel A in June, Zion Road Parcel B (610 units) drew 2 bids though the top bid price is largely within expectations. The site was initially on the H1 2024 Reserve List before getting triggered on 22 Apr 2024 and launched later on 13 May 2024 with a minimum bid price of $604.57 mil ($1,080 psf ppr). The other two suburban sites, Canberra Crescent (375 units) and De Souza Avenue (355 units), while of palatable size, are not near MRT stations and hence received lukewarm response -- 3 and 2 bids respectively, of which De Souza Avenue site drew a top bid price below expectations, probably as it is in a largely private and landed enclave and lacks a large HDB upgraders catchment.
This underscores continued cautiousness among developers after H1 2024 new home sales posted a record half-yearly low of 1,916 units earlier this week, below the previous floor of 1,977 units in H2 2008. Coupled with expectations of a delay in interest rate cuts, developers have turned very selective and wary of more prime sites with an investor or foreigner focus amid uncertain end-user demand after the most recent cooling measures in April 2023. Even for suburban sites, they probably still prefer locations that have superior locational attributes such as key transport nodes, amenities, within 1km of popular schools or near a large HDB upgraders catchment.
Zion Road Parcel B
The plot at Zion Road Parcel B (610 units) drew 2 bids and a top bid price of $730.09 mil or $1,304 psf ppr in line with expectations, submitted by a unit of Allgreen Properties.
Given its smaller size, closer proximity to Great World City and without requirements for an SA2 component, the site recorded a unit psf price 8.5% higher than the neighbouring Zion Road Parcel A (735 conventional dwelling units and 435-500 SA2 units) which was awarded on 16 Apr 2024 to its sole bidder, a joint venture between CDL and Mitsui Fudosan Co for $1.102 bn or $1,202 psf ppr. The top bid price on a per sq ft basis, however, trailed the recently awarded more palatable River Valley Green Parcel A (380 units) which is located right next to Great World MRT station. River Valley Green Parcel A site received 2 bids and was awarded for $464.00 mil ($1,326 psf ppr) to the top bidder, an entity of Wing Tai Holdings.
Submitting a bid 10.5% higher than the second bid of $1,181 psf ppr from Hong Leong Holdings, Allgreen Properties who owns nearby shopping mall Great World City was likely keen on the site given their familiarity with the area.
We believe that the developer would take cue from the launch prices at preceding sites in the area, with the proposed development potentially achieving at least $3,000 psf. Newly completed 99-year project Riviere in the locality saw 47 transactions in 2023 at a median price of $3,083psf.
Canberra Crescent
The plot at Canberra Crescent (375 units) drew 3 bids and a top bid price of $279.00 mil or $793 psf ppr in line with our expectations, submitted by a tie-up between Kheng Leong Co. Pte. Ltd. and Low Keng Huat (Singapore) Ltd. There seems to be some consensus between the top two bids as the top bid is just 1.4% higher than the second bidder’s S$782 psf ppr.
With a top bid unit price of $793 psf ppr, this is about 20% higher than nearby private residential GLS land parcels at Canberra Drive Parcel A (220 units) and Canberra Drive Parcel B (455 units). The former which now houses The Commodore drew 5 bids and was awarded on 9 mar 2020 for $129.20 mil ($643.9 psf ppr) while the latter, now existing project, The Watergardens at Canberra drew 4 bids and was awarded 9 Mar 2020 for $270.2mil ($650.4 psf ppr). Both aforementioned projects have been fully sold and thus the developer need not be concerned of competing new launches or unsold inventory in the locale. In addition, it can draw upgraders’ demand from nearby HDB estates in Sembawang and Yishun.
The Watergardens at Canberra saw two subsale transactions in 2024 at a median price of $1,686 psf while The Commodore sold its last 9 units in 2023 at a median price of $1,528 psf and did not clock any subsale transactions in 2024.
At a top bid price of $793 psf ppr, the future average launch price for this Canberra Crescent site could range from $1,700 – 1,800 psf.
De Souza Avenue
The plot at De Souza Avenue (355 units) drew 2 bids within expectations but a top bid price of $278.90 mil ($841 psf ppr) below expectations, submitted by a unit of Sustained Land.
This top bid price per sq ft basis is 16% below the nearest GLS site at Jalan Jurong Kechil (now Verdale, 258 units) which drew 3 bids and was awarded on 7 Sep 2018 for $215.00 mil ($1,002 psf ppr). The land rate decline could be a reflection of higher construction costs, financing costs, area harmonisation and the increased ABSD on developers and investors since 2018.
There were 2 secondary market transactions in Verdale in 2024 at a median price of $1,983 psf ppr. At a top bid price of $841 psf ppr, the future average launch price for this De Souza Avenue site could range from $2,000 – 2,100 psf.
As expected, developers continued to display heightened caution, with tame bidding observed at the URA tender closings today (18 Jul 2024) for the residential sites at Zion Road Parcel B (610 units buildable), Canberra Crescent (375 units) and De Souza Avenue (355 units).
Consistent with the lacklustre interest observed at neighbouring site Zion Road Parcel A in April and nearby River Valley Green Parcel A in June, Zion Road Parcel B (610 units) drew 2 bids though the top bid price is largely within expectations. The site was initially on the H1 2024 Reserve List before getting triggered on 22 Apr 2024 and launched later on 13 May 2024 with a minimum bid price of $604.57 mil ($1,080 psf ppr). The other two suburban sites, Canberra Crescent (375 units) and De Souza Avenue (355 units), while of palatable size, are not near MRT stations and hence received lukewarm response -- 3 and 2 bids respectively, of which De Souza Avenue site drew a top bid price below expectations, probably as it is in a largely private and landed enclave and lacks a large HDB upgraders catchment.
This underscores continued cautiousness among developers after H1 2024 new home sales posted a record half-yearly low of 1,916 units earlier this week, below the previous floor of 1,977 units in H2 2008. Coupled with expectations of a delay in interest rate cuts, developers have turned very selective and wary of more prime sites with an investor or foreigner focus amid uncertain end-user demand after the most recent cooling measures in April 2023. Even for suburban sites, they probably still prefer locations that have superior locational attributes such as key transport nodes, amenities, within 1km of popular schools or near a large HDB upgraders catchment.
Zion Road Parcel B
The plot at Zion Road Parcel B (610 units) drew 2 bids and a top bid price of $730.09 mil or $1,304 psf ppr in line with expectations, submitted by a unit of Allgreen Properties.
Given its smaller size, closer proximity to Great World City and without requirements for an SA2 component, the site recorded a unit psf price 8.5% higher than the neighbouring Zion Road Parcel A (735 conventional dwelling units and 435-500 SA2 units) which was awarded on 16 Apr 2024 to its sole bidder, a joint venture between CDL and Mitsui Fudosan Co for $1.102 bn or $1,202 psf ppr. The top bid price on a per sq ft basis, however, trailed the recently awarded more palatable River Valley Green Parcel A (380 units) which is located right next to Great World MRT station. River Valley Green Parcel A site received 2 bids and was awarded for $464.00 mil ($1,326 psf ppr) to the top bidder, an entity of Wing Tai Holdings.
Submitting a bid 10.5% higher than the second bid of $1,181 psf ppr from Hong Leong Holdings, Allgreen Properties who owns nearby shopping mall Great World City was likely keen on the site given their familiarity with the area.
We believe that the developer would take cue from the launch prices at preceding sites in the area, with the proposed development potentially achieving at least $3,000 psf. Newly completed 99-year project Riviere in the locality saw 47 transactions in 2023 at a median price of $3,083psf.
Canberra Crescent
The plot at Canberra Crescent (375 units) drew 3 bids and a top bid price of $279.00 mil or $793 psf ppr in line with our expectations, submitted by a tie-up between Kheng Leong Co. Pte. Ltd. and Low Keng Huat (Singapore) Ltd. There seems to be some consensus between the top two bids as the top bid is just 1.4% higher than the second bidder’s S$782 psf ppr.
With a top bid unit price of $793 psf ppr, this is about 20% higher than nearby private residential GLS land parcels at Canberra Drive Parcel A (220 units) and Canberra Drive Parcel B (455 units). The former which now houses The Commodore drew 5 bids and was awarded on 9 mar 2020 for $129.20 mil ($643.9 psf ppr) while the latter, now existing project, The Watergardens at Canberra drew 4 bids and was awarded 9 Mar 2020 for $270.2mil ($650.4 psf ppr). Both aforementioned projects have been fully sold and thus the developer need not be concerned of competing new launches or unsold inventory in the locale. In addition, it can draw upgraders’ demand from nearby HDB estates in Sembawang and Yishun.
The Watergardens at Canberra saw two subsale transactions in 2024 at a median price of $1,686 psf while The Commodore sold its last 9 units in 2023 at a median price of $1,528 psf and did not clock any subsale transactions in 2024.
At a top bid price of $793 psf ppr, the future average launch price for this Canberra Crescent site could range from $1,700 – 1,800 psf.
De Souza Avenue
The plot at De Souza Avenue (355 units) drew 2 bids within expectations but a top bid price of $278.90 mil ($841 psf ppr) below expectations, submitted by a unit of Sustained Land.
This top bid price per sq ft basis is 16% below the nearest GLS site at Jalan Jurong Kechil (now Verdale, 258 units) which drew 3 bids and was awarded on 7 Sep 2018 for $215.00 mil ($1,002 psf ppr). The land rate decline could be a reflection of higher construction costs, financing costs, area harmonisation and the increased ABSD on developers and investors since 2018.
There were 2 secondary market transactions in Verdale in 2024 at a median price of $1,983 psf ppr. At a top bid price of $841 psf ppr, the future average launch price for this De Souza Avenue site could range from $2,000 – 2,100 psf.
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