Commentary on URA to launch the tender for the Reserve List site at Zion Road (Parcel B)

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

The Urban Redevelopment Authority (URA) announced today that it has accepted an application from a developer to put up the Residential site at Zion Road (Parcel B) for sale by public tender. This is a Reserve List site on the first half 2024 (1H2024) Government Land Sales Programme.

URA has received an application from a developer for the site to be put up for public tender. The developer has committed to submit a bid not lower than a minimum price of $604,567,890 in the tender for the land parcel. As the minimum price committed by the developer is assessed to be acceptable to the Government, the site will be released for sale by public tender.

In accordance with the procedures of the Reserve List system, URA is making public the minimum price committed for the site. However, the identity of the applicant will not be released. URA will launch the public tender for the site in May 2024 and close the tender in July 2024.

With a land area of about 0.9 ha, the Residential site at Zion Road (Parcel B) will have a maximum permissible gross floor area of 52,002 sqm and can yield about 610 private residential units.

CBRE comments: 
This triggering of the release of Parcel B site for sale from the Reserve List came very shortly after the Zion Road (Parcel A) was awarded on 16 April. 

A recap of the Parcel A site: 
• The residential with commercial at 1st storey site at Zion Road Parcel A received 1 bid of $1.107 bn ($1,202 psf ppr) when its tender closed on 4 Apr and was awarded to CDL-MFA Vega Property Pte. Ltd. and CDL-MFA Altair Property Pte. Ltd, a CDL and Mitsui Fudosan joint venture on 16 April. The plot is a pilot Long Stay Service Apartment (SA2) site, a hybrid developmental site comprising of 735 conventional housing units and 435 – 500 long-stay serviced apartments – which require a minimum stay of three months, up from the minimum stay of seven days for existing serviced apartments.  
• At a unit price of $1,202 psf ppr, the top bid was below market expectations and a significant 30% lower than the comparable land parcel across the road, which now houses the 455-unit Riviere along Jiak Kim Street. In Dec 2017, the site which drew 10 bids was awarded to Frasers Property for $955.4 million or $1,733 psf ppr. Riviere, which is now fully sold, saw 47 transactions in 2023 at a median price of $3,083psf.
 
For Parcel B, the minimum price of S$604.6 mil translates into S$1,080 psf ppr, which is about 10.1% lower than Parcel A’s S$1,202psf ppr. In our opinion, this is a very attractive minimum land rate, notwithstanding the weak appetite of developers recently. Without the SA2 component and at about 60% the GFA of Parcel A, Parcel B poses lower development risk and should warrant a higher land rate. We expect CDL-Mitsui JV to be interested in defending the area, and more developers to be interested in this plum site. We expect 3-4 bids and top bid price of S$1,300-1,380 psf ppr or about S$730-770 mil.