3 sites in Lentor, Bukit Batok draw tepid bids

Tenders for three state-owned plots in Lentor and Bukit Batok that closed on Tuesday attracted fewer bids than expected, though top bid prices generally held up.

Analysts cited steeper interest rates, rising construction costs, heightened macroeconomic uncertainties, a build-up of new home supply in the Lentor area and upcoming executive condominiums (ECs) near the Bukit Batok area.

Despite the need to replenish their land banks, some developers may be concerned that the Lentor Modern and Lentor Hills Road (Parcel A) sites, which were sold in earlier tenders in July last year and January this year, respectively, have first-mover advantage.

Together with Lentor Central and Lentor Hills Road (Parcel B), whose tenders closed on Tuesday, they can generate about 1,935 private homes, which is a significant supply in one location, JLL noted.

The Lentor Central site drew three bids, while Lentor Hills Road (Parcel B) drew just two.

"Compared with the Lentor Modern site, which was sold at $1,204 psf ppr (per sq ft per plot ratio) in July 2021, prices of the Lentor Central and Lentor Hills sites represent an 8 per cent and 6.1 per cent discount respectively," said Colliers Singapore head of research Catherine He.

A consortium comprising China Communications Construction, Soilbuild Group and United Engineers submitted the top bid of $481 million, or $ 1,108 psf ppr, for Lentor Central, said CBRE.

Lentor Hills Road (Parcel B) attracted a top bid of $276.36 million, or $1,130 psf ppr, from TID Residential, a joint venture between Hong Leong Holdings and Mitsui Fudosan, CBRE said.

Some analysts believe developers' interest in future sites in Lentor may be ignited if Lentor Modern sees good sales this month.

Four bids were submitted for the EC site in Bukit Batok West Avenue 5, with the top bid from a City Developments entity of $336.07 million, or $626 psf ppr.

City Developments group chief executive Sherman Kwek said: "Given the site's proximity to the upcoming Tengah new town and Jurong Lake District, it will benefit from easy access to a wide range of amenities as well as good connectivity to a key business, lifestyle and tourism hub."

However, JLL senior director for research and consultancy Ong Teck Hui said the number of bidders and the top bid for the Bukit Batok West Avenue 5 site "were below expectations".

In comparison, he pointed to the keen contest among nine bidders for an adjacent Bukit Batok West Avenue 8 site and a robust top bid of $662 psf ppr in March.

ERA Realty head of research and consultancy Nicholas Mak said three more EC projects could be launched in the next 18 months.

"Tuesday's tender results of only four bids show that developers are cautious as the prices of new EC projects are near the top end of the price envelope. If developers were to launch a new project at above $1,300 psf, it will likely face buyers' resistance."

OrangeTee & Tie senior vice-president of research and analytics Christine Sun attributed the lukewarm bids to a number of ECs launching in the area, including Copen Grand, a plot in Bukit Batok West Avenue 8 and the Tengah Plantation Loop site.

"Moreover, rising interest rates and higher construction costs may have deterred some developers... Margins are not huge for exec condo developments," she added.

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A version of this article appeared in the print edition of The Straits Times on September 14, 2022, with the headline 3 sites in Lentor, Bukit Batok draw tepid bids. Subscribe