Mega private residential site in Dunman Road up for sale

A mega site in Dunman Road was put up for sale by public tender yesterday, following the launch of a smaller plot in Pine Grove last week, in a bid to beef up private housing supply as unsold new stock hits record lows.

The 99-year leasehold plot in Dunman Road is the largest site on the confirmed list of the Government Land Sales (GLS) programme. It spans 25,234.3 sq m, has a maximum gross floor area of 88,321 sq m and can yield 1,040 residential units, the Urban Redevelopment Authority (URA) said yesterday.

Huttons Asia's senior director of research Lee Sze Teck said this site will test developers' appetite for huge projects.

"The last mega project launch was Normanton Park. If participation in the Dunman Road GLS tender is good, it will give confidence to the mega developments seeking to go en bloc," he said.

The tender for the site, which comes under the confirmed list of the GLS programme for the first half of the year, will close on June 2. The Pine Grove parcel A site tender also closes on June 2.

URA will also be removing a white site in Kampong Bugis from the GLS reserve list with immediate effect, due to delays in the completion of soil remediation works at the site.

It will review the development staging plans for the site.

Mr Steven Tan, chief executive of OrangeTee & Tie, noted that there may be more joint ventures in the bidding for the Dunman Road site because of its size and expected investment quantum of more than $1 billion.

Said Mr Tan: "We anticipate between four and seven bidders. The top bid could range between $1,250 and $1,350 per sq ft per plot ratio (psf ppr), translating to an overall bid of $1.188 billion to $1.284 billion. The potential selling price of the future development could range between $2,300 to $2,400 psf."

Ms Wong Siew Ying, head of research and content at PropNex Realty, believes that developers may not be deterred by the site's size, given that a number of mega projects have take-up rates of over 90 per cent in recent years, and a relatively limited supply of new private homes in the vicinity.

Future homes on the site should appeal to buyers, given its proximity to Dakota MRT station, and the numerous nearby amenities and schools.

"We estimate that this site tender could receive a top bid of around $1.235 billion to $1.331 billion, reflecting a land rate of $1,300 to $1,400 psf ppr," Ms Wong added.

Analysts noted that a state tender for a site in Jalan Tembusu, located just 800m from the Dunman Road site, saw eight bidders and was awarded in January for $768 million ($1,302 psf ppr).

But the Dunman Road site is likely to draw fewer bidders due to the higher risks involved, said Mr Ong Teck Hui, the senior director of research and consultancy at JLL.

He cited the case of the white site at Marina View, which had only one tenderer at $1.508 billion, and the Jalan Anak Bukit commercial and residential site that was awarded to Far East Organization and Sino Group, which jointly submitted the highest bid of around $1.028 billion.

But there should be fair demand for the Dunman Road site, given that unsold inventory had dropped to 14,333 units as at the fourth quarter last year and developers need to replenish their land bank.

"The tender could draw three to five bidders, and the site is expected to fetch a top bid of between $1.14 billion ($1,200 psf ppr) and $1.24 billion ($1,300 psf ppr)," Mr Ong said.

CBRE's South-east Asia research head Tricia Song said the Dunman Road site is one of the most attractive sites on the GLS programme because of its location attributes, including proximity to Dakota MRT station and popular schools and "unblocked views over a large landed enclave at its southern perimeter".

"Future residents will also have direct access to the Geylang Park Connector, which runs along Geylang River and connects seamlessly to Marina Reservoir and Gardens by the Bay, she added.

But the site carries heightened development risks - a 35 per cent additional buyer's stamp duty on developers should they not sell everything within five years, she noted.

Nonetheless, recent land sales have seen robust tenders, signalling the confidence of developers in the local residential market.

Ms Song cited the two freehold development land parcels recently sold en bloc at $815 million or $1,488 psf ppr in Thiam Siew Avenue, a residential street of landed homes adjacent to Tanjong Katong Road.