Sim Lian scores top bid of $828.8m for Jalan Tembusu state land tender
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Among reasons for the lacklustre bids is the fact that the Jalan Tembusu site is a large site that can yield 840 units.
PHOTO: SCREENGRAB FROM GOOGLE MAPS
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SINGAPORE - A state land tender for a 99-year leasehold site for private homes in Jalan Tembusu scored a top bid of $828.8 million from Sim Lian Group, while an executive condominium (EC) site in Tampines Street 62 has garnered strong interest due to robust take-up at recent EC launches.
Tuesday’s tender bids show that developers seem to have lower risk appetites, avoiding projects that require large capital outlays, and that they prefer EC sites in the suburbs, which are less exposed to cooling measures, noted Ms Tricia Song, head of research for South-east Asia at CBRE.
Sim Lian’s top bid of $828.8 million, or $1,069 per sq ft per plot ratio (psf ppr), for the Jalan Tembusu site is just 0.1 per cent above the next bid of $828 million, or $1,068 psf ppr, from a joint venture between City Developments Limited (CDL) and Frasers Property – implying a consensus on the site’s value.
Analysts noted that this site, near the upcoming Tanjong Katong MRT station,
Sim Lian’s bid is nearly 18 per cent below CDL and MCL Land’s successful bid of $1,302 psf ppr for the Tembusu Grand site.
Edmund Tie’s head of research and consulting Lam Chern Woon said: “Headwinds have intensified over the past 12 months.
“Hikes in buyer’s stamp duty, additional buyer’s stamp duty (ABSD) and financing costs will continue to weigh on affordability. Rising construction costs will also threaten overall profitability.”
Among reasons for the lacklustre bids is the fact that the Jalan Tembusu site is a large site that can yield 840 units. It is also in an area with a lot of supply, with nearly 2,500 units launched in 2023 – Tembusu Grand (638 units), The Continuum (816 units), and Grand Dunman (1,008 units), Ms Song said.
The winner of this site will have stiff competition for buyers, and would also have factored in the sales performance of Tembusu Grand and Grand Dunman, said Ms Chia Siew Chuin, JLL’s head of residential research and consultancy.
As at end-June, Tembusu Grand had sold 57 per cent of its total units at an average price of $2,474 psf, while Grand Dunman sold 55 per cent of all units at an average price of $2,500 psf over its launch this past weekend.
At the land price of $1,069 psf ppr, the break-even cost for the site is estimated at $2,000 psf, and the selling price of the future project could range between $2,300 psf and $2,380 psf, Ms Chia said.
Ms Wong Siew Ying, head of research and content at PropNex Realty, said Sim Lian is likely land banking, because its project Treasure at Tampines is fully sold and The Botany at Dairy Farm is more than half sold.
Meanwhile, the Tampines Street 62 Parcel B EC site, which can yield 700 units, drew bids from seven entities. Of these, four bidders submitted alternative proposals under the modified concept and price revenue tender system, used to encourage the adoption of innovative construction technologies and building methods.
“Several developers that failed in their bid for the Tampines Street 62 EC Parcel A tender have returned to vie for Parcel B,” Ms Wong said.
The robust take-up of EC projects, including the 618-unit Tenet in Tampines, and the nine-party contest during the tender closing for the Plantation Close EC site in June 2023 have bolstered developers’ confidence, Ms Chia said.
The Tampines Street 62 site is adjacent to Tenet, which had 21 units left by end-June.
The strong demand for EC units can potentially spill over to the future project, which is near the upcoming Tampines North MRT station and the mixed-use project in Tampines Avenue 11, she added.
Ms Wong expects that the top bid could come in at $650 psf ppr to $680 psf ppr, and even touch the $700 mark.
OrangeTee & Tie deputy chief executive Justin Quek said ECs remain attractive because the price gap between new private condominiums in the suburbs and ECs remains significant.
Another pull factor is that HDB upgraders need not pay ABSD upfront even if they keep their flat as they wait for their EC to be completed, he said. But they will need to dispose of their flat within six months of taking possession of the EC unit.
