Great World mall owner Allgreen submits $730.1 million top bid for Zion Road GLS site

SINGAPORE – A 99-year leasehold plot in Zion Road drew lacklustre bidding interest, but it attracted a top bid of $730.1 million from a unit of Allgreen Properties, which analysts said was within market expectations.

The plot, known as Zion Road Parcel B, was on the Government’s reserve list, but it was released for sale after the Urban Redevelopment Authority received an application committing to a bid not lower than $604.6 million.

The tender for the site closed on July 18, with the top bid coming in at 20.8 per cent higher.

This $730.1 million bid from developer Allgreen Properties – which owns the nearby Great World mall – works out to a land rate of $1,304 per sq ft per plot ratio (psf ppr).

Reserve list plots are released for sale only if a developer offers a minimum price that is acceptable to the Government and if there is sufficient market interest.

The tender launch of Parcel B, which can yield 610 new private homes, comes on the heels of the sale of an adjacent site, Zion Road Parcel A.

Parcel A was the first Government Land Sales (GLS) site to pilot a new class of long-stay serviced apartments.

The $1,304 psf ppr bid for Parcel B comes at an 8.5 per cent premium to that of Parcel A, which was awarded in April 2024 to a City Developments-Mitsui Fudosan joint venture for $1.1 billion, or $1,202 psf ppr.

Analysts attributed the higher bid for Parcel B to the absence of a requirement to provide long-stay serviced apartments, which rendered this project less complex and risky.

But Ms Chia Siew Chuin, JLL’s head of residential research for Singapore, said bidding interest for this site was tepid due to concerns over potential competition from other recently awarded GLS private housing sites in the vicinity.

Including the long-stay serviced apartments from Zion Road Parcel A, River Valley Green parcels A and B, about 2,740 new private homes are due to be developed in the area.

“Another 470 units could be added if the River Valley Green (Parcel C) plot on the reserve list is triggered for tender,” said Ms Chia.

Another factor that might have affected bids was a requirement to build a public park, and to include a pedestrian side gate and covered walkway to link the future project to a planned covered linkway along Kim Seng Road. These would add to development costs, she added.

The Zion Road site is one of three residential plots, including those in Canberra Crescent and De Souza Avenue, whose GLS tenders closed on July 18.

Analysts noted measured bidding interest for all three sites, but the 375-unit Canberra Crescent site in the suburbs drew slightly more interest because of potential upgrader demand from the Sembawang, Yishun and Woodlands Housing Board estates.

A tie-up between Kheng Leong and Low Keng Huat (Singapore) submitted the top bid of $279 million, or $793 psf ppr, for the Canberra Crescent plot.

This bid is 23.1 per cent above the $644 psf ppr awarded for nearby GLS site Canberra Drive Parcel A in March 2020. It is also 22 per cent above the $650 psf ppr bid for Canberra Drive Parcel B.

Knight Frank research head Leonard Tay cited pent-up demand and limited new private home supply in the area, as two nearby condominium projects that are under development – The Commodore and The Watergardens At Canberra – are already fully sold.

Meanwhile, Ms Chia pointed out the Canberra Crescent site attracted just three bids, below the average number of contenders for residential sites in 2023.

Analysts say the measured bids reflect developers’ reduced risk appetite given market challenges such as elevated costs, increased risks, and a slowdown in new home sales.

This is especially after new home sales for the first half of 2024 posted a record half-yearly low of 1,916 units on July 15, below the previous floor of 1,977 units in the second half of 2008, according to CBRE.

SL Capital (8), a subsidiary of Sustained Land, submitted a top bid of $278.9 million, or $841 psf ppr, for the 355-unit De Souza Avenue plot, which is close to Bukit Batok Nature Park and Bukit Timah Nature Reserve.

PropNex’s head of research and content Wong Siew Ying said the top bid came in below expectations because the site is not near an MRT station and also faces competition from nearby projects.

These include The Botany at Dairy Farm, Hillhaven, and The Reserve Residences, and an upcoming new launch in Bukit Timah Link later in 2024.

ERA Singapore chief executive Marcus Chu said: “The highest bid submitted – $841 psf ppr – is more typical of that of a suburban GLS site, even though this site is located in the city fringe.”