GuocoLand and Hong Leong Holdings’ joint venture (JV) has made the only offer for a residential Government Land Sales (GLS) plot along Upper Thomson Road. The JV partners bid $779.6 million for the 344,700 square foot property when the tender concluded on April 4. Using a plot ratio (ppr), the offer price comes out to be $905 psf.
The bid for the land parcel, Upper Thomson Road (Parcel B), is 7.8% less than the price paid by a consortium including Hong Leong Holdings, GuocoLand and CSC Land Group for a GLS site at Lentor Central last September. That GLS site closed today is roughly 1.8km from the Upper Thomson Road GLS location.
For the 158,264 square foot residential plot at Lentor Central, the Hong Leong Holdings, GuocoLand and CSC Land Group consortium put in a winning bid of $435.1 million ($982 psf ppr). Frasers Property turned in a second bid of $410.8 million ($927 psf ppr).
The Upper Thomson Road (Parcel B) GLS site is expected to produce up to 940 homes. But the site has a special conservation element incorporated into the general GFA, according to OrangeTee & Tie CEO Justin Quek. He says this could complicate the project and let the developer generate more original project ideas.
Apart with Upper Thomson Road (Parcel B), URA also started a nearby 262,875 square foot property, Upper Thomson Road (Parcel A), for bid in December. First floor of such site is zoned for commercial use although residential use is intended. It is projected to produce an estimated 21,528 square feet of commercial space and 640 homes including 100 long-stay serviced apartments. June 19 will close the tender for Upper Thomson Road (Parcel A).
Most market watchers expected the GLS site to draw up to five offers when the tender for Upper Thomson Road (Parcel B) started last December. Still, the site got less bids than expected.
This reflects both the low level of interest and the cautious attitude of developers, claims Chia Siew Chiun, head of residential research and consultancy at JLL. She notes that the conservation need could result in extra development expenses and that the rather quiet area lacks basic neighboring facilities.
According to Quek, Parcel A’s size is less than Parcel B’s and the site of Parcel A is adjacent to Springleaf MRT station. “Developers seeking consistent income from the long-stay serviced apartments might want to look at the Parcel A plot nearby,” he advises.
Marcus Chu, CEO of ERA Singapore, notes the site’s rather unproven position as the reason for the “muted interest.” “Not many developers will have the taste for the magnitude of this land; the high-rise condo will be the first of its kind (in this location). Guocoland might, however, copy his success in the Lentor estate since he is aware of the demographics and housing needs in the area.
The Upper Thomson Road (Parcel B) tender closed the same day another GLS site on Zion Road closed. For the 164,451 square foot site, City Developments LTD (CDL) made the lone proposal of $1.107 billion ($1,202 psf ppr). It is the first GLS site testing the government’s long-stay serviced apartment initiative launched last November.
Mohan Sanderan, head of research and data analytics at SRI, says that if the GuocoLand-Hong Leong JV receives the Upper Thomson Road (Parcel B), acquiring the first land parcel in the Springleaf precinct could establish a first-mower advantage to shape the area’s future development, and maybe affect the market dynamics for next land sales in the vicinity.
Sadgeran notes that in 2018 a partnership of nearby boutique developers received the only non-landed GLS site given in the area at Chuong Kuo Road. Lian Soon Holdings, OKP Land and HSB Developments built the site into the 84-unit The Essence condominium.
Given the dearth of new condo launches in the vicinity, Sadgeran argues the new project at Upper Thomson Road (Parcel B) may profit from pent-up demand for a new unit in this location.
While ERA forecasts a range of between $2,000 and $2,100 psf, SRI claims the new development might see a launch price between $2,000 and $2,200 psf. JLL projects a selling price of $2,100 psf.
