SINGAPORE (EDGEPROP) - The Government Land Sales (GLS) site at Tan Quee Lan Street attracted only two bids at the close of the tender on September 5. The top bid of $800.19 million was submitted by a joint venture between GuocoLand and subsidiaries of Hong Leong Holdings, namely Intrepid Investments and Hong Realty. The bid price translated to $1,535 psf per plot ratio (psf ppr). This is $4.2% higher than the second bid of $1,473 psf ppr submitted by City Developments Ltd (CDL) and MCL Land (a subsidiary of Hongkong Land), says Tricia Song, Colliers International head of research for Singapore.
Desmond Sim, CBRE head of research for Southeast Asia sees the bids as “a defensive move on the part of the developers”.
The bidders for the GLS site on Tan Quee Lan Street
“Both bidders are related parties,” says Nicholas Mak, ERA Realty head of research & consultancy. Both bids for the site on Tan Quee Lan Street are also above the top bid of $1,458 psf ppr for the Middle Road GLS residential site, he points out.
The tender for the GLS site on Middle Road had closed at the end of March, with 10 bids received. Wing Tai Holdings won the site with a top bid of $492 million ($1,458 psf ppr).
“We think some developers could have been put off by the hype over the site and expected aggressive bidding for it,” says Colliers’ Song. “In addition, there might be worries about competition from the Middle Road site and the Midtown Bay project.”
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The site on Tan Quee Lan Street saw two bids, with GuocoLand submitting the top bid of $1,535 psf ppr (Photo: Samuel Isaac Chua/EdgeProp Singapore)
The top bid of $1,535 psf ppr for the site on Tan Quee Lan Street is 5.3% higher than the $1,458 psf ppr paid for the Middle Road site. The slight premium could reflect the more favourable location of the former, as it's adjacent to the Bugis MRT station, says Christine Li, Cushman & Wakefield (C&W) head of research for Singapore and Southeast Asia.
The maximum gross floor area (GFA) for this land parcel was 521,301 sq ft, which could yield about 580 private residential units with commercial space on the first level, estimates Ong Teck Hui, JLL senior director of research & consultancy.
Many developers may have been deterred by the very high capital outlay, adds Ong, as this "increases risks, given the oversupply in the market and an uncertain macroeconomic environment”. As the land price based on the top bid is already $800.2 million, the total development cost of the new project will exceed $1 billion, he adds.
On the other hand, the two bids received reflects the "strong confidence in the Beach Road real estate market” by the developers, says ERA's Mak. GuocoLand is developing the $2.4 billion Guoco Midtown mixed-use development on Beach Road - which is just across the road from Tan Quee Lan Street. CDL is the developer of the South Beach mixed-use development, further down on Beach Road.
The site on Tan Quee Lan Street offers an opportunity to build a signature project on top of the Bugis MRT interchange station for the Downtown and East-West Lines, says Colliers’ Song. She estimates a breakeven price of $2,200 psf for the new project, with a future selling price above $2,400 psf.