Developers Wary of Future Private Home Demand as Two Government Land Tenders Draw Muted Bids

Government land sales (GLS) tenders for two sites have seen muted interest, with only a single consortium bidding for the Marina Gardens Crescent white site. The top bid came in at $770.46 million, reflecting a lower land rate on a per square foot per plot ratio (psf ppr) basis compared to the nearby Marina Gardens Lane site that closed last year.

Meanwhile, a residential site in Media Circle within the one-north precinct drew three bids, with the top bid coming in at $395.29 million.

Analysts noted that the first tender results released this year indicate that property developers remain cautious amid prevailing property cooling measures and elevated borrowing costs.

According to tender results released by the Urban Redevelopment Authority (URA) for the two GLS sites, the sole bidder for the Marina Gardens Crescent site was a consortium comprising GuocoLand (Singapore) under GuocoLand, Intrepid Investments under Hong Leong Holdings, and TID Residential.

The consortium submitted a bid of $770.46 million, which translates to $984 psf ppr. This is 29.8% lower than the $1,402 psf ppr fetched for the Marina Gardens Lane site whose tender closed last year. At the time, the GuocoLand-led consortium also participated in the tender for Marina Gardens Lane with a bid of $985 psf ppr, finishing as the second-highest bidder, before the site was eventually awarded to a consortium led by Kingsford Huray under Kingsford Group.

Large Site Sizes Require Substantial Capital, Deterring Developers

Analysts believe developers are concerned about future private residential demand in this area. The government's hike in Additional Buyer's Stamp Duty (ABSD) for foreign buyers has led to a pullback by foreign investors. Furthermore, because of the site's large footprint, substantial development capital is required, and high interest rates have made developers hesitate.

Facing the headwinds of cooling measures, developers have shown waning appetite for sites in this precinct that demand higher financial commitments.

Since the Marina Gardens Crescent site was launched for tender in late June last year, very few new private residential projects have launched in the city centre. TMW Maxwell, which launched last August, has sold only six units to date at a median price of $3,338 psf.

The tightening of ABSD has prompted many foreign buyers to steer clear of the local market, making developers even more cautious. Analysts project that residential units developed on this site could fetch selling prices between $2,800 and $3,200 psf.

With the top bid on the lower side, it may not meet the government's reserve price. If the government accepts this bid and awards the site, average selling prices for the new private homes could start from $2,500 psf.

The Marina Gardens Crescent parcel is a 99-year leasehold mixed-use commercial and residential site that can yield approximately 775 residential units and 64,560 sq ft of commercial space.

GuocoLand stated that it plans to develop the site into a mixed-use development tailored for local residents and diverse commercial operators, supporting the government's vision of transforming Marina South into an attractive, sustainable, and community-centric precinct.

Also closing tender on the same day was the Media Circle site. The top bid was submitted by a consortium comprising CNQC Realty (Clementi) under Qingjian Realty and Forsea Residence at $1,191 psf ppr, which was 2.7% higher than the second-highest bid of $385 million.

This site can yield about 355 residential units and approximately 4,300 sq ft of commercial space.

The number of bidders for this site was fewer than those for the nearby Slim Barracks Rise and One-North Gateway land parcels.

Located close to numerous educational institutions, the National University of Singapore (NUS), the National University Hospital (NUH), one-north, and the Singapore Science Park, the site has strong potential to attract a large pool of prospective tenants and buyers who work or study nearby.

The new private residential project is expected to draw investor interest for rental yield, given the sizeable working population in the adjacent one-north tech and business cluster.

Another upcoming Media Circle site slated for launch is a pilot site for long-stay serviced apartments, which could add a further 515 units. With progressive development, Media Circle will transform in the coming years into a vibrant hub where people can live, work, and play.

Given that the site is located further from the MRT station, projected selling prices are estimated to range between $2,350 and $2,400 psf, slightly lower than the $2,441 psf achieved at Blossoms by the Park.