Orchard Boulevard site draws four bids, top bid of $1,617 psf ppr below expectations

Tenders for two Government Land Sales (GLS) sites have closed, with the residential site at Orchard Boulevard and an executive condominium (EC) site at Plantation Close in Tengah drawing four bids each. The top bid for the Orchard Boulevard site came in generally below market expectations.

According to tender results released by the Urban Redevelopment Authority (URA) on Thursday (1 February), the highest offer for the Orchard Boulevard site was submitted by a joint venture between UOL Group and Singapore Land Group. Their bid of $428.28 million translates to $1,617 per square foot per plot ratio (psf ppr), which is 2.46% higher than the second-highest bid of $418 million.

Analysts noted that the hike in Additional Buyer's Stamp Duty (ABSD) for foreign buyers, which impacted luxury home demand, coupled with rising construction costs, prompted developers to adopt a cautious stance in their bidding.

Earlier market forecasts had anticipated up to five bids for the Orchard Boulevard site, with top bids projected to reach around $2,200 psf ppr.

Experts: Narrow Bid Spread Reflects Developers' Prudent Approach

While the number of bids for the Orchard Boulevard site met expectations, the top bid fell short of initial estimates. Nonetheless, the land rate stands as the highest for a residential site in the area since May 2018, when a parcel on Cuscaden Road was awarded at $2,377 psf ppr.

The narrow spread among the bids suggests developers exercised caution due to elevated home ownership costs for foreign buyers, who typically account for a larger proportion of purchasers in the Core Central Region (CCR).

When bidding for the site, developers were mindful of the ABSD rate for foreign buyers being raised to 60% in April last year, which dampened demand from foreign investors for prime luxury homes.

The more conservative bidding also likely reflects the prevailing inflationary environment and escalated construction costs.

Hoi Hup and Sunway Consortium Submits Top Bid of $701 psf ppr for Plantation Close EC Site

Tender also closed on the same day for the EC site at Plantation Close. According to tender results released by the Housing & Development Board (HDB) on Thursday, a consortium comprising Hoi Hup Realty and Sunway Developments submitted the highest bid of $423.38 million, translating to $701 psf ppr.

Analysts had previously expected the Plantation Close EC site to draw between six and eight bids, with top offers ranging from $690 to $710 psf ppr.

In September last year, Hoi Hup Realty and Sunway Developments were awarded the adjacent EC parcel at $703 psf ppr.

If awarded this plot, Hoi Hup Realty and Sunway Developments could explore amalgamating the two parcels into a mega EC development, subject to approval from the authorities.

A key factor behind the reduced number of bids for this Plantation Close EC site was likely developers' consideration of the pipeline supply from the neighbouring EC plot, which is slated to yield 495 residential units.