The Urban Redevelopment Authority in Singapore has accepted low bids from joint ventures led by City Developments Ltd. (CDL) and GuocoLand, owned by billionaire Kwek Leng Beng and his cousin Quek Leng Chan, for two prime residential sites in the city. The bids were likely accepted due to the large quantum for both parcels, taking into consideration factors such as high construction costs, elevated borrowing costs, and government cooling measures. CDL and Mitsui Fudosan offered S$1.1 billion for a site on Zion Road to build housing units across multiple towers, while GuocoLand and Hong Leong Holdings submitted a bid of S$780 million for a site in Upper Thomson Road to build around 940 residential units.
The bid for the Zion Road site, equivalent to S$1,202 per square foot per plot ratio, was 30% lower than nearby land parcels sold in 2017. This lower bid was likely accepted by URA due to changing market conditions over the past few years, as housing demand has slowed following property curbs and taxes on foreign buyers. Despite this, the Zion Road residential projects are expected to attract local buyers, particularly Singaporean homebuyers and permanent residents, as the average price for the project is estimated to be around S$3,000 per square foot when launched.
The GuocoLand-led consortium’s bid for the Upper Thomson Road site was slightly below expectations but reflective of the plot’s large size and the competitive market landscape. The winning bid of S$780 million will allow for the construction of around 940 residential units on the 32,024 square meter plot. The competitive nature of the bidding process and the current market conditions likely influenced the acceptance of this bid by URA.
Despite the slowing property sales and the relatively lower bids for the residential sites, analysts believe that the projects in Zion Road and Upper Thomson Road could be compelling for local buyers. The prime locations of these sites, close to Orchard Road and the Downtown Core, coupled with the scale of the residential components, are expected to attract interest from Singaporean homebuyers and residents. Analysts predict that the average price range for the projects could be attractive for both occupation and investment purposes.
Overall, the acceptance of the low bids for the residential sites by joint ventures led by CDL and GuocoLand highlights the changing market conditions in Singapore’s real estate sector. The government’s acknowledgment of these conditions, along with factors such as high construction costs and borrowing expenses, likely influenced the decision to award the parcels. The developers’ plans to build housing units in prime locations and the potential appeal of these projects to local buyers bode well for the future development and success of the residential sites in Zion Road and Upper Thomson Road.
