No Bids for Upper Thomson Road Housing Site at URA Tender
A state land plot in Upper Thomson received no bids from developers at a tender that closed on Wednesday, June 19. Market watchers had anticipated up to three bids for the suburban plot.
Before the tender closed, consultants predicted offers ranging from S$750 to S$1,020 per square foot per plot ratio (psf ppr). However, no developers submitted bids, reflecting the current market challenges.
The outcome follows recent data showing a significant decline in new home sales, with numbers hitting near all-time lows. Recent government land sale tenders have seen minimal interest and lower-than-expected bids.
This Upper Thomson plot is the second offered under a new category requiring developers to include serviced apartments in the project. The adjacent Upper Thomson Road (Parcel B) drew a single bid in April from a joint venture between GuocoLand and Hong Leong Holdings at S$780 million or S$905 psf ppr. That site, zoned purely for residential use, will house around 940 units.
The Upper Thomson Road (Parcel A) site tendered on Wednesday is expected to yield 540 residential units and 100 serviced apartments. The 2.44-hectare site has a gross plot ratio of 2.2 and a maximum gross floor area (GFA) of 53,729 square meters, including 1,000 sq m GFA for a childcare center and 4,700 sq m GFA for long-stay serviced apartments.
Analysts believe developers were deterred by the requirement to include long-stay serviced apartments, a still-untested rental category involving higher land and development costs and specialized management expertise.
The first Government Land Sale site for long-stay serviced apartments, located in Zion Road, closed in April with a sole bid of S$1.1 billion or S$1,202 psf ppr from a City Developments Limited-Mitsui Fudosan tie-up. This plot is near the prime River Valley residential district, which may have boosted developer confidence.
In contrast, the Upper Thomson land parcel is in the Springleaf area, not typically associated with mid-term tenants, noted Leonard Tay, Knight Frank’s research head. Developers may have been cautious due to competition with private landlords and the suburban location, which lacks comprehensive amenities and schools.
The SA2 apartments have a minimum-stay requirement of at least three months, unlike existing serviced apartments with a seven-day minimum stay. This new concept remains untested in suburban areas, said Tay.
Additionally, developers had to incorporate biodiversity-sensitive designs and environmental safeguards due to the site’s proximity to a catchment area, increasing overall capital outlay, noted Chia Siew Chuin, JLL’s head of residential research.
The quieter location and absence of nearby amenities posed additional risks, said Chia. Tricia Song, CBRE’s head of research for South-east Asia and Singapore, also highlighted the competition from over 3,500 units in the nearby Lentor area.
Nicholas Mak, chief research officer at Mogul.sg, pointed out that this was the first time in over 20 years a state land tender closed with zero bids, the last being in February 2001 for plots in Geylang Lorong 9 and Lengkong Empat.
Following the tender outcome, Propnex head of research Wong Siew Ying suggested the government might include the Upper Thomson Road plot in the upcoming GLS slate for H2 2024 and review the serviced apartment component.
Lee Sze Teck, Huttons Asia’s senior director of data analytics, noted that SA2 sites might perform better if located near the city center or job opportunities.
A third serviced apartment site will be tendered in September. The Media Circle plot in Buona Vista, with a 60-year lease, is designated for long-stay serviced apartments only, with commercial use on the first storey. This 5,764.3 sq m site can yield 520 serviced apartments.
