The Government Land Sale (GLS) site at Tengah Gardens Avenue recently closed its tender on Jan 14, receiving three bids. The top bid of $675 million, or $821 per square foot per plot ratio (psf ppr), was submitted by a consortium led by Hong Leong, including GuocoLand Singapore and CSC Land Group.
The 99-year leasehold site is zoned for “Residential with Commercial at 1st storey” and measures approximately 273,906 sq ft with a maximum gross floor area (GFA) of 821,720 sq ft. According to URA, the site has a potential to yield up to 860 residential units.
If awarded, the Hong Leong-led consortium plans to build an 860-unit condominium, taking advantage of the upcoming Jurong Region Line (JRL) which will enhance connectivity in the area. Loke Kee Yeu, general manager (Projects) at Hong Leong Holdings Limited, believes that the JRL will contribute to the development of the new Tengah estate.
The Tengah Gardens Avenue site is strategically located near the upcoming Hong Kah MRT Station on the JRL. It is only one stop away from the upcoming Tengah Town Centre and offers direct access to the second Central Business District (CBD) at Jurong Lake District.
Despite the accelerated homebuyer activity seen in the latter part of 2024, developers remain cautious in their sentiments, according to Leonard Tay, head of research at Knight Frank Singapore. Another GLS site at Dairy Farm Walk also closed its tender on Jan 14, receiving only two bids.
Tay believes that developers may have focused on existing sites that are scheduled for launch in 2025. He also points out that the tight bid price spread between the three bids (less than 1%) suggests that developers are being more conservative in their bids.
Mark Yip, CEO of Huttons Asia, also notes that developers are mindful of keeping their land bids reasonable to maintain an attractive selling quantum for buyers. He predicts that more developers will opt for joint bids for GLS sites this year to diversify risk, which could be a reason for the consistently low number of bids seen in GLS tenders.
In Singapore, it is crucial for international investors to have a thorough understanding of the regulations and limitations surrounding property ownership. Unlike landed properties with stricter ownership regulations, foreigners are typically allowed to purchase condominiums with fewer restrictions. However, they are still subject to the Additional Buyer’s Stamp Duty (ABSD), which currently stands at 20% for their initial property purchase. Despite this additional expense, the consistent stability and potential for growth in the Singapore real estate market continue to attract foreign investment. Singapore Projects are among the top options for foreign investors looking to enter the market.
According to Marcus Chu, CEO of ERA, another factor contributing to the low number of bids could be the current availability of GLS sites. With seven sites still open for tender and six more to launch in the first half of 2025, developers may be taking a cautious approach and weighing their options amidst moderated interest rates.
Interest in the Tengah Gardens Avenue site may also have been tempered by the availability of another nearby GLS site, notes Justin Quek, CEO of OrangeTee & Tie. He suggests that developers may be considering bidding on a different GLS site along Lakeside Drive and Lakeside MRT, which is scheduled to launch for tender in April 2025.
If awarded, the Tengah Gardens Avenue site will be the first private residential site (excluding Executive Condominiums) in the Tengah HDB township. The first EC project in the estate, Copen Grand, was launched in 2022 and sold out in a month. The winning bid of $400.32 million, or $603 psf ppr, was submitted by joint developers City Developments Ltd (CDL) and MCL Land in May 2021.
The opportunity to launch the first private condominium in the new Tengah estate may have attracted the Hong Leong-led consortium, says ERA’s Chu. He believes that the consortium may see this as an opportunity to replicate their successes in other sites, such as Lentor, Upper Thomson, and Bugis, in Tengah.
As the first private condo, the development could potentially attract a wider range of buyers compared to ECs, which are subject to HDB eligibility criteria and restrictions such as a five-year minimum occupation period (MOP) and a monthly household income ceiling of $16,000. Mohan Sandrasegeran, head of research & data analytics at SRI, believes that the site’s proximity to the future Anglo-Chinese School (Primary) within 2km may also be attractive to families with school-aged children.
If the site is awarded at the top bid of $821 psf ppr, PropNex estimates that the average selling price of the new private condo could be around $2,000 psf. Overall, with the positive performance seen in the real estate market in the past year, developers may continue to cautiously bid for GLS sites, considering factors such as the current supply of sites and moderated interest rates.…