Sale of condo land at Jalan Tembusu & Lentor Hills Road
The tenders for two Government Land Sale (GLS) development land parcels closed on 18 January 2022. These are the first GLS residential land tenders to close after the government introduced the latest round of cooling measures on 16 December 2021.
The new condominium developments on these two land parcels could be launched for sale to the public in 2023 or 2024. Therefore, the tender results could provide some insights into property developers’ expectations of the conditions of the residential property market in the coming one to two years.
The two residential land parcels
The details for the two GLS sites are included in the table below.
Table 1 | Details of the two GLS sites
One of the residential site is located at Jalan Tembusu, in District 15 near the East Coast. The site is expected to yield about 630 to 650 non-landed housing units.
The land parcel is within close proximity to good schools such as Tanjong Katong Primary School and Chung Cheng High School. The upcoming Tanjong Katong MRT station on the Thomson-East Coast Line, which will be operational around 2024, is about 600 metre from the subject site. This will attract many potential homebuyers to the future development of this plot.
Figure 1 | Location map of GLS site at Jalan Tembusu
Below is the table of comparable uncompleted condominiums to the Jalan Tembusu GLS site.
Table 2 | Comparable residential projects to Jalan Tembusu GLS
The other land parcel is at Lentor Hills Road (Parcel A), near Yio Chu Kang. The GLS sites at Lentor Hills Road are near to CHIJ St Nicholas Girls’ School, one of the more prestigious schools in Singapore. There will also be future parks connecting the development to the nearby Lower Peirce Reservoir.
Figure 2 | Location map of GLS site at Lentor Hills Road (Parcel A)
Below is the table of comparable condominiums near the condominium site at Lentor Hills Road.
Table 3 | Comparable residential projects to Lentor Hills Road (Parcel A) GLS
The tender for the site at Jalan Tembusu attracted a healthy 8 bids from property developers. This shows that property are still eager to acquire residential development land, especially if the site is attractively located.
The top bid of $768 million for Jalan Tembusu site was submitted by City Developments Limited. It translated to a land rate of $1,302 psf ppr, which is within our expectation. A condominium with about 630 to 650 units could be built on this site. The units could be launched at $2,300 to $2,400 psf, based on current cost estimates. The new development on this site may not face much competition when it is launched for sale in the future as there is not much new development expected to be launched in 2023.
Furthermore, the government does not sell residential development sites in the East Coast area often, which is another reason for the relatively high level of interest from developers. The land parcel at Lentor Hills Road (Parcel A) attracted 4 bids from developers.
The relatively lower number of bids from developers compared to the eight bids received for the Jalan Tembusu site is partly because the latter is located in the middle class city fringe East Coast area.
The top bid for the site at Lentor Hill Road (Parcel A) is 12% lower than the land rate paid for the Lentor Central site in 2021. The developers could have factored in the risk that the government could sell more land parcels in the Lentor area, which would increase the competition for future development on this site.
The top bid of $586.59 million for Lentor Hills Road site was submitted by a consortium consisting of Hong Leong Holdings, GuocoLand and TID (a joint venture between Hong Leong and Mitsui Fudosan). The bid translated to a land rate of $1,060 psf ppr. A 23-storey condominium with about 590 to 610 units could be built on this site. It could be launched at above $1,900 psf in 2023.
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Source: By ERA Research