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ROBERT Kuok’s Allgreen Properties placed the top bid for a 99-year leasehold private housing site in Zion Road, near the group’s Great World City mixed development, at a state tender on Thursday (Jul 18).

Allgreen unit Valerian Residential’s bid of nearly S$730.09 million – or about S$1,304 per square foot per plot ratio (psf ppr) – was the higher of two bids received for the site at the Urban Redevelopment Authority (URA) tender, in yet another display of lacklustre interest from developers in private housing sites amid heightened business risks.

The top bid was 10.5 per cent above the other bid, of S$1,180.54 psf ppr, which came from a tie-up between Intrepid Investments and Hong Realty – both part of the Hong Leong Group.

The plot on offer, known as Zion Road (Parcel B), can yield about 610 private homes. It was triggered from the reserve list of the first-half 2024 Government Land Sales (GLS) programme, with a minimum bid offer of S$604.6 million, or about S$1,080 psf ppr.

Sites on the reserve list are launched only on successful application by a developer that has given an undertaking to offer a minimum bid price that is acceptable to the government at tender.

This is unlike sites on the confirmed list, which are launched for sale according to schedule, regardless of demand.

Potential oversupply?

The outcome of the tender is within market expectations, which have been toned down following a series of GLS tender closings this year drawing muted interest and cautious bids from Singapore’s residential developers, amid weak housing sales, global uncertainties, still-high financing costs and whittled profit margins with property cooling measures still in place.

For the Great World City-Zion Road locale, there are also concerns of a potential oversupply from GLS sites.

Property consultants polled by The Business Times earlier this week had expected Zion Road (Parcel B) to fetch one to three bids, with the top bid forecast at between S$1,100 psf ppr and S$1,300 psf ppr.

Allgreen’s bid for the site was 1.6 per cent lower than the S$1,325 psf ppr fetched last month for a nearby GLS private housing site, River Valley Green (Parcel A). That plot, clinched by Wing Tai with its nearly S$464 million bid, is much smaller and has a more choice location right next to Great World MRT station.

It can generate about 380 private homes, making it a more palatable offering, noted CBRE’s head of research for South-east Asia, Tricia Song.

However, Allgreen’s psf ppr bid for Zion Road (Parcel B) was about 8.5 per cent higher than the neighbouring Zion Road (Parcel A) which was awarded in April this year to its sole bidder – a joint venture between City Developments Ltd and Mitsui Fudosan – for slightly over S$1.1 billion or about $1,202 psf ppr.

Parcel A, however, is zoned for residential use with commercial space at the first storey; and the residential use includes a long-stay serviced apartment component. This is a new rental concept introduced by the government in November last year entailing a minimum stay duration of three months, compared with the seven-day minimum stay requirement for regular serviced apartments. Parcel A can be developed into 735 private homes for sale and 435 to 500 long-stay serviced apartments.

For Parcel B, on offer at Thursday’s tender, Chia Siew Chuin, JLL’s head of residential research for Singapore, attributed the “tepid interest” to concerns about the potential supply of new private residential units that will be generated from GLS sites in the locale.

An abundance of about 2,740 new private dwelling units (including long-stay serviced apartments) can be developed from Zion Road (Parcel A) and River Valley Green (Parcel A) which have been awarded, Zion Road (Parcel B) for which the tender has just closed, and River Valley Green (Parcel B) on the confirmed list and to be launched for tender in October.

“Another 470 units could be added should the River Valley Green (Parcel C) plot on the reserve list be triggered for tender,” she added.

Nicholas Mak, chief research officer at Mogul.sg, predicts that the launch price for the new private housing project on Zion Road (Parcel B) could be S$2,700 to S$2,900 psf.

PropNex’s head of research and content, Wong Siew Ying, said Zion Road (Parcel B) is appealing given its proximity to two MRT stations (Great World and Havelock on the Thomson-East Coast Line). “The site is also within walking distance to amenities such as the Great World City mall and the Zion Riverside Food Centre, and not far from Orchard Road,” she explained.

ERA Singapore chief executive officer Marcus Chu said that lower land prices for sites being sold at GLS tenders may not necessarily translate to lower selling prices of end units by developers, largely due to the higher development costs.