Developers give Tampines mixed-use site vote of confidence, snub Media Circle serviced apartment plot

Developers give Tampines mixed-use site vote of confidence, snub Media Circle serviced apartment plot


Developers on Thursday gave a clear sign that amid today’s depressed sentiment and sales slump, they would rather stick to the tried and tested and steer clear of risk.

A mixed-used site in the well-established regional centre of Tampines drew six bids on Thursday (Sep 19), in the strongest turnout a state land tender has seen in a year. A Hoi Hup Realty-Sunway Developments joint venture outbid five other parties with its offer of S$668.3 million or S$1,004 per square foot per plot ratio (psf ppr) for the Tampines Street 94 site, which can yield 585 new homes and about 10,500 square metres (sq m) of commercial space.

The top bid, coming in 1.9 per cent over the second-highest offer from Sing Holdings, was slightly above expectations. It was also 13.5 per cent higher than the S$885 psf ppr price that a much bigger mixed-use site nearby was sold for to UOL, Singapore Land and CapitaLand Development, in July 2023.

In contrast, an experimental site designated for 520 serviced apartments near the one-north office hub saw just one offer from a Frasers Property-led group. The consortium put in a S$120 million bid translating to S$461 psf ppr, far below what analysts had earlier estimated the plot could fetch and raising doubts that the tender would be awarded.

The Media Circle plot comes under a new rental category of long-term serviced apartments labelled SA2, that was introduced last year to help meet market demand. While it is the third SA2-type site to be put up for sale, it is the first “pure” serviced apartment project to be tendered, and comes with a shorter 60-year lease compared with the standard 99-year lease for state land parcels.

Earlier sites combining residential housing for sale with the SA2 component had also got the cold shoulder from industry players.

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The first plot tendered at Zion Road was awarded to a City Developments Ltd-Mitsui Fudosan tie-up which placed the sole bid of S$1.1 billion, or S$1,202 psf ppr, in April. The large site can house up to 1,170 residential units, including 435 serviced apartments, on the edge of the prime River Valley neighbourhood. The second SA2-type site at Upper Thomson saw no interest at all, with the tender closing with no bids in June.

The Tampines Street 94 plot, slated for residential and commercial development, sits in an established and well-populated regional hub. There is also a stipulated minimum GFA for a childcare centre (650 sq m), a community plaza (1,500 sq m), supermarket (1,000 sq m) and a food court (1,000 sq m) for the project.

Hoi Hup-Sunway pipped the second-highest bid of S$655.6 million or S$985 psf ppr from Sing Holdings Residential by 1.9 per cent.

Also in the rink were Sim Lian with its S$560 million or S$841 psf ppr bid; a consortium of GuocoLand, Intrepid Investments and Hong Leong coming in at S$550.4 million or S$827 psf ppr; Soilbuild Group and United Engineers offering S$542.9 million or S$816 psf ppr; and a consortium consisting of Santarli Construction, Apex Asia, BHCC Group, Heeton Holdings and Soon Li Heng Engineering that bid S$541.9 million or S$814 psf ppr.

The outsized 50 basis-point interest rate cut that the US Federal Reserve delivered on Wednesday could have boosted confidence, said CBRE’s head of research for South-east Asia, Tricia Song. She expects investment sentiment could improve as funding costs ease.

Given the absence of new launches in Tampines for half a decade, ERA Singapore’s chief executive officer Marcus Chu said that developers might be anticipating strong sales for the project, “making it worthwhile to bid competitively”.

Treasure at Tampines was the last launch in Tampines and sold 2,203 units in under three years, Chu added.

The Tampines Street 94 project will add some 585 new homes to the area, where another 1,200 units are already planned on the Tampines Avenue 11 site sold earlier. Launch prices are expected to range around S$1,900 psf to S$2,350 psf. Median prices in the suburban Outside Central Region hovered around S$2,107 psf in the second quarter of 2024.

Wong Siew Ying, PropNex’s head of research and content, said that mixed-use projects usually see brisk sales at launch. For example, J’den sold 88 per cent of its units on launch weekend, while The Reserve Residences saw a take-up of more than 70 per cent at launch, and Lentor Modern moved 84 per cent on its launch.

“Meanwhile, the sizable commercial component in the future Tampines Street 94 development will serve a growing residential population in the area, with new HDB flats being built around the subject site. It could also help to build up the developers’ suburban retail footprint,” she added.

Prospects for the Media Circle plot do not appear so rosy to developers, analysts suggested.

Huttons CEO Mark Yip noted that tenant demand has always been strong in the one-north district. The Buona Vista area is home to academia as well as firms in the technology and life sciences sectors. But the “lack of enthusiasm” from developers signalled that “the market is not yet ready to embrace this product”, due to the higher risks of building an untested product and longer time to recoup the capital, said Yip.

Leonard Tay, Knight Frank Singapore’s head of research, said: “It remains to be seen whether the site will be awarded to this sole bidder, or whether the bid will be deemed too low. Perhaps the authorities should consider that the developer had priced in not only the land tenure of 60 years, but also the risk of the unknown, where long-stay serviced apartments have yet to prove viable in Singapore, regardless of the site being situated in an employment zone.” 

The muted interest could have also been due to how it is not near any MRT station, and developers may be mindful that more high-density residential developments will be built in the Media Circle area, noted Wong Siew Ying, PropNex head of research and content. 

Justin Quek, OrangeTee & Tie’s chief executive officer, pointed out that there are already a number of hospitality-related developments nearby, including serviced apartments at Citadines Fusionopolis Singapore, a co-living space at lyf one-north Singapore, and the Citadines Connect Rochester Singapore hotel. All are nearer to public transport options, retail, and dining establishments compared to the Media Circle SA2 site.



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