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TWO suburban residential sites saw thin interest and conservative bids at the low end of expectations when government tenders closed on Thursday (Jul 18), as developers continued to play it safe in a sluggish market.

A site at Canberra Crescent in the north of Singapore drew three bids, with the top bid of S$279 million or S$793 per square foot per plot ratio (psf ppr) from a joint venture between Kheng Leong, the private real estate arm of the family of Wee Cho Yaw, and builder Low Keng Huat.

Running a close second for the Sembawang area site was a consortium comprising BHCC, Apex Asia, Heeton Holdings and Santarli Construction, with a bid of S$275.1 million or S$782 psf ppr. The third bidder, GuocoLand, offered S$228.8 million or about S$650 psf ppr.

While the top two bids were close, the third bid was about 20 per cent lower. The gap points to a disparity in outlook, while “the measured bids also display their reduced risk appetite and opportunistic approach given the more challenging market environment characterised by elevated costs, increased risks, and a slowdown in new home sales”, said JLL’s head of residential research Chia Siew Chuin. 

Observers noted that the top bid for the Canberra plot was only about 10 per cent higher than that of the most recent executive condominium (EC) site sold. A Tampines EC site went to the Sim Lian group in October 2023 for S$543.3 million or S$721 psf ppr, a record-high rate for EC land. 

PropNex’s head of research and content Wong Siew Ying said that if the Canberra Crescent site is awarded, it would mark the lowest land rate for an Outside Central Region government land sale site (GLS) (excluding ECs) since 2020.

ERA Singapore chief executive Marcus Chu pointed out that the top bid was 12-14 per cent lower than winning bids for recently awarded GLS sites in the north – Champions Way at S$904 psf ppr and Upper Thomson parcel B at S$905 psf ppr.

Still, the current bid is about 20 per cent over the S$644 psf ppr and S$650 psf ppr bids for two Canberra Drive sites sold earlier in 2020, said JLL’s Chia.

“While developers have the need to replenish their land bank, the five-year Additional Buyer’s Stamp Duty timeline and the slower sales rate are forcing them to be circumspect in bidding for land,” said Mark Yip, chief executive officer of Huttons Asia. Still-high interest rates also add to the cost of acquiring land, he said.

The Canberra Crescent site measures 20,437.3 square metres (sq m) and can yield around 375 units.  

Another tender that closed on Thursday, for a similar-sized site at De Souza Avenue in the west, also saw a top bid that was on the low side of expectations. Sustained Land pipped two bids with S$278.9 million or S$841 psf ppr for the Toh Tuck area plot, while Capital Development, an affiliate of Eng Seng Lee Construction, bid a much lower S$688 psf ppr or S$228 million. 

Bids came in at a “lowball price”, said ERA’s Chu. 

“The highest bid submitted of S$841 psf ppr is more typical of an Outside Central Region site, even though the site is located in the Rest of Central Region,” he said. 

While Sustained Land’s bid of S$841 psf ppr was 22.3 per cent higher than the second bidder, it is 37.4 per cent lower than the S$1,343 psf ppr that a nearby Bukit Timah Link site sold for in November 2022.

Both the Canberra Crescent and De Souza Avenue sites are of palatable size, but they are not near MRT stations and thus received lukewarm responses, said Tricia Song, CBRE’s head of research for South-east Asia.   

Song said that this underscores continued cautiousness among developers, after new home sales fell to a record half-yearly low of 1,916 units in data released earlier this week, below the previous floor of 1,977 units in H2 2008. 

“Even for suburban sites, (developers) probably still prefer locations that have superior locational attributes such as key transport nodes, amenities, within 1 km of popular schools or near a large HDB upgraders’ catchment,” she said.

Analysts reckon the Canberra Crescent project could eventually be launched at selling prices ranging from S$1,700 psf to S$2,100 psf. 

Two other projects are already coming up on plots sold earlier in the Canberra area, and will be completed in 2026-2027. At The Commodore, the average selling price has reached over S$1,500 psf, while The Watergardens at Canberra has an average selling price of S$1,450 psf, said PropNex’s Wong. Both projects have been fully sold out.

The De Souza Avenue area similarly has a limited supply of new homes, said JLL’s Chia. Existing projects such as The Linq @ Beauty World and Verdale are sold out, while the newer The Reserve Residences has 39 unsold units out of its 732 units. 

But the need to improve pedestrian access and build other access for the De Souza Avenue plot would have dampened interest and led to the lower bids, said JLL’s Chia. 

The site is located off Jalan Jurong Kechil in District 21. It has a land area of 19,245.4 sq m and can yield 355 units. Market watchers put the project’s future selling price between S$1,950 psf and S$2,200 psf. 

The sale of these two residential sites follows recent state tenders that saw even less interest. In June, an Upper Thomson Road plot found no takers when market watchers were expecting up to three bids. The site would have yielded 540 residential units and 100 serviced apartments.

Another Upper Thomson Road plot for 940 homes drew only one bid in April. It was awarded at S$780 million, or S$905 psf ppr, to a joint venture between GuocoLand and Hong Leong Holdings.