Tenders closing for URA sale sites at Marina Gardens Crescent and Media Circle
Tender closed for two Government Land Sales (GLS) sites.
SINGAPORE, 18 January 2024 - Tender closed today for two Government Land Sales (GLS) sites at Marina Gardens Crescent and Media Circle.
|Site for Tender
|Maximum Gross Floor Area
|Estimated number of housing units
|No of bidders
|Marina Gardens Crescent
|$770,456,256($984 psf per plot ratio or ppr)
|$395,288,889($1,191 psf ppr)
Source: URA, JLL Research
Ms. Chia Siew Chuin, Head of Residential Research, Research & Consultancy at JLL
谢岫君, 私宅市场研究部主管 (新加坡) commented:
Today’s tender results show that developers are cautious towards large sites and inclined towards smaller plots to mitigate risks in an uncertain market marked by escalating costs and shrinking profit margins
Marina Gardens Crescent
The tender for the White site in Marina Gardens Crescent concluded with only a single bid, highlighting the cautious outlook among developers towards large sites requiring substantial land and development costs, particularly in emerging and undeveloped districts like the Marina South precinct.
This vigilance is prompted by market uncertainties, raised Additional Buyers Stamp Duty (ABSD) rates on foreigners and investors, along with the prevailing elevated interest rates and high development costs. Developers are also watchful of the upcoming supply from other nearby projects, such as Newport Residences, Skywaters Residences, Marina View Residences and the project at the adjacent Marina Gardens Lane plot awarded to a Kingsford Group-led consortium in June 2023.
Consequently, the consortium formed by Guocoland, Intrepid Investments Pte Ltd (a wholly-owned subsidiary of Hong Leong Holdings Limited) and TID Residential Pte Ltd (joint venture between Hong Leong Holdings and Mitsui Fudosan) is a prudent strategy to mitigate the significant capital outlay as well as to leverage pooled resources and minimise risks associated with acquiring such a substantial site.
The consortium’s sole bid of $984 psf ppr for the White site is comparable to the second highest offer of $985 psf ppr for the land parcel at Marina Gardens Lane whose tender closed on 27 June 2023. After having missed out on the previous opportunity, Guocoland and Hong Leong Group are now making another attempt to establish a presence in the emerging growth precinct.
Notably, the bid of $984 psf ppr is 29.8% lower than the winning bid of $1,402 psf ppr achieved for the Marina Gardens Lane plot. This notable disparity highlights the measured approach in land bidding due to heightened prudence amidst the current uncertain market environment. The lower bid submitted for the White site also indicates that despite the potential benefits of being a first mover in offering essential commercial amenities to meet the needs of the expanding residential and working population in the area, these advantages might be inadequate to outweigh the other concerns surrounding the site and prevailing market conditions.
The response to the tender for the Media Circle site was subdued with just three contenders. The muted interest could be due to the site's less favourable location, as it is situated further away from MRT station linkages. In comparison, the two smaller sites at Parcels A and B at Slim Barracks in the nearby one-north locale benefit from better proximity to the MRT stations.
However, developers recognised the advantages of the site’s relatively smaller plot size, which has the capacity to yield about 355 units. With the growing risks and compressed profit margins, there has been an inclination towards smaller sites. This preference is particularly pronounced in the current uncertain market climate characterised by cautious homebuyer sentiment brought about by weak macroeconomic conditions, cooling measures, elevated interest rates, and high prices.
Smaller sites require a more manageable capital outlay, enabling developers to stay agile, minimise costs and mitigate risks. The shorter project timeline and faster sales turnaround for smaller projects also allow developers to complete and sell projects more quickly within the stipulated five years to qualify for a 35% ABSD tax remission and ensure a favourable return on their investments.
The top bid of $1,191 psf ppr is just 2.7% above the second highest bid and 23.1% higher than the third offer.
The closest comparable sites in the one-north locale are Parcels A and B at Slim Barracks. Parcel A was awarded at $1,246 psf ppr and Parcel B at $1,210 psf ppr in September 2021. With a top bid of $1,191 psf ppr, the offer for the Media Circle site is 4.4% lower than the price paid for Slim Barracks (Parcel A) and 1.6% lower than that for Parcel B. The lower bid for the Media Circle site reflects the less attractive locational attributes.
Notwithstanding the site’s further distance from MRT linkages and amenities, the future project on the Media Circle site could still benefit from some degree of pent-up demand due to the limited supply of private homes in the area even with the launch of Blossoms by the Park on Slim Barracks (Parcel A) and the upcoming The Hill @ One North on Slim Barracks (Parcel B).
As of end-2023, the 275-unit Blossoms by The Park had sold 229 units (83.3%) at a median price of $2,441 psf.
The selling price for the new project could start from $2,300 psf and the breakeven cost is estimated at about $2,000 psf.
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