Luxury Site in Singapore’s River Valley Tipped to Sell at a Discount Amid Housing Slump

The dark clouds hovering over Singapore’s luxury housing market have yet to clear off with analysts predicting that a residential plot launched for tender in the city-state’s posh River Valley area on Monday could sell at a markdown compared to the last residential site auctioned in the area four years ago.

Singapore’s Urban Redevelopment Authority (URA) on Monday launched for sale River Valley Green (Parcel A), a prime plot located just one stop from Orchard Road MRT station which can yield 380 homes. However, the site could sell for the equivalent of S$1,380 to S$1,500 ($1,038 to $1,128) per square foot and bring in just a few offers, according to real estate agency Propnex, after a luxury site on nearby Orchard Boulevard in February sold for more than 30 percent below 2018 prices.

“We estimate that River Valley Green (Parcel A) could attract 3 to 4 bids, with the top bid potentially coming in at about S$483 million to S$525 million,” Wong Siew Ying, head of research and content at PropNex, said in a statement.

The low end of that estimate represents a 9 percent discount to the S$1,515 per square foot that City Developments Ltd (CDL) paid in January 2020 to acquire the site for what is now its Irwell Hill Residences, a development located about 10 minutes’ walk from the River Valley site.

High-End Brought Low

The 100,000 square foot (9,291 square metre) parcel near the junction of Kim Seng Road along River Valley Road, is approved for development of up 350,000 square feet of gross floor area and can connect directly to Great World MRT station.

Located opposite Allgreen Properties’ Great World City commercial and residential complex, the site has a 99-year leasehold tenure with the tender set to close on 19 June. Wong’s prediction of three bids for the site is less than half of the seven offers the URA received for the Irwell Hill Residences site four years ago.

The parcel is being launched after Singapore opened the year with its slowest January for new private home sales since 2009 as the government continues to increase the supply of new housing at the same time that taxes on home purchases by investors and non-residents have dented the top end of the market.

Developers sold just 281 new homes in January, according to the URA, which was down 29 percent from a year earlier. In the Core Central Region, Singapore’s bureaucratic nomenclature for the centre of town, and where the River Valley site is located, just 25 homes were sold in January.

The Core Central region is the city-state’s priciest place for homes and land, where buyers have often included foreign citizens or investors buying properties for rental income. Both non-locals and investors buying multiple properties face the steepest Additional Buyers Stamp Duty (ABSD) in Singapore since the government hiked those tariffs in April last year to cool the market.

When the URA late last month month launched a tender for a condo site in the upscale Holland Village area, analysts predicted that the plot is likely to sell for 15 percent of 2018 prices, with the sale exercise set to close on 14 May.

Market Cools

At the same time that it launched the tender for River Valley Green (Parcel A) on Monday the agency also made an adjacent site, River Valley (Parcel B), available under its reserve list, where the plot can be launched for sale if a developer makes a bid which matches the government’s minimum requirement.

However, with that 126,330 square foot site expected to yield up to 360 homes and 220 long-stay serviced apartments, analysts do not expect a tender for the plot to be triggered anytime soon, as high interest rates and softening buyer demand have dampened developer enthusiasm for large capital outlays for land.