A CapitaLand-City Developments (CDL) joint bid won a government tender for a 3.7 hectare mixed-use site in northeastern Singapore with a bid of S$777.78 million ($566 million), according to announcements by the two companies.
In their first cooperation since 2007, the pair of Singaporean development giants aim to build up to 700 homes on the property along with community retail and other amenities.
The SengkangCentral project is the largest mixed-use site offered by the Urban Redevelopment Authority (URA) since 2015 with CapitaLand pushing aside six other competing bids to win the ninth URA tender of the year.
Quiet Area, Developing Hub
“CapitaLand looks forward to partnering with CDL to shape and transform the site into a landmark development that will be an identity marker and new focal point for the Buangkok neighbourhood,” said Lim Ming Yan, President & Group CEO of CapitaLand Group.
Lim’s new site is located in the traditional residential area of Buangkok near Punggol Park, a 16 hectare community recreation area in the northern reaches of the city state . Once completed, the project will have direct access to the Buangkok MRT station, which is 11 stops and one change from Raffles Place, or about 34 minutes.
The consortium will be building a mixed-use development incorporating a bus station, hawker centre and community centre that will connect to Punggol Park via public spaces. Analysts reviewing the acquisition saw the project as potentially adding value to the suburban neighbourhood when it is completed in the first half of 2022.
“The developers can leverage on the potential of this site to develop the Sengkang community and transport hub to serve the Sengkang and Buangkok housing estates and inject much vibrancy into the area,” said Desmond Sim, Head of Research for Singapore and Southeast Asia at CBRE.
CDL, which is teaming up with CapitaLand on the project, is familiar with the area and its market potential after having completed the 616-unit Jewel at Buangkok just across the street from the Sengkang Central site in late 2015.
Seven Bidders, Four Shortlisted
The two-envelope tender for the 99-year leasehold site, which requires bidders to first submit concepts and then a price, was opened on 28 December 2017 and closed 21 June. The URA received a total of seven bids by late June, with four bidders eventually being shortlisted.
In addition to the CapitaLand-CDL bid, the other finalists for the project were a joint bid by Perennial Real Estate Holdings and Qingjian Realty, which offered S$682 million; Singapore Press Holdings and Kajima Development, which bid S$636.39 million; and a Wing Tai Holdings — Keppel Land bid at S$608.9 million.
The Far East Organisation, which led the consortium that won the S$1.2 billion Holland Road tender in May, had lodged two bids for Sengkang Central but failed to reach the shortlist stage. CapitaLand and CDL had also made a joint bid for the prime Holland Road site.
Hot Market and Cooling Measures
The winning bid amounts to S$9,941.43 per square metre of the project’s 78,236 square metres of gross floor area. According to CapitaLand, the additional Buyer’s Stamp Duty (ABSD), introduced on 6 July, will not apply to this property.
Until Singapore introduced new market curbs, including the ABSD in early July, the market for new residential sites had been exceptionally strong in 2018. According to URA data, the city’s residential property price index rose about nine percent from the lows of 2017 through the second quarter of 2018, although the index has still not regained its all-time peak reached in the third quarter of 2013.