UOL Group, JBE Holdings and Frasers Property each won Singapore government residential land sales on Tuesday with bids as much as 4 percent below expectations, as the potential long-term impact of the coronavirus outbreak adds to developer concerns over the city’s already oversupplied housing market.
UOL Group secured an Urban Redevelopment Authority condo development site in northern Singapore’s Canberra with a bid of S$270 million ($195 million), according to an announcement by the government agency, while boutique condo developer JBE Holdings won an adjoining plot with a S$129 million bid.
Meanwhile, through a subsidiary, Frasers Property tendered S$287 million to win a Housing Development Board project in northeastern Singapore.
“Developers continue to exercise discretion and prudence in the latest Government Land Sales tenders as reflected by the bids tabled for the three residential sites,” said Colliers International’s head of research for Singapore, Tricia Song, as the winning bids came in as much as 4 percent below expectations. The analyst added that the uncertainty arising from the COVID-19 health scare could depress market prospects as the year progresses.
UOL Wins with S$270M Bid in Northeastern Singapore
UOL saw off a pair of team bids from a joint venture between Chip Eng Seng unit CEL Development and KSH Holdings and a tie-up between mainland-backed builders MCC Land and Greatview Group, as well as a solo offer from CSCEC subsidiary CSC Land to win the 99-year leasehold site known as Canberra Drive Parcel B.
“We are pleased to be able to clinch Parcel B at Canberra Drive,” said UOL Group’s CEO Liam Wee Sin. “Being the larger of the two sites, this site gives us the opportunity to create an exciting product with about 450 units that is within walking distance to the newly opened Canberra MRT.”
Based on the project’s permissible gross floor area of 415,412 square foot (38,593 square metres), the SGX-listed developer’s bid equates to S$650 per square foot of housing – 3 percent below the S$670 per square foot predicted by Colliers prior to the announcement of the results.
Located within ten minutes’ walking distance of the Canberra MRT, the residential development is restricted to a height of five storeys.
JBE Holdings’ S$129M Bid Frustrates UOL
Market analysts had expected a single developer to win both Canberra Parcel A and the adjoining Canberra Parcel B, allowing the builder to unify the sites as a single development.
However, UOL Group’s bid of S$124.4 million for Canberra A came up 3.8 percent short of JBE Holdings’ tender. The boutique developer helmed by former New World executive director Patrick Lam did not make an offer for Canberra B.
JBE was the only bidder for the 13,315 square metre Canberra A site which did not submit a proposal for the adjoining project, with Lam, who also serves as CEO of Hong Kong-listed property management firm FSE Holdings, having previously focused on executive condo developments.
Based on the permissible gross floor area of 200,661 square feet, the boutique condo developer’s successful bid equates to S$644 per square foot – 3.9 percent lower than the S$670 per square foot expected by Colliers.
The development, which is restricted to a height of 40 metres or five storeys, will yield around 220 units.
With prices for both Canberra developments within 1 percent of each other, Colliers said that it expects selling prices for homes in both projects to average up to S$1,300 per square foot.
Out of the five bids for Canberra A and four for Canberra B, three of the offers for each site came from companies with mainland China backing including CEL Development, CSC Land and MCC Land, with the latter also entering the tender for the Sengkang Executive Condo project.
Frasers Property Bids S$287M for Sengkang Development
On the same day that the URA revealed the results of the Canberra site tenders, the city’s Housing Development Board announced that Frasers Property had placed the winning bid for a 99-year leasehold site in Sengkang’s Fernvale area.
Frasers’ bid for the public-private executive condominium development equates to S$555 per square foot, based on the project’s permissible gross floor area of 516,280 square feet.
“The acquisition reinforces Frasers Property Group’s commitment to our home market in Singapore,” said Frasers Property’s group CEO Panote Sirivadhanabhakdi, who added that the firm is confident in the long-term prospects of the Singapore residential market.
Located across the road from the Greenwich V shopping mall, the plot — which can be developed up to a maximum height of 56 metres — will yield 500 homes, according to the developer.
“If awarded, this will mark Frasers Property’s first executive condominium in almost six years, after Parc Life in Sembawang which was awarded in July 2014,” said Song.
Frasers’ winning bid was just 0.5 percent higher than the tie-up between Sing Holdings and MCC Land. The CEL Development joint venture with KSH Holdings was also competing for this project, placing third with a bid of S$283.1 million.
“The seven bids were tightly bunched between S$500 and S$555 per square foot, reflecting a consensus on the demand and pricing of the site,” said Song. The Colliers analyst added that, based on the price paid for the land Frasers could launch sales of homes in the project at up to S$1,100 per square foot.
Developers Lose Appetites for Sites
Despite developers’ caution in bidding for the sites, Colliers’ Tricia Song said that the potential of COVID-19 was only adding fuel to a trend that had begun with the introduction of measures to cool the housing market in 2018.
“Since the introduction of fresh property cooling measures in July 2018, developers have by and large taken a cautious approach to site acquisition, and we expect this to continue for some time – particularly in view of the COVID-19 curveball which is expected to weigh on the economy,” said Song.
She added that, despite the lower than expected bids, the virus outbreak had not yet had an impact on home sales, which is being supported by “pent-up demand, low interest rates, and attractive projects with competitive pricing”.
According to official data released on 17 February for private home sales, developers sold 618 new private homes in January – the best performing January sales since 2013.