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Wing Tai and Hong Leong-CDL JV Top Bidders for S$875M Pair of Singapore Sites

2019/03/31 by James Hatton Leave a Comment

Kwek Leng Beng’s Hong Leong and CDL made a modest offer for a red-light district plot

Developers in tropical Singapore kept their cool at a couple of land tenders last week with a site near Bugis, at the fringe of downtown bringing 10 offers, while a second plot in the Geylang red light district attracted only five bids.

A subsidiary of Wing Tai Holdings topped the bids for a government-owned residential plot on Middle Road in Singapore with a S$492 million ($363 million) offer, according to an announcement by the Urban Redevelopment Authority on Thursday.

A joint venture set up by Kwek family-controlled Hong Leong Group and its listed affiliate City Developments Ltd led the bidding for the Geylang site with S$383.5 million ($283 million).

The restrained offer suggests developers are treading carefully in Singapore, analysts suggest, as consumer demand for new housing remains uncertain following last year’s purchase restrictions imposed by the government.

With the first round of the public tender process now complete, the two bids will be put forward for evaluation in more detail by the Urban Redevelopment Authority before a final award is made.

Downtown Land Attracts Conservative Bids

Ten offers were made for the 7,462.6 square metre (24,484 square foot) land parcel on Middle Road in downtown Singapore, with Wing Tai subsidiary Wingcharm Investment’s top bid equating to S$15,697 per square metre of gross floor area.

Five minutes walk from Bugis metro station behind the Bugis Cube shopping mall, the land parcel comes with a 99-year leasehold and permission to build a residential-commercial development with a maximum gross floor area of 31,343 square metres.

Other bidders for the site include a joint venture between MCC Land (Singapore), the local unit of China’s MCC mining conglomerate, and Greatview Investment, along with solo bids from Far East Organisation and JBE Development.

Kwek Leng Beng’s Hong Leong Group were involved a pair of bids for the site, with its listed development unit City Developments teaming up with Hongkong Land’s Singapore affiliate MCL Land for one offer while the billionaire’s Hong Realty joined with their Malaysian cousins at GuocoLand for an additional try at the site.

New Project Could Mean 375 Homes for Wing Tai

In what could be Wing Tai’s first residential site acquisition since Garden Residences in August 2017, the downtown site has allowance for up to 1,500 square metres of commercial space and 375 residential units.

“We expect a potential selling price of S$2,200-2,300 per square foot,” said Head of Research for Colliers International Singapore Tricia Song. “The developer’s S$492 million bid translates to about S$1,458 per square foot per plot ratio – in line with our forecast.”

Wing Tai led the bids for a site behind the Bugis Cube

The homes will not fall under the URA’s new minimum size regulations that came into force in October 2018 because the plot is outside the regulatory area.

Despite the public tender attracting the highest number of contenders for a residential government land sale site within nearly a year, the bids for the downtown site were “fairly conservative” with most below S$1,300 per square foot per plot ratio, according to the analyst.

Red-Light District Plot Fails to Excite Developers

The public tender for the 16,225 square metre site on Sims Drive in the Geylang, 350 metres from Aljunied metro station, drew only five bids, contrary to expectations.

The residential development, which has a 99 year leasehold, has a maximum permissible gross floor area of 48,676 square metres.

The S$383.5 million bid from the Hong Leong – CDL partnership equates to S$7,879.24 per square metre of gross floor area.

Other bidders for the site included a unit of GuocoLand, which developed the adjacent Sims Urban Oasis project, and a joint bid by a vehicle controlled by Fission Holdings, Pinnacle Assets and Chee Hsian Sing.

Colliers International analyst Tricia Song said the bids for the Sims Drive site came in way below expectations, despite being close to the Aljunied metro station, due in part to the fact that the site is subject to a larger minimum average unit size of 85 square metres, under the new government regulations. The analyst estimated the potential sale price to be in the region of S$1,400 per square foot, factoring in the potentially larger units.

“Developers may also be assuming some buffer for the five-year ABSD timeline, given its relatively larger plot size – 570 units can be built,” she said.

Despite Hong Leong Holdings setting a new record for purchases of government land sites in western Singapore in July last year after agreeing to pay S$460 million ($338 million) for a plot in the Bukit Batok Planning Area, its winning bid for the Sims Drive site — which works out to S$732 per square foot of built — is the lowest private residential land bid on a per square foot basis in over a year.

The previous low came in February 2018 when a partnership between Lian Soon Holdings and OKP Land paid S$681 per square foot per plot ratio for the smallish Chong Kuo Road site near Mandai, according to the Colliers analyst.

Time to Say Goodbye to Exuberant Land Bids

“It is clear from the results of recent Government Land Sale tenders that the days of overly exuberant land bids are behind us,” said Colliers analyst Tricia Song.

According to data obtained by Singapore’s URA, developers launched 1,657 private residential units for sale in Q4 2018, compared with 3,754 units in Q3. Launches of executive condominiums also dropped off, with 628 units launched in 2018, compared with 1,555 in 2017.

Thursday’s announcement was followed by a new URA notice on Friday that another land sale had been launched for a plot on Tan Quee Lan Street, expected by the Colliers Singapore Head of Research to attract a top bid of S$834 million, or S$1,600 per square foot per plot ratio, 10 percent higher than the Middle Road site.

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Filed Under: Projects Tagged With: CDL, City Developments, daily-sp, government land sale programme, Hong Leong Group, Kwek Leng Beng, Singapore, Urban Redevelopment Authority, Wing Tai Group

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