A tender for a site for a suburban Singapore project which could be worth S$8.5 billion ($6.3 billion) upon completion attracted just two bids – both from the same five-party consortium – with three of the city-state’s largest property players teaming up with Japan’s top two builders to pursue the mega-development.
On Tuesday Singapore’s Urban Redevelopment Authority (URA) announced that a five-way joint venture between hometown champions CapitaLand Development, City Developments Limited (CDL) and Frasers Property, along with Japanese titans Mitsubishi Estate and Mitsui Fudosan, had submitted a pair of proposals for the 3.93 million square foot (365,000 square metre) integrated development in Jurong Lake District.
Financial details of the proposals have yet to be released as authorities prepare to pick a winner after evaluating designs submitted as part of the two-envelope tender process for the master-planned community.
With analysts having earlier estimated that the initial phase of the site included in this tender could attract bids of S$1.2 billion to S$1.3 billion, with the total land cost for the two-phase development potentially ranging up to S$3.9 billion, the limited number of offers is in line with market expectations.
“That the JLD (Jurong Lake District) site tender garnered a low number of bids is not surprising, in view of the cautious market sentiment, the large scale of the development, the multi-year project timeline, as well as the deep expertise and the financial muscles required to bring the entire project to fruition,” said Wong Siew Ying, head of research and content at local agency PropNex.
Major Builders Unite
In a joint statement by the five developers, CDL group chief executive Sherman Kwek pointed to his company’s experience with large, mixed-use projects as preparing it for the Jurong Lake District development.
“CDL has built a track record of captivating designs and developed coveted sites like South Beach, The Quayside Collection at Sentosa Cove and Sengkang Grand Residences & Mall, all awarded under the two-envelope tender system prioritising design and concept over price,” Kwek said. “Master planning is about shaping our city’s future and investing in our community.”
CapitaLand, CDL and Frasers all hold separate 25 percent stakes in the joint venture while Mitsubishi Estate and Mitsui Fudosan each own a 12.5 percent share.
The master-planned project comprises three plots that connect the existing commercial centre at Jurong East MRT interchange station to the future Jurong Lake District station on the Cross Island Line.
The tender closed on Tuesday was for the phase one site, along with an option fee for the right to buy the two remaining plots at a later date.
15-Year Plan
The proposed master plan for Jurong Lake District specifies up to 1.5 million square feet of office space and a total of 1,700 residential units.
The initial phase included in this tender specifies development of at least 753,470 square feet of office space and about 600 new homes, which the developers will be allowed to roll out over the next 10 to 15 years, based on market demand.
Being a “white site” which provides flexibility to the developer in some aspects of land use, the joint venture partners are able to choose how to allocate the remaining 785,765 square feet of space for complementary uses, including retail, hotels or additional office space.
Mitsui Fudosan, which at JPY 4.48 trillion ($29.6 billion) outdistances second-ranked Mitsubishi Estate as Japan’s largest developer by market capitalisation, in January tied up with GuocoLand and major CDL shareholder Hong Leong Holdings through its TID Residential joint venture in a S$771 million bid for the Marina Gardens Crescent mixed-use project in Singapore’s Marina South. That tender was not awarded.
Hailing its cooperation with the other consortium members, the Japanese firm, pointed to its history of developing commercially led communities in its home country and around the region.
“Since our incorporation, the group has led the development of multitude of markets with iconic ‘mixed use’ developments such as Nihonbashi Revitalization Plan, Tokyo Midtown series and Kashiwano-ha Smart City in Japan,” Daijiro Eguchi, a managing director with Mitsui Fudosan Asia, said in the statement.
Note: This story has been revised to indicate that Mitsui Fudosan’s joint bid with GuocoLand and Hong Leong Holdings for the Marina Gardens Crescent plot was not awarded. An earlier version indicated that the bid had been successful. Mingtiandi regrets the error.
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