CDL and Mitsui have big plans for the Zion Road site (Image: Google)
A joint venture between City Developments Ltd and Japan’s MItsui Fudosan placed the sole bid for a site in Singapore’s posh District 10, positioning the partners to develop a mixed residential and commercial project which includes the city-state’s first land designated for long-stay rental apartments.
The 50:50 JV offered S$1.1 billion ($820 million) for the site, which is designated for development of condominiums and retail space, in addition to the rental apartments, according to an announcement on Thursday by the Urban Redevelopment Authority (URA), which conducted the tender.
“We are honoured to partner with Mitsui Fudosan in submitting a joint bid for this rare site,” Sherman Kwek, group chief executive officer for CDL said in a statement. “The synergistic partnership reflects our combined expertise and shared vision to create yet another enduring icon for the precinct as well as pioneer the concept of longer-term stay rental apartments, which complements our Group’s focus on expanding our living sector portfolio.”
With Singapore exploring ways to encourage development of rental housing as an alternative to increasingly unaffordable home purchases, the 1.5-hectare (3.7-acre) site on Zion Road in Bukit Merah was one of two plots in the URA’s most recent land sale programme designated for build-to-rent development.
Cautious Bids
The CDL-Mitsui offer is equivalent to S$1,202 per square foot of buildable area in the project, which represents a 31 percent discount to the tender price for the last government land sale in the area six years ago, with analysts tying the offer to developer uncertainty regarding the economics of rental housing.
Sherman Kwek, chief executive of City Developments Ltd
“The lower land price is likely due to the inclusion of long-stay serviced apartments in the tender. As this is a new asset class, the risks are higher [for developers],” Mark Yip, chief executive officer of property agency Huttons Asia, said. He added that the tender could have attracted more interest if the serviced apartments were offered separately.
The Zion Road plot can yield up to 920,853 square feet (85,550 square metres) of gross floor area, with future owners entitled to develop two condo towers and a rental apartment block above a retail podium on the site. The condo towers of 69 and 64 storeys are designed to accommodate 740 units, while the 35-storey apartment block would provide another 290 homes.
Bounded by Kim Seng Road to the east and Havelock Road to the south, the project will link directly to Havelock MRT station, and is within 10 minutes’ walk of Great World City and roughly two kilometres from Orchard Road.
Sales Slowing
With home price growth slowing and condo projects rapidly entering the market, sales of new private homes in Singapore fell 20 percent in the first quarter, compared to the preceding three months, with prices of non-landed properties climbing 1 percent from the same period in 2023.
That first quarter slowdown came after developers sold fewer new private homes in 2023 than in any year since 2016, according to URA figures. Analysts see the slower market triggering a recalibration of developer land appetites.
“The results of today’s tender closings suggest a reduced risk appetite among developers.” said JLL head of residential research Chia Siew Chuin. “Some have already secured sufficient land… while others are being selective and reserving their resources for more attractive or smaller, easier-to-manage sites with less demanding requirements.”
Wong Siew Ying, head of research at PropNex, said that the discounted offer for the site raises the possibility that the URA may decide not to award the plot, after the agency in February withdrew a tender for a mixed-use site in Marina South as the sole bid was “too low.”
Should the project be awarded, Wong estimates that future homes in the Zion Road project will sell for more than S$2,700 per square foot of built area.
Dominating the North
In a separate tender on Thursday, a joint venture between Malaysia’s GuocoLand and Hong Leong Holdings, the private holding company of CDL chairman Kwek Leng Beng, placed the sole bid of S$779.6 million for a 3.2-hectare plot along Upper Thomson Road in Singapore’s northern region.
GuocoLand and Hong Leong’s Lentor Mansion achieved 75% take-up during launch weekend.
At S$905 per square foot of built area, the bid came in below market expectations, with an abundant supply of homes in the area and the large scale of the project potentially deterring would-be buyers, according to analysts.
The partners could develop the site into as many as 940 new homes across the maximum buildable floor area of 861,760 square feet.
The plot near Springleaf Forest in Yishun is within a 10-minute walk of the new Springleaf MRT station – placing it just one MRT stop away from the up-and-coming Lentor estate where five ongoing projects are dominated by GuocoLand.
Quek Leng Chan’s GuocoLand is dominating land sales in northern Singapore
Including projects outside Lentor Hills, JLL’s Chia estimated that as much as 2,952 new homes will be developed across six projects near the Lentor MRT station, with roughly 1,280 of those units having not yet been sold.
With GuocoLand developing four Lentor Hills projects with partners including Hong Leong, analysts indicated that the developers may be looking to gain greater control over home supply in the area.
“The consortium’s tender participation is likely driven by its defensive strategy to maintain a strong foothold in the area extending beyond the Lentor neighbourhood. This provides them the chance to better manage sales and pricing of their projects,” Chia said.
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