GuocoLand, Hong Leong Commit $222M to Development of Northern Singapore Site

GuocoLand and Hong Leong Holdings have agreed to commit S$298.1 million ($222.5 million) to develop a northern Singapore residential site won by their joint venture earlier this year.

Malaysia’s GuocoLand, a unit of the Hong Kong-listed Guoco Group controlled by billionaire Quek Leng Chan, will contribute funding of S$178.9 million, comprising share capital of S$45 million and a loan of S$133.9 million, according to a stock filing.

GuocoLand will hold a 60 percent interest in the JV, with the remaining 40 percent owned by Singapore-based Hong Leong Holdings, the private holding company of Quek’s cousin, City Developments Ltd chairman Kwek Leng Beng.

“Further funds and working capital for the project are expected to be provided by external loans from banks, financial institutions or other third parties,” GuocoLand said in the filing.

Sole Bid Pans Out

In April, the Singapore government awarded the wedge-shaped site, known as Upper Thomson Road (Parcel B), to the joint venture for S$779.6 million, working out to S$905 per square foot for the right to develop 861,759 square feet (80,060 square metres) of gross floor area.

While the offer had been the sole bid for the 344,705 square foot plot, which can yield 940 homes, some industry experts had speculated that the Urban Redevelopment Authority might withdraw the tender after the price came in below expectations.

Two months later, a tender for the adjoining Upper Thomson Road (Parcel A) ended with no bids. That plot can yield 640 units, including a required 100 long-stay apartments for rent.

Despite the location next to Springleaf MRT station, developers may have passed on Parcel A due to the LSA mandate and the site’s remoteness from major commercial hubs, according to local broker PropNex Realty.

The abundance of competing supply from Parcel B and six upcoming projects in the nearby Lentor area was likely a deterrent to potential bidders for Parcel A, said Chia Siew Chuin, head of residential research at JLL Singapore.

Plotting a Supply Surge

Singapore in late June announced a second-half confirmed list of the Government Land Sales programme that would bring total supply in 2024 to 11,110 private homes, representing the most supply introduced in a single year since 2013.

The confirmed list comprises nine private residential sites (including one executive condo site) and one commercial-plus-residential site. The plots can yield 5,050 homes (including 560 EC units) — roughly in line with the first half’s 5,450 units — as well as 14,300 square metres (153,924 square feet) of commercial space.

Also last month, the URA released sites at Dairy Farm Walk and Tengah Garden Avenue in western Singapore and a plot at Bayshore Road on the southeastern coast, as the campaign to replenish the city-state’s housing supply kicked into high gear.