The Holland Drive site can yield 680 luxury units when developed
A government land sale has once again fallen short of expectations as a residential plot in one of Singapore’s most expensive residential districts drew a top bid representing a one-third discount from 2018 pricing for the location.
UOL Group, along with a pair of its affiliates, joined with CapitaLand Development to offer S$805.4 million ($597 million) for the condo site on Holland Drive, besting a pair of competing offers in a tender that closed Tuesday evening, according to the Urban Redevelopment Authority (URA).
While the tender has yet to be awarded, the UOL-CapitaLand offer translates to S$1,285 per square foot of buildable area, or one-third less than the 2018 selling price for an adjacent site which is now the One Holland Village retail and residential project. With home sales slowing, analysts see the tender result as evidence of developers becoming more cautious.
“it is one of the attractive sites offered under the land sales slate for the first half of this year. Notwithstanding the appealing location, developers are circumspect, as we once again witnessed relatively conservative bidding,” said Wong Siew Ying, head of research and content at PropNex Realty.
Banking on a Prime Location
With Wong having estimated when the tender for the plot was launched in February that the project could draw offers as high as S$1 billion, the UOL-CapitaLand bid is nearly 20 percent below that three-month-old prediction.
Wee Ee Lim took over as UOL’s chairman in February following the demise of his father, the late Wee Cho Yaw
UOL and CapitaLand each have a 35 percent stake in the consortium, while UOL’s wholly owned SGX-listed subsidiary Singapore Land, and Kheng Leong, a private firm owned by the Wee family which controls UOL, have 20 percent and 10 percent shareholdings, respectively.
The plot can yield up to 680 luxury condos when developed, and should the tender be awarded, the group plans to develop a pair of 40-storey condo towers spanning up to 626,700 square feet (58,222 square metres) of gross floor area. The consortium pointed to the site’s location within a five-minute walk of the Holland Village MRT station and near the Good Class Bungalow areas along North Buona Vista Road and Holland Road as enhancing its appeal to potential customers.
“The consortium is confident that the site will be a draw for discerning homebuyers, given its excellent location adjacent to the iconic Holland Village, which offers a compelling lifestyle proposition and is popular with both local and expatriate communities,” a spokesperson for the group said in a statement Tuesday.
Next door at One Holland Village, which was developed by Far East Organization, Sino Group and Seiksui House and kicked off home sales in 2019, units sold last year in the 296-home project fetched an average S$2,923 per square foot.
“Given that One Holland Village Residences took about four years to sell out, developers are likely cautious about the site in Holland Drive,” Wong said. “They would have considered the potential risks, in view of the larger development size and the substantial price quantum of the Holland Drive plot, coupled with the muted market sentiment and existing cooling measures.”
Below-Market Bids
The low-ball bids for the Holland Drive site come as many developers have shied away from Singapore land sales this year, with those projects that do sell finding fewer bidders and lower prices.
Last month, a site on Zion Road in District 10 was awarded to a City Developments Ltd and MItsui Fudosan joint venture despite their S$1.1 billion offer representing a 30 percent discount to the rate fetched by a neighbouring plot in 2017.
With Holland Village a favourite haunt for expatriates, Tricia Song, head of research for Singapore and Southeast Asia at CBRE pointed to government duties on sales of homes to non-locals as diminishing the project’s appeal.
“Its prime location would also appeal more to foreigner buyers and investors which have been greatly deterred by the increased ABSD (Additional Buyer’s Stamp Duty) under April 2023’s round of cooling measures,” Song said.
The veteran analyst expects units at the upcoming project to be priced from S$2,800 per square foot of built area while PropNex’s Wong predicted rates from S$2,700 per square foot.
The UOL-CapitaLand bid comes less than a year after the two companies teamed up to win a 1,190-home project in northeastern Singapore’s Tampinea area for S$1.2 billion.
Home Sales Down 58%
The muted bidding for the latest state land tender was followed on Wednesday by gloomy news on SIngapore home sales.
In monthly data released on Wednesday, the URA said new private home sales across the city-state plunged 58 percent to 301 units in April from 718 units in March. Last month’s tally was down 66 percent compared to April 2023.
Leonard Tay, research head of Knight Frank, traced the weak home sales figures to the lack of attractive project launches last month as only a few limited-scale developments were launched last month, including the 142-unit The Hill @ One North, the 59-unit The Hillshore and the 14-unit 32 Gilstead luxury development.
That limited set of launches comes after GuocoLand and Hong Leong Holdings launched 533 units in their Lentor Mansion in March, with 409 homes finding homebuyers.
“For the rest of 2024, with interest rates are now expected to remain higher for longer with sticky inflation not going away, the year will likely be characterised by moderate sales with spikes of buying activity occurring only when a compelling project [hits the market],” Tay said.
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