Canberra Drive residential sites draw bids within market expectations

Bids for Canberra Drive residential sites reflects developers’ caution amid uncertain times

The Urban Redevelopment Authority (URA) announced on March 3 that it has closed tenders for two residential sites at Canberra Drive.

Commenting on the bids for Canberra Drive residential sites, Colliers International said:

“Developers continue to exercise discretion and prudence in the latest Government Land Sales tenders as reflected by the bids tabled for the three residential sites – Canberra Drive Parcels A & B, Fernvale Lane Executive Condo (EC).

“Since the introduction of fresh property cooling measures in July 2018, developers have by and large taken a cautious approach to site acquisition, and we expect this to continue for some time – particularly in view of the COVID-19 curveball which is expected to weigh on the economy. Having said that, we have observed that the virus outbreak has yet to impact home sales thus far, supported by pent-up demand, low interest rates, and attractive projects with competitive pricing. However, should the outbreak become protracted and stretch into the second half of 2020, there may be some pressure on housing demand, especially if there are widespread job losses and poor market sentiment.”

Against a backdrop of uncertainty, the bids for Canberra Drive residential sites are generally within market expectations. Colliers  believes developers probably took some comfort from the decent home sales in recent months and healthy buying interest in certain upcoming projects.

Ms Tricia Song, Head of Research for Singapore at Colliers International commented on the Canberra Drive residential sites saying:

“The two adjoining residential sites in Canberra Drive (Parcels A and B) were previously put on the Reserve List H1 2019 as a single 4.09-ha plot, which was subsequently split into two parcels for sale on the Confirmed List in the Government Land Sales programme for H2 2019.

“We had expected developers to bid for both sites, with a potential outcome of a single developer submitting the top bid both parcels. However, it appears that developers were not over exuberant in their bids, and the tender for the two sites were topped by different developers.

“While the number of bids were in line with expectations, top bid prices were marginally lower than our expectations. The per square foot per plot ratio (psf ppr) price for both parcels were SGD644 and 650 psf ppr, within 1% of each other. We expect this would still put potential average selling price of either project at SGD1,250-1,300 psf.

“Nearby comparable private condominium projects such as Eight Courtyards (completed in 2014), The Nautical (2015) and Canberra Residences (2013) traded at SGD900-1,000 psf over the past 12 months. In February, newly-launched 496-unit Parc Canberra EC achieved sales of 64% (316 units) at an average price of SGD1,085 psf.

“These two sites should benefit from the Canberra MRT which turned operational since 2 November 2019, and Bukit Canberra, an upcoming sports and community hub in Sembawang set to open progressively from 2020.”

Colliers International assessed the Canberra Drive residential sites individually as such:

“Canberra Drive Parcel A
All four developers who pitched for Parcel B, the larger site, also submitted bids for Parcel A. Incidentally, the top bid for Parcel A was tabled by the only developer who did not bid for Parcel B – Oasis Development.
Parcel A attracted five bidders, in line with our expectations of 4-6 bidders given its smaller quantum. The top bid of SGD129.2 million or SGD644 psf ppr was 3.4% higher than the next highest bidder – MCC Land and Greatview, and slightly lower than our earlier expectation of SGD670 psf.

Canberra Drive Parcel B
Meanwhile, Parcel B – being a larger site – garnered slightly fewer bids of four, also in line with expectations. The top bid of SGD270.2 million or SGD650 psf ppr by United Venture Development was 4.8% higher than the next highest bidder – MCC Land and Greatview, and slightly below our earlier expectation of SGD670 psf.

For Parcel B, there is also a requirement to build an Early Childhood Development Centre1 (ECDC) for infant care and childcare services within the proposed development for a minimum of 10 years from the date of issuance of ECDC licence.”

Besides the Canberra Drive residential sites, Colliers also commented on the Fernvale Lane (EC).

“The Fernvale Lane EC site received seven bids, in line with our expectations and consistent with the 7-9 bids for the last five EC site tenders since the cooling measures in July 2018.

“The seven bids were tightly bunched between SGD500-555 psf ppr, reflecting a consensus on the demand and pricing of the site. The top bid of SGD286.5 million or SGD555 psf ppr, was submitted by FCL or Frasers Property, pipping the second-placed Sing Holdings and MCC Land by just 0.5%. If awarded, this will mark Frasers Property’s first EC in almost six years, after Parc Life in Sembawang which was awarded in July 2014. At this land rate, we estimate the developer could launch the project at SGD1,050-1,100 psf.

“The top bid price is slightly above our expectation of SGD500 psf ppr. Confidence could have been boosted by the recent stellar performance at EC projects – OLA Residences in nearby Anchorvale has received 1,163 e-applications, more than double the 548 units offered in the Spanish-themed development. Further up north, 496-unit Parc Canberra EC recently achieved sales of 64% (316 units) at an average price of SGD1,085 psf during its launch in February 2020.

“The Fernvale Lane site is not near any MRT station and is about 800m from the nearest LRT station – Fernvale. It is one block away from another EC — The Topiary, which was completed in 2016 and achieved an average price of SGD730 psf. There were limited secondary transactions as the Minimum Occupation Period (MOP) of five years have not been reached. Nearby private condominium projects such as Seletar Park Residences (completed in 2015) and The Greenwich (2014) transacted at SGD1,000-1,100 psf over the past 12 months.

“This latest land price is relatively comparable with the last Executive Condo site tender at Canberra Link, awarded on 11 October 2019 for SGD233.89 million or SGD566 psf ppr; and the Tampines Avenue 10 EC site awarded on 22 January 2019 for SGD57 8psf ppr.

“There is still an EC site in the Reserve List – Tampines Street 62, which will be released if a developer commits to bid above an undisclosed Reserve Price. The lone EC site in the H1 2020 GLS Confirmed List is in Yishun Avenue 9, which would be released for tender in April 2020. “