URA residential site tenders receive lukewarm response from developers

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Bids for URA residential site tenders 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.

URA residential site tendersCanberra Drive residential sites
This marks the fifth batched URA residential site tenders since November 2017 and presents three mass-market residential sites of different bite sizes to developers.

Mr Desmond Sim CBRE’s Head of Research for Southeast Asia commenting on the URA residential site tenders said:

Canberra Drive (Parcels A and B)
These two sites were launched for sale under the Confirmed List of the GLS programme for the second half of 2019. They were initially put on the Reserve List of the first half of the 2019 GLS programme as a single plot, but are now split into two parcels on the confirmed list. This will ensure that the sites are more digestible and will appeal to more developers.

Parcel B is almost twice as large as Parcel A, yielding up to 455 units while Parcel A can yield 220 units. The sites are attractive considering their proximity to Canberra MRT station, Sembawang Shopping Centre and Sun Plaza.

Recent transactions include Kandis Residence which was sold at a median price of S$1,254 psf in Q1 2020, with a relatively well take-up of about 75%. The most recent GLS sites awarded in the area were two EC sites at Canberra Link awarded at $558 psf ppr to Hoi Hup/Sunway, and $566 to MCC Land.

Fernvale Lane (EC)
This site would probably be in tandem with the increased demand for ECs after the qualifying income ceiling was raised to $16,000 from $14,000 in September last year. Another site in Tampines Street 62 was also released for application, but under the reserve list.

Although no MRT station is nearby, it is still near amenities such as Greenwich V shopping mall. The site may also appeal to HDB upgraders in Sengkang and Punggol, with at least 10,000 flats in these areas reaching their five-year minimum occupation period.

CBRE Research believes that developers were also encouraged by the response to recent launches like OLA in Anchorvale Crescent and Parc Canberra in Canberra Link. Overall, strong bidding featured for the three sites with some close margins. This is especially so as developers are encouraged by the palatable quanta as well as with a smaller number of units. Opportunities remain for the affordable private market, and some developers will seek to continue to replenish their landbank.”

Commenting on the bids for Canberra Drive URA residential site tenders, 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 URA 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.”

Besides the Canberra Drive URA residential site tenders, Colliers also commented on the Fernvale Lane (EC) saying, “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 SGD578psf 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. “

Written by Ravi Chandran

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