River Valley Green GLS plot draws $464m top bid; no bids for Upper Thomson long-stay apartment site (2024)

SINGAPORE – Bidding interest remains muted with just two bids submitted at the lower end of market expectations for a state land plot in the prime River Valley residential district, while a pilot site for 100 long-stayservicedapartments and 540 private homes in Upper Thomson Road got the cold shoulder.

Wing Tai Holdings unit Winchamp Investment submitted a top bid of nearly $464 million or $1,325 per sq ft per plot ratio (psf ppr) for River Valley Green Parcel A, which can yield 380 private homes. The second bid of $444.9 million came from Hong Leong Group unit Hong Realty.

Despite the River Valley Green site’s palatable size and proximity to Great World City MRT station, the top bid for it is 12.5 per cent below that for the nearby Irwell Bank Road site. The latter site, where the 540-unit Irwell Hill Residences now sits, drew seven bids and was awarded at $1,515 psf ppr in January 2020, when market conditions were rosier, CBRE noted.

Meanwhile, there were no bids for Upper Thomson Road Parcel A – one of two Government Land Sales (GLS) sites launched in December 2023 to pilot a new class of long-stay servicedapartments, which come with a three-month minimumstayperiod.

It is the first residential GLS land parcel in at least ­­­20 years not to garner any bids, noted Ms TriciaSong, CBRE’s research head for Singapore and South-east Asia.

And this comes amid worsening new private home sales so far in 2024, with volumes slumping to a record monthly low for May at 221 units, after an already weak tally of 301 units in April.

With higher-for-longer interest rates, the cooling measures and high development costs, including punitive measures when deadlines to sell out their projects are not met, the appetite for development has waned, Knight Frank Singapore’s research headLeonardTay said.

Despite the Upper Thomson Road site’s proximity to Springleaf MRT station, developers gave it a miss, partly because of uncertainty over leasing demand for long-stay serviced apartments in an area that is not near major commercial hubs, analysts said.

MrEdwinLoo, Cistri’s associate director (economics and property), pointed out that “mixing residential with long-stay serviced apartments in this location could be problematic for developers”.

“They may find it difficult to divest the serviced apartments component as this is not a prime location for private rental housing, unlike River Valley and other areas closer to employment hubs and the Central Business District,” he said.

A state tender for a plot in Media Circle in the Buona Vista area, that can yield 520 long-stay serviced apartments, will be keenly watched. That tender closes on Sept 19.

Developing serviced apartments requires higher upfront investment and specialised management expertise, which narrows down the pool of potential developers, Ms Song said.

MsChiaSiewChuin, JLL’s head of residential research for Singapore, noted that the requirement to incorporate biodiversity-sensitive designs and environmental safeguards, due to the Upper Thomson Road plot’s proximity to the Central Catchment Nature Reserve, may add to the overall capital outlay.

ERAchief executive Marcus Chu also pointed to competition for home buyers from the neighbouring Upper Thomson Road Parcel B site that was awarded in April at $779.6 million ($905 psf ppr) and can yield up to 940 residential units.

Competing supply from the Parcel B site and the nearby Lentor area is a deterrent, Ms Chia said, pointing to an unsold inventory of about 1,108 units from six upcoming projects in the area around Lentor MRT station.

Weighing on developers’ sentiment are slower sales in 2023 and lacklustre volumes in recent months, as well as a pipeline of yet to be launched projects and the ample supply of units from the first-half 2024 GLS programme, PropNexhead of research and contentWongSiew Ying said.

The low level of interest for River Valley Green Parcel A shows that developers remain cautious, even though they are still inclined towards smaller plots, Ms Chia said.

Analysts said the lacklustre bids underscore heightened caution over prime sites and the untested long-stay serviced apartment model amid tepid foreigner demand due to the cooling measures, protracted economic uncertainty and delays in US interest rate cuts.

Adding to developers’ caution, the River Valley Green plot will face competing new supply from the Zion Road Parcel A and Parcel B sites that can collectively offer 1,780 dwelling units (including 435 long-stay serviced apartments on Parcel A), PropNex’s Ms Wong said.

The Urban Redevelopment Authority has releasedZionRoadParcel B for sale from itsreservelist, after receiving an application committing to a bid not lower than about $604.6 million.

Reservelistplots are released for sale only if a developer puts in an offer of a minimum price that is acceptable to the Government.

The tender for the Zion Road Parcel B plot, which can yield about 610 new private homes, will close on July 18, Ms Wong said.