Tenders for Tanah Merah Kechil Link and Yishun EC sites closed with bids 'above expectations'

SINGAPORE  -The tenders for two confirmed list residential sites under the Government Land Sales (GLS) programme for the first half of the year, which attracted keen bids, were closed on Thursday (Oct 29).

The two 99-year leasehold land parcels – in Tanah Merah Kechil Link and Yishun Avenue 9 – offered for sale by the Urban Redevelopment Authority (URA) and the Housing Board (HDB) respectively, were the first GLS tenders to close since the pandemic.

Analysts said the land bids were above expectations.

The 8,880 sq m site at Tanah Merah Kechil Link, next to Tanah Merah MRT station, attracted 15 bids, with the highest by MCC Land (Singapore) at $248.99 million. This translates to a land rate of about $930 per sq ft per plot ratio (psf ppr), analysts said.

The 21,514 sq m executive condominium (EC) site in Yishun Ave 9 drew the highest bid from Sing Holdings at $373.5 million (or a land rate of $576 psf ppr), out of a total of seven bids received by the HDB.

A decision on the tender awards will be made after the bids for both sites have been evaluated.

Mr Karamjit Singh, chief executive of Showsuite Consultancy, noted that both sites are targeted at the mass market, where the demand for homes remains the strongest.

“The top bid for the Tanah Merah site would require the developer to sell the new apartments for about $1,700 to $1,800 psf, which is bullish considering that new units in that area are currently trading between $1,500 and $1,600 psf,” he said.

Mr Ong Teck Hui, senior director of research and consultancy at JLL, said the site’s key attraction is its proximity to the Tanah Merah MRT station, and its relatively small plot size, which requires less capital outlay.

“The residential development in Tanah Merah Kechil Link is likely to be launched in late 2021, when buying demand could improve further alongside expected economic recovery,” he added.

The Tanah Merah Kechil Link site, which is slated for residential with commercial use on the first storey, can potentially yield about 265 residential units and 2,000 sq m of commercial space. It has a maximum gross floor area (GFA) of 24,864 sq m.

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The tender period for the Yishun EC site was extended by six months due to the coronavirus outbreak. Tender durations for residential sites under the GLS programme are typically between six and eight weeks.

The EC site can yield about 600 homes. It is located within 500m of Junction 9, a new mall.

ERA Realty’s head of research and consultancy, Mr Nicholas Mak, said the top bid for the Yishun EC site “shows that the developer is quite confident of the EC market as the land rate is higher than the two EC sites launched for sale in 2019”.

“At the land rate of $576 psf ppr, the estimated break-even cost is about $1,000 to $1,050 psf. The developer probably plans to launch the new EC at prices above $1,100 psf,” he added.

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Noting that developers’ confidence in the residential market has been bolstered by new home sales over the past five consecutive months, Mr Singh said: “As they have been steadily selling down their stock, they would now need to start planning their land acquisitions and pipeline supply for the next two years. With the subsequent GLS tenders only closing in March and April next year, this bodes well for the private land market to cater to the shortfall in supply”.

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