Singapore Property: Singapore Property
- Three government residential land tender sites closed with limtied participation from developers
- 2 sites in Lentor went at close to S$1,100 psf ppr with Soilbuild-led consoritum and Hong Leong coming out tops with launch prices touching S$2kpsf.
- CDL bags another EC site in Bukit Batok in a close contest
- Guocoland’s Lentor Modern to launch in upcoming weekend will set the tone and mometnum for suburban pricing
The upcoming Lentor neighbourhood is taking shape.
The close of the tenders for two residential sites in Lentor in the latest government land sales (“GLS”) tenders is expected to add another c.740 units to the Lentor neighbourhood. Only a handful of developers have placed in bids for these two tenders, which we believe signal their cautiousness regarding the supply increase around the Lentor vicinity. With earlier sites awarded to Guocoland and its consortium partners 3Q’21 and 1Q22, the Lentor neighbourhood will see close to 2,000 units to be launched in the coming quarters. On top of that, 2 more sites (one site on the confirmed list and one site on the reserve list) may potentially add another 1,005 units in the longer term. This brings the total supply in Lentor to be potentially close to 3,000 residential units, bringing potentially close to 6,000-9,000 new residents to the catchment over time.
Cautious bidding from developers for Lentor sites.
The close of the tenders for Lentor Central (c. 470 units), the site that is closest to the soon-to-be launched Lentor Modern mixed-use development saw only 3 bids with the highest coming from a Soilbuild Group led consortium with a top bid of S$481.0m, translating to a land rate of S$1,108 psf ppr. The bids came close with all 3 bidders coming with 5% of each other. It is noteworthy that CapitaLand and Guocoland bids came in 2nd and 3rd respectively. Based on estimates, if awarded to the highest bidder the breakeven for this project is estimated to be around S$1,750 psf to S$1,850 psf, implying launch prices to be above S$2,000 psf onwards.
The site at Lentor Hills (Parcel B), located further away from Lentor MRT station saw only two bids with TID residential ( Hong Leong and Mitsui) coming in top with a bid of S$276.4m, translating to a land rate of S$1,130 psf ppr, marginally higher than the highest bid at Lentor Central site. TID residential bid came in c.13% higher than the 2nd bidder (Soilbuild-led consortium) by c.13%. Based on estimates, if awarded to the highest bidder the breakeven for this project is estimated to be around S$1,800 psf to S$1,900 psf, implying launch prices to be above S$2,000 psf onwards.
Sticky land prices; all eyes on launch of Lentor Modern with Guocoland setting the pricing for the area.
We note that the pricing for land sites within the Lentor region have generally held steady with land bids for residential sites within the c.S$1,100 psf range. The launch of 605-unit Lentor Modern will be closely watched where a strong take-up rate at launch weekend will set the pricing and sales momentum for future projects in the vicinity. By being the first to launch, we believe that Guocoland (BUY, TP S$2.30) have a head-start compared to its peers with its 2nd project (Lentor hills residences) ahead, capturing the new demand from households looking for a home in the new upcoming neighbourhood.
City Developments Limited (“CDL”) adds another executive condominium site to its landbank.
An executive Condominium (“EC”) site at Bukit Batok Avenue 5 has also closed with the group coming in tops amongst four developers. CDL bid of S$336.1m (or S$626 psf ppr), is marginally higher than the 2nd bidder from Sim Lian and within 1% of its other bidders for the site. The group have been active in acquiring sites within the executive condominium (“EC”) segment with the last capture of Tengah Garden Walk back in Jun’21 to be launched soon as 637-unit Copen Grand in 3Q22. We note that the pricing for pricing for the Bukit Batok Avenue 5 site is a c.5% tad lower than the tender price for a recent EC site that was awarded to Qingjian nearby in Bukit Batok West Avenue 8. Based on our estimates, CDL should be looking to price the EC at close to s$1,200 psf given estimated breakeven of between S$1,100 psf – S$1,150 psf.