Surprises abound in first government land tender of 2024 – Singapore Residential
- Developers exhibit caution in recent 2 tender bids
- Media Circle site in Mediapolis attracted three bidders with Qingjian-Forsea leading at S$1,191psf, with launch price projected at S$2,200psf onwards
- Guocoland was the sole bidder for a mixed-use site in Marina Gardens Crescent near Gardens by the Bay at S$984psf (c.25%-40% below previous tendered sites)
- A potential c.S$2.2bn mixed-used development may arise, positively impacting Guocoland’s RNAV
What’s New
The first two government land sales (“GLS”) tenders of 2024 yielded surprises with more cautious participation rates and bid prices. The Media Circle site in One North received three bids, with Qingjian–Forsea joint venture (“JV”) coming out tops while a Guocoland-led consortium was the sole bidder for a white site in Marina Gardens Crescent. Overall, we saw moderating bid prices by developers given supply build-up from past land sales and ample GLS opportunities in the coming months amid a more cautious economic outlook.
Media Circle site – Winning by a whisker
A JV between Qingjian and Forsea came in tops among 3 bidders with the highest bid price of S$395.3m or S$1,191 psf per plot ratio (ppr) for the 99-year leasehold site in Media Circle, within the One-North precinct. The winning bid was c.3% higher than that of the runner-up, a consortium led by Hong Leong, TID and Mitsui at S$385m. The site is zoned residential with commercial use for 1st storey and can yield close to 355 units. We note that the bid price is c.4% and c.2% lower than the Slim Barracks sites (Parcel A and B) that were awarded at close to c.S$1,210psf – S$1,246 psf in 4Q21. We believe the lower bid reflects site’s greater distance to amenities and transportation (MRT) compared to the Slim Barracks sites which are within walking distance to the MRT. On our estimates, Qingjian-Forsea’s bid implies a breakeven of close to S$1,900 – S$1,950 psf, implying launch prices of close to S$2,200 psf – S$2,300 psf assuming c.10% margin.
Guocoland – a new landmark at Marina Gardens Crescent? The c.783,000 sqft white site at Marina Gardens Circle, located near to Gardens by the Bay in downtown Central Business District attracted only a single bidder, a Guocoland led consortium, at S$770.5m or S$984 psf ppr. While the overall quantum is sizeable which limits participation from developers, it could be seen as a coup in terms of pricing, in our view. We note that the site is directly linked to Marina South MRT station (Thomson East Coast line).
While its location within the CBD could mean that the Singaporean buyer pool will be smaller due to lack of schools and amenities, we see a good buffer. The bid price is c. 42% lower than an adjacent site awarded to Kingsford Development for c.S$1,402 psf (or an overall quantum S$1.03bn) in Jun 2023, and c.25% lower than a white site awarded to IOI Properties in 2021 for S$1.5bn (c.S$1,307 psf), where the 905-unit Marina View Residences is expected to be launched sometime in Feb 2024.
If a mixed-use development comprising of commercial and office (130k sqft) space and 775 residential units is built on the site, we estimate a gross development value (“GDV”) of up to c.S$2.2bn with a comfortable margin of >25%. Depending on Guocoland’s stake in this joint venture, we see a potential accretion of c.S$0.18-S$0.20 (or 3.5% accretion) to our RNAV of S$5.70.