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The 15 bids are an indication that “developers are hungry for attractive development land”, notes Mak. However, the bids reflect caution too, as most of the bids were near the median land rate of $825 psf ppr, he adds. “The relatively small site also makes it attractive to medium-sized and smaller developers.”
Lee Sze Teck, director of research at Huttons Asia, notes that the top bid for the Tanah Merah Kechil Link site is “the highest submitted for a GLS site in the Outside Central Region (OCR)”. He attributes this to dwindling unsold inventory of uncompleted units, which has led to “an urgency” among developers to replenish their land bank.
“There could be an increase in confidence among developers that the economy has seen its worst and will return to growth in 2021/2022,” says Lee. “The palatable bid size for the plot could be another reason.”
According to Tricia Song, head of research for Singapore at Colliers International, the high number of bids for the Tanah Merah GLS site exceeded her expectations. “This is the highest number of bids since the Holland Road commercial and residential site (concept and price) tender in May 2018 which drew 15 bids from 10 consortiums,” she says. “This is also much higher than the four to nine bids seen for private residential GLS sites over the past 18 months.”
Sing Holdings’ bid is 8.9% higher than the second highest bid of $342.9 million submitted by CDL’s wholly-owned entity, Maximus Residential SG.
“The site has quite a few characteristics that would make the future project an exciting one, and that’s why we really wanted the site and bid at the price [that we did],” says Lee Sze Hao, CEO and managing director of Sing Holdings. “In view of the circumstances and the costing, this was the price that we were prepared to do it at.”
Before buying the site in Yishun, Lee paid a visit to the area for the first time. “I hadn’t visited Yishun until then,” he admits. The last two ECs launched in Yishun were both in 2015, namely Signature at Yishun and The Criterion, located next to each other. “Our EC project will be the next, and it will be sometime in 2021-2022, which is six to seven years after the last two EC projects were launched,” Lee points out.
He attributes the attractiveness of the EC site to a combination of factors: As the new EC project is likely to be launched only 15 months down the road, all the uncertainties today could have stabilised to a new norm. “And the safest bet for home buyers is still an EC,” he says.
Since September last year, the combined monthly household income for EC home buyers was raised to $16,000 (from $14,000 previously). This further increases the eligibility of more home buyers who aspire to own private property, adds Lee.
The EC site at Yishun Avenue 9 is located about 1.6km from the Yishun MRT Station at Northpoint City, which is just a short bus ride away, Lee says. The Northpoint City is a 1.33 million sq ft mall and is linked to many amenities including a community club and regional library. Khoo Teck Puat General Hospital and Community Hospital is nearby, and for parents of young children, Chong Fu Primary School, a good school, is located within 1km of the new EC site, adds Lee.
Another attraction of the EC site in Yishun Avenue 9 is its proximity to the upcoming 40ha nature park at Khatib Bongsu, a mangrove and mudflat habitat announced by the National Parks Board in March. “The new EC site offers an unblocked view of the nature park and the water,” says Lee. “Families can enjoy the many lifestyle amenities — kayaking and visiting the nature park, Yishun Park and the many clubs, namely Safra Yishun Country Club and Orchid Country Club.”
‘Robust’ end-user demand
With a maximum GFA of about 648,441 sq ft, the new EC site at Yishun is likely to have about 600 units, estimates Lee. The blocks will be oriented such that all the units will be north-south facing, which is ideal as it maximises cross-ventilation as well as natural light. Units are likely to be a mix of two- to five-bedroom apartments, which caters to young couples, families with children, as well as multi-generational or extended families who want to live together.
The land rate submitted by Sing Holdings is higher than the rates for the two EC sites launched for sale in 2019, notes ERA’s Mak. “At the land rate of $576 psf ppr, the estimated breakeven cost is about $1,000 to $1,050 psf. The developer will probably plan to launch the new EC at prices above $1,100 psf.”
According to JLL’s Ong, the last EC tender at Fernvale Lane, which closed in March 2020, fetched a top bid of $555 psf ppr. Three EC projects are in the pipeline for launch: the 700-unit Parc Central Residences at Tampines Avenue 10 by Hoi Hup Realty and Sunway Developments; Provence Residence at Canberra Link by MCC Land, which could comprise 413 units; and the upcoming project at Fernvale Lane by Frasers Property, which could house 499 units.
Total new and unsold EC units at the end of 3Q2020 fell to 632 units from 829 units in 1Q2020, adds JLL
End-user demand for ECs is expected to be “robust” considering the sales performance of Signature at Yishun and The Criterion, the two most recent projects in Yishun, notes PropNex’s Wong. She expects the potential launch price for the future EC to range from $1,100 to $1,200 psf.