Developers Drawn to Tampines Street 94 Mixed-Use Site
Summary
(1) The tender for the site at Tampines Street 94 drew six bids, which is a significant vote of confidence from developers. In the past year, the GLS tenders for private residential land parcels averaged about 3 bids for each tender
(2) The tender drew a relatively high number of bids because of the positive attributes of the site at Tampines Street 94, such as its close proximity to a MRT station. Hence, this property project is less risky for the developer.
(3) The developer could launch the future residential project at $2,250 to $2,350 psf, which would set a new benchmark price for that location.
Introduction
The Singapore government offered two land parcels for sale by public tender. The two Government Land Sale (GLS) tenders closed on 19 September. Both land parcels are unique as they are not the typical residential development sites.
This commentary will analyse the mixed-use site at Tampines Street 94. The analysis of the Media Circle land tender will be discussed in the next commentary.
About the Tampines Street 94 site
The 99-year leasehold land parcel at Tampines Street 94 is zoned for mixed residential-cum-commercial development. It is located about 50 metres from the Tampines West MRT Station.
With a land area of measuring 23,511 sqm, the site can yield a maximum of 61,834 sqm of Gross Floor Area (GFA).
Based on the development parameters, about 82% of the GFA will likely be used for residential space, which could yield about 580 to 595 apartment units. The remaining development space will be used for retail shops, a supermarket, a food-court, childcare centre and a community plaza, which will be built in the basement and lower floors of the development.
A vote of confidence or a risk adverse move
The tender for this site drew six bids, which could be a significant vote of confidence from developers. In the past year, the GLS tenders for private residential land parcels averaged about 3 bids for each tender.
This is the highest number of bids in a GLS tender for a mixed residential-cum-commercial development site since the tender for the Holland Road site that closed in March 2018 and drew 15 bids with the concept plan. However, only 5 bids were subsequently shortlisted for price consideration. The Holland Road site is currently being developed into One Holland Village.
However, based on recent GLS tenders, developers have been quite risk adverse.
The relatively high number of bids for the Tampines Street 94 site is partly due to the attractive location of the land parcel, which is just across the road from the Tampines West MRT Station. This will provide the future residents of this development easy access to public transportation.
It would also give the developer some comfort that it would be easier to sell the housing units in this project than in other sites offered by the government. In other words, the Tampines Street 94 development is less risky than other land parcels that the government would sell this year.
Furthermore, there is a high concentration of HDB flats in that vicinity and not many private housing developments. Therefore, the launch of the new residential development on this site will benefit from the pent-up demand from HDB upgraders in that area.
In addition, the new development on this site will be the only modern shopping mall near the Tampines West MRT station, which will be another attraction for the future buyers and residents of this project. Currently, there are three shopping malls at Tampines MRT station, which is one MRT station away. However, the three malls are somewhat dated as two of them were built in 1995 and the third one was completed in 2009.
The land price: not too high and not too low
The top bid of $668.28 million, submitted by a joint-venture between Hoi Hup Realty and Sunway Developments, translates to a land rate of $1,004 psf ppr (per square foot per plot ratio), which is 1.9% above the second highest bid by Sing Holdings. We expect the government to accept this bid and sell the site to the top bidder.
The median transacted prices of private 99-year leasehold condominium projects near the Tampines subject site ranges from $1,470 psf to $1,761 psf, based on transactions concluded in the first nine months of this year. So far, the median resale prices of the nearby condominiums have not exceeded the $2,000 psf level.
Table 1: Private residential projects comparable to Tampines Street 94 development
Name of residential project | Street Name | Completion Date | Total Units in project | Median price, $psf |
Pasir Ris 8 | Pasir Ris Drive 8 | Uncompleted | 487 | $1,761 |
The Tapestry | Tampines Street 86 | 2021 | 861 | $1,668 |
The Alps Residences | Tampines Street 86 | 2019 | 626 | $1,471 |
Tenet | Tampines Street 62 | Uncompleted | 618 | $1,516 |
Treasure at Tampines | Tampines Lane | 2023 | 2203 | $1,703 |
Coco Palms | Pasir Ris Grove | 2018 | 944 | $1,646 |
Source: Mogul.sg Research, URA
The developer of the Tampines Street 94 site could launch the residential project at $2,250 to $2,350 psf in 2026, which could set a new benchmark price for new private homes in that location.
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