Introduction
The Government Land Sale (GLS) tenders for three residential development land parcels closed on 7 November 2023.
The three residential sites are relatively large, where each site could yield between 500 and 800 condominium units. The details of the three sites are shown on Table 1.
Table 1: Details of the three GLS sites
Source: URA, Mogul.sg Research
Map 1: GLS condominium site at Clementi Avenue 1 (in orange)
Source: Urban Redevelopment Authority
Map 2: GLS condominium site at Pine Grove (Parcel B) (in orange)
Source: Urban Redevelopment Authority
Map 3: GLS condominium site at Lorong 1 Toa Payoh (in orange)
Source: Urban Redevelopment Authority
Different market outlook among developers
Among these three land parcels, the location of the Lorong 1 Toa Payoh site is arguably the most attractive as it is less than 400 metre from the Braddell MRT station, which in turn is only four MRT stations from the Orchard MRT station, at the heart of the prime shopping belt.
The attractiveness of the Toa Payoh site is reflected in the top tender bid submitted by a consortium led by Citi Developments Limited at $968 million or at a land rate of $1,360 psf ppr, which is 18.1% higher than the second highest bid. The land rate for the Toa Payoh site is the highest among the three GLS tenders. (See Table 2)
Table 2: Details of GLS tender results & estimated future launch prices
Source: URA, Mogul.sg Research
The spread between the top and second highest bid for two of the sites, namely Pine Grove (Parcel B) and Lorong 1 Toa Payoh, are relatively large, at 23.8% and 18.1% respectively. The spread between the top and second highest bid in most of the other residential GLS tenders in the past five years usually did not exceed 10%.
The wider spread between the top and second highest bid could indicate that there is a wide divergence in market outlook between the participating developers. This could be due to the heightened economic and geopolitical uncertainties, which also contributed to the rather low number of bids for the Pine Grove (Parcel B) and Lorong 1 Toa Payoh sites.
Upward pressure on future new condo prices
The estimated future launch prices of the three residential projects that would be developed on each of the land parcels is shown in Table 2. The prices could start at $2,300 psf for the non-landed project on Pine Grove (Parcel B) to as high as $2,550 psf for the condo at Lorong 1 Toa Payoh.
Even at $2,480 psf, which is the lower end of the estimated price range for the future condo project at Lorong 1 Toa Payoh, it would still exceed the median transacted prices of the existing 99-year leasehold condominiums in Toa Payoh and Bishan. (See Table 3)
Table 3: Comparable condominiums near Lorong 1 Toa Payoh GLS site
Source: URA, Mogul.sg Research
Table 4: Comparable condominiums near Clementi Ave 1 and Pinegrove GLS sites
Source: URA, Mogul.sg Research
Conclusion
The government closes the three GLS tenders on the same day, perhaps in the hope that this would dilute developers’ demand and moderate land prices. However, the results from the three tenders that closed today did not point to that conclusion. The number of bids for certain sites may be slightly lower, but not the land rate of the top bids.
The three future condominium projects could likely be launched for sale in the first half of 2025. Based on the land prices in the GLS tenders that closed today, the prices of the future mass-market condominium projects in the primary market could be about 10% to 15% higher than those launched in 2023. This means that there would be upward pressure on the prices of residential properties in the next year or two.
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