By: Low De Wei
(Bloomberg) — Singapore’s cooling property market suffered a blow after a housing site put up for sale by the government failed to attract any interest from developers for the first time in more than two decades.
The lack of bids is a setback for efforts tackling high rents as the government pushes out a new kind of long-term serviced apartment. The Upper Thomson Road site was one of two earmarked for construction of some apartments requiring a minimum three-month stay, up from the current seven-day requirement.
The pilot was part of efforts by authorities to tackle a major surge in residential rents, which remain near multi-year highs, despite an easing in recent quarters. Developers have turned cautious as new home sales fell for a second month in May.
Tepid foreigner demand and economic uncertainty are making developers think twice, according to CBRE Group Inc., which added that this was the first time such a site saw no bids in more than 20 years.
The other pilot site for long-term serviced apartments on the fringe of the city center drew only one bid, which was accepted in April. Shares of Singapore-based developers were mixed in morning trading. City Developments Ltd, which backed the bid, were largely unchanged, as was UOL Group Ltd. Frasers Property Ltd’s shares fell as much as 1.3%.
“Market sentiment is weak, and caution rules the day” for developers, said Nicholas Mak, the chief research officer at Mogul.sg, a property portal.
Nicholas adds, "The government land sale (GLS) tender for a residential development site at Upper Thomson Road closed this week without getting any bid from property developers. This is the first time in 23 years that a GLS residential land tender did not draw any bid from developers.
Although Upper Thomson Road (Parcel A) site is near the Springleaf MRT station, the location is not suitable for a serviced apartment development as it is far from any centre of employment. Furthermore, there is an absence of retail, food and beverage outlets and other amenities to make the life of residents more convenient.
In addition, the developer of this site must build long-term service apartments (SA2) as part of the overall development. Not every developer is keen to build and operate serviced apartments. Additionally, the absence of developer’s bid reflects the uncertain and cautious climate in the land sale market."
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