No Bids Submitted Upper Thomson Road Gls Site
PropNex Realty invests in new platform for digital real estate transactions
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The 99-year leasehold residential Government Land Sale (GLS) site located along Upper Thomson Road failed to attract any bids when the tender closed on June 19. This site was batched together with another plot, River Valley (Parcel A).
Spanning 262,875 sq ft, the Upper Thomson Road (Parcel A) site has a gross plot ratio of 2.2 and is expected to yield about 640 residential units, including 100 long-stay serviced apartments. It is zoned for residential use with commercial space on the first storey, with an estimated 21,528 sq ft of commercial space available.
This is the second GLS site to offer a new category of long-stay serviced apartments, with a minimum stay period of three months. The first site to include such apartments was the Zion Road (Parcel A) plot, which was awarded to a joint venture (JV) between City Developments Ltd (CDL) and Mitsui Fudosan on April 16. The JV partners submitted the sole bid of $1.107 billion, equivalent to $1,202 psf per plot ratio.
Mark Yip, CEO of Huttons Asia, comments that it is not surprising that there were no bids for the Upper Thomson (Parcel A) site, as this type of serviced apartment is relatively new in the area. Furthermore, the government was aware of this and allocated a small number of units for the project. Yip adds that developers may have been deterred by the high risks associated with this project, given the limited number of serviced apartment units.
Marcus Chu, CEO of ERA Singapore, also notes that the location of the site is not a prime commercial area, which may affect the rental demand for the apartments. Leonard Tay, head of research at Knight Frank, adds that the Upper Thomson/Springleaf area is not typically associated with mid-term tenants, which could have put off developers from participating in the tender.
In addition to the risks of developing long-stay serviced apartments, Chu highlights that the developer of Parcel A will also face stiff competition from the neighboring Upper Thomson Road (Parcel B) residential site, which was awarded to a JV between GuocoLand and Hong Leong Holdings in April. The JV submitted the sole bid of $779.6 million, translating to $905 psf per plot ratio. This site can yield up to 940 residential units.
Wong Siew Ying, head of research and content at PropNex, believes that the Parcel A site may be added to the 2H2024 GLS programme, and the lack of interest in the site may prompt the government to review the requirements for long-stay serviced apartments in the process.
Yip suggests that developers may be more inclined to bid for GLS sites with long-stay serviced apartments if they are located near the city center or major commercial areas. The next GLS site with serviced apartments is in Media Circle, which will close on September 19. Yip predicts that there may be just one bid for this site.