Sole bidder for Marina South site is far below expectations, raising concerns that it will not be awarded
Analysts have said that, if GuocoLand is awarded the land, developers of residential properties may be forced to lower the values of other sites in the area.
The site, located near the Marina South MRT Station, consists four plots. The largest plot measures 186.422 sq ft.
Another plot measuring 58.238 sq ft. has been reserved as an open space to be used for a pedestrian shopping mall. Two pedestrian-only underground spaces have been designated.
The land price was almost 30% lower than what Kingsford Group had paid in a June 2016 state tender for a plot adjacent to the Marina Gardens Lane. Kingsford’s S$1.03-billion plot has a residential zone with a commercial floor at the first level. It can create about 790 homes, which is similar to 775 units on the plot that was offered at the latest tender.
The Marina Gardens Crescent site has a maximum floor area of approximately 783,000 sq. ft. This is 6% more than what was stipulated in the contract for Kingsford.
A joint-venture between GuocoLand Group, Intrepid Investments and Guoco Group was the second-highest tenderer at S$985psfppr last year. That’s just a bit above the only bid for a plot nearby on Thursday. GuocoLand is now partnering with Hong Leong Group to try and establish a presence at the new growth precinct.
Observers have also noted that the single bid for the Marina Gardens Crescent, which is located next to the Marina South MRT Station, was significantly lower than the S$1,191 psf ppr fetched by a Media Circle plot at the same closing tender on Thursday. Media Circle, a residential plot with commercial space in the first-floor level, is further from the city centre and not so close to an MRT. Urban Redevelopment Authority (URA) conducted the auction.
The Business Times surveyed property consultants who predicted that Marina Gardens Crescent could fetch from zero to five biddings. The highest bid was between S$1,100 and S$1,500 per square foot, per year.
The majority of market watchers, speaking anonymously to BT Thursday night, said that they don’t expect the government will award the Marina Gardens Crescent property. “The Chief Valuer’s comparable transaction is the site that was sold to Kingsford.” “Only one bid was submitted for the site,” a property consultant with experience who declined to give his name said.
Another analyst commented that it will be interesting to see whether the government awards the Marina Gardens Crescent at S$984psfppr and if they meet the reserve price. The Government Land Sale reserve price is 85 per cent the estimated market value, as determined by Chief Valuer. This includes factors like the proposed land usage, site conditions and relevant sales transactions.
In a tightly watched tender by the state that ended on Thursday, 18 January, a white plot of land in Marina South designated as a residential and commercial site only received one bid and even then it was well below market expectations.
The consortium of GuocoLand Investments, TID Residential and Intrepid Investments made the sole bid for a 99-year leasehold in Marina Gardens Crescent. It was S$770.5M or S$984/square foot/per plot ratio.
Marina Gardens Crescent plot only attracts one bidder for a few reasons. One reason is the huge amount of money involved.
Coming Soon in Area
In the near future, there will be a lot of new housing in the area. This includes the Marina Gardens Lane plot as well as the Marina View Residences. Skywaters Residences. and Newport Residences. Together, these can provide about 1,900 new houses.
The higher Additional Buyers’ Stamp Duty rates, which will be applicable to foreigners and investors starting April 2023, as well as the lack of nearby schools, may have an impact on the demand for new homes.
In general, developers tend to shy away from large sites that are geared towards investors in the city. The developer sales of new homes on the island have slumped down to their lowest level in 15 years, at 6,452 units.
Risk-averse developers will find The Media Circle, which has the potential to yield 355 residential apartments, more appealing. In addition to property cooling measures and the high interest rate climate, macroeconomic headwinds also cause developers to be cautious.
Developers are also being weighed down by rising costs and decreasing profit margins.
The consortium, if it is awarded the Marina Gardens Crescent, will create a new exciting mixed development for local residents and businesses. They will also help the government realize its vision to make Marina South into an attractive, sustainable, and community centric district.
Hong Leong Group, Singapore’s Intrepid Investments & TID Residential and GuocoLand, listed on the Singapore Exchange, are the partners of the Singapore Exchange listed GuocoLand for the bid.
A joint-venture between GuocoLand Group, Intrepid Investments and Guoco Group was the second-highest tenderer at S$985psfppr last year. That’s just a bit above the only bid for a plot nearby on Thursday. GuocoLand is now partnering with Hong Leong Group to try and establish a presence at the new growth precinct.
Potential for tidy profit
Observers have noted that the Marina Gardens Crescent site would bring in a handsome profit for the consortium.
The breakeven cost is between S$2,000 and S$2,100 per sq. ft. The price of the Marina Gardens Lane property is likely to be set by the previously-tendered Marina Gardens Lane.
The Marina Gardens Crescent development site is expected to be developed at S$2,800 per sq ft up to S$3,200 in 2026.
A “white site” is a parcel of land where many uses are allowed. However, the government usually stipulates minimum and maximum components of specific uses.
