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Bids for first GLS site of the year may be tame, say analysts

SINGAPORE — The first land parcel in the Government Land Sales (GLS) programme for the first half of this year was released for sale by the Urban Redevelopment Authority (URA) yesterday, with analysts expecting keen interest for the attractively located site as developers look to build up their land banks.

Bids for first GLS site of the year may be tame, say analysts

Prince Charles Crescent site

SINGAPORE — The first land parcel in the Government Land Sales (GLS) programme for the first half of this year was released for sale by the Urban Redevelopment Authority (URA) yesterday, with analysts expecting keen interest for the attractively located site as developers look to build up their land banks.

However, bids for the 99-year leasehold Prince Charles Crescent site are likely to fall well short of the record price of S$1,162.86 per square foot per plot ratio (psf ppr) that Keppel Land paid for the nearby Kim Tian Road land parcel last April as housing market conditions have turned softer since then, the analysts said.

“I think this site will welcome around 10 bids because of the location and because developers need business continuity, but we expect bids not to be bullish … I think the strain from the cooling measures and the evidence that there are more unsold units will put some pressure on bid prices,” said Mr Desmond Sim, Head of Research at property consultancy CBRE.

Mr Nicholas Mak, Executive Director for Research and Consultancy at property firm SLP International, noted that several other sites in the vicinity were sold before the Total Debt Servicing Ratio (TDSR) framework was introduced in June last year and developers may be more cautious in bidding this time round. The United States Federal Reserve has also begun scaling back its monetary stimulus programme, which may lead to higher global interest rates.

However, there could still be developers who would place “fairly high” bids to fortify their position in the area, he added.

The 268,713 sq ft site, released from the Confirmed List of the GLS, has a maximum gross floor area of 564,308 sq ft, which can yield about 655 private homes, the URA said. It is close to Redhill MRT Station and well connected to the Central Business District and Orchard Road.

“Due to the size of this project and the financial resources required for the development, this tender is likely to appeal to major developers, such as those who have developed projects in this location. Some of these developers would also participate in this tender to protect their market share in this location,” said Mr Mak, who expects the top bid to range from S$928 to S$980 psf ppr.

“Future residents in this project could enjoy nearby facilities such as the Alexandra Canal Linear Park, the Delta Sports Hall and Swimming Complex as well as Valley Point Shopping Centre. Overall, depending on the unit mix, the future development could attract healthy interest from investors as well as owner-occupiers.”

Adding to the attractiveness of the site is the unblocked view to the north, an area mainly occupied by low-rise properties, said Mr Ku Swee Yong, Chief Executive of property agency Century 21.

“In theory, a good design can give almost perpetual unblocked view. The location is pretty strong ... This is one of the most attractive sites in the GLS programme. But given the current conditions, the bids might come in below that by Keppel Land, maybe around the S$1,000 psf ppr level,” he said.

The tender closes on April 16.

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