URA tender for mixed-use land parcel at Marina View closes with single bid of S$1.508b

• The tender for a 7,800-sqm land parcel at Marina View closed on Tuesday
• It attracted only a single bid of just over S$1.508 billion
• Analysts said the response was lacklustre and below their expectations 
• They cited reasons such as a lack of confidence among developers due to the hollowing out of the CBD amid Covid-19 

SINGAPORE — The tender of a 7,800-sqm land parcel at Marina View closed on Tuesday (Sept 21) with only one bid of just over S$1.508 billion, the minimum price for the white site under the Government Land Sales programme.

This was below the expectations of analysts, who had anticipated strong interest from developers with bids up to S$1.9 billion due to growing public acceptance of living in the Central Business District (CBD) where residential units are in short supply.

In a press statement on Tuesday, the Urban Redevelopment Authority (URA) named the sole bidder as Boulevard View, a subsidiary of Malaysian property developer IOI Properties Group. 

The final bid price of S$1,508,000,101 was just S$101 over the minimum price of $1.508 billion submitted in June by an unnamed developer — believed to be Boulevard View — that triggered the tender launch.

The site was on the authority's reserve list for the first half of this year. Such sites are put to tender only after a developer commits to a price acceptable to URA.

“This is not an announcement of a tender award,” said URA on Tuesday. 

“A decision on the award of the tender will be made after the bid has been evaluated. This will be publicised at a later date.”

The 99-year leasehold mixed-use site, near the upcoming Shenton Way MRT Station, is set to yield 905 homes and 540 hotel rooms, with some office and other commercial use also permitted. 

Analysts on Tuesday described the response to the tender as “lacklustre”, noting that previous tenders for Government Land Sale (GLS) residential sites have been more competitive.

Ms Tricia Song, head of research at real estate firm CBRE’s Southeast Asia arm, pointed out that five other sites located in other suburban or city fringe areas, such as in Lentor, Tampines and Ang Mo Kio, have garnered at least seven to 15 bids each.

She added that at S$1,379 per square foot (psf) per plot ratio (ppr), the bid price for Marina View is lower than the most recent GLS residential sites sold in the CBD.

For example, One Bernam’s site at Tanjong Pagar, which received four bids, had a top bid of S$S$1,462psf ppr, and Midtown Modern’s site at Tan Quee Lan Street, which received two bids, had a top bid of S$1,535psf ppr. Both were tendered in September 2019.

“The hollowing out of the CBD during the pandemic, and the slow and interrupted return to the CBD offices may have dampened the confidence in city living by developers,” she said on the tepid response to the Marina View site. 

Mr Wong Xian Yang, head of research, at Cushman & Wakefield Singapore, said other factors could be the large quantum of the project, coupled with the lingering uncertainties regarding the resumption of global travel and construction amidst the manpower crunch.

He added that one other possible reason dissuading developers from throwing their hat into the ring could be that many are residential property developers who may not be very familiar with hotel development, and therefore decided to sit this one out.

“We think the Marina View tender would probably garner a much better turnout if it was a mixed-use site without a hotel component,” said Mr Wong.

Mr Mark Yip, Huttons Asia’s chief executive officer, noted that the last time a GLS tender saw one bidder was for a site at Silat Avenue in 2018.

URA awarded the 22,852 sqm site at the tendered price of S$1,035 billion, or S$1,138 psf ppr, to the sole bidder which was a consortium of UOL Venture Investments, UIC Homes, and Kheng Leong Company.

Mr Yip said the absence of bigger-listed developers in Singapore participating in the Marina View tender could be because these developers believe that the risk-return ratio of the project is high.

With land tenders in the Outside Central Region reaching S$1,204 psf ppr and International Plaza going enbloc for S$2,170 psf ppr, this land bid of S$1,379 psf ppr “appears to be on the low side and may be viewed as opportunistic by the Government”.

He added that with the fact that there was no other bidder for the site could be another reason for the Government not to award it.

A site in the Marina Bay area worth S$2.57 billion was awarded in 2016 to the IOI Properties Group, which is listed on the Malaysian stock exchange, for an office-retail development.