Recent state land tenders in Singapore revealed a subdued bidding environment, indicating a cautious stance among property developers in the face of a sluggish housing market and persistent high financing costs. This sentiment was evident in the URA tender results for two significant plots: a private residential site in Margaret Drive, Queenstown, and an Executive Condominium (EC) plot in Jalan Loyang Besar, Pasir Ris.

Margaret Drive Tender Attracts Limited Interest

The tender for the Margaret Drive site, capable of accommodating 460 homes, received only two bids. The highest bid of S$497 million, or S$1,154 per square foot per plot ratio (psf ppr), came from Hong Leong Group units and GuocoLand. This was approximately 5% higher than the next highest bid of S$473.6 million, or S$1,100 psf ppr, from Sing Holdings. The outcome was at the lower end of market expectations, where property analysts had anticipated up to three bids, ranging from S$1,150 to S$1,250 psf ppr.

This lukewarm response contrasts sharply with the tender for a nearby site in 2017, which drew 13 bidders and a winning bid exceeding S$1 billion, or S$1,051 psf ppr. Market observers had expected greater interest, citing a lack of new private housing projects in Queenstown and the area's appeal to potential upgraders from resale flats.

Chia JT, Managing Director of Propertyforsale, pointed out that the site's attractive location and size were overshadowed by ongoing market challenges. These include high construction costs, elevated borrowing rates and global economic uncertainties, compounded by the inclusion of a childcare center in the site's development plans.

Pasir Ris EC Plot Sets Record Land Price Amid Modest Interest

The EC site at Jalan Loyang Besar in Pasir Ris attracted four bids, with the highest offer of S$557 million, or S$729 psf ppr, setting a new record for EC land prices. The top bid came from a consortium comprising CNQC International, China Communications Construction Company, and ZACD. The second-highest bid, at S$538.9 million or S$705 psf ppr, was submitted by Allgreen Properties and China Construction (South Pacific) Development Co.

The record-setting bid reflects developers' confidence in the EC market, a segment generally less impacted by recent property cooling measures due to its appeal to owner-occupiers and first-time buyers.

Market Outlook and Future New Launches

"The Margaret Drive project to launch at around S$2,400 psf, consistent with nearby developments like The Hill @ One-North and Stirling Residences," said Chia, Propertyforsale MD. 

The Pasir Ris EC project, on the other hand, is anticipated to launch at prices around S$1,600 psf, appealing primarily to first-time buyers and HDB upgraders.

The subdued bidding in these tenders underscores a cautious approach by developers, balancing the need for new inventory with market risks. As market conditions evolve, future tenders and project launches will be closely watched as indicators of the housing sector's health and developers' strategies.