US interest rate cut boosts bids for Tampines mixed-use GLS site
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Six bids were submitted for the suburban commercial and residential site near Tampines West MRT station.
PHOTO: SCREENGRAB FROM GOOGLE MAPS
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SINGAPORE – A state land tender for a mixed-use development in Tampines Street 94 got a vote of confidence from developers, with Hoi Hup Realty and Sunway Developments submitting the top bid of $668.3 million on Sept 19, while the first pure-play long-stay serviced apartment site up for tender in Media Circle in Buona Vista attracted just one bid of $120.1 million.
Six bids were submitted for the suburban commercial and residential site near Tampines West MRT station,
The difference in outcomes for the two land sales underscores the fact that developers were “more willing to participate in known models for development than in a property type or concept that has yet to convincingly prove itself in Singapore”, Knight Frank research head Leonard Tay said.
Referring to the US Federal Reserve’s interest rate cut on Sept 18, Ms Tricia Song, head of research for South-east Asia at CBRE, said: “The oversized rate cut of 50 basis points in the US may have boosted confidence in the Singapore land sales market, with one tender closing seeing more participation and optimistic bids than those closed in the prior 10 months.”
She added: “We expect investment sentiment could improve going forward as funding costs come off, especially if developer sales also pick up on lower mortgage rates.”
The $668.3 million bid for the Tampines site works out to a land rate of $1,004 per sq ft per plot ratio (psf ppr) and is just 1.9 per cent above the second-highest bid at $655.6 million, or $985 psf ppr, said OrangeTee & Tie chief executive Justin Quek.
He noted that the site has attracted the most bids since November 2023, when a site in Clementi Avenue 1 closed with six bids.
Analysts said the Tampines Street 94 site is smaller than a Government Land Sales (GLS) site in Tampines Avenue 11, which attracted three bids and was awarded for about $1.2 billion
The Tampines Street 94 plot is about half the size of the Tampines Avenue 11 site, which made it more palatable to developers, they said.
Pointing to the popularity of integrated developments, PropNex head of research and content Wong Siew Ying noted that the project’s sizeable commercial component will serve a growing residential population in Tampines and help build the developers’ suburban retail footprint.
Pent-up demand for private housing in this area is another draw. Treasure at Tampines, the most recent launch in 2019, was fully sold by 2022, and there is a sizeable pool of Housing Board flat upgraders from Tampines, Bedok and Pasir Ris.
Shoring up developers’ confidence too is the prospect of more interest rate cuts, especially as the new launch is projected for the fourth quarter of 2025, analysts said.
On the flip side, the 60-year leasehold site in Media Circle
PropNex’s Ms Wong found this “unsurprising”, in the light of the tepid tender results for two 99-year leasehold sites
“The tender for the Upper Thomson Road Parcel A plot drew a blank, while the latter in Zion Road was awarded to a solitary bidder,” Ms Wong said.
OrangeTee’s Mr Quek said: “The long-stay serviced apartments model is still largely untested. Moreover, there is already a handful of hospitality-related developments in Queenstown, including a serviced apartment at Citadines Fusionopolis, a co-living space at lyf one-north, and the hotel Citadines Connect Rochester, which are nearer to public transport, retail, and dining establishments compared with this site.
“Coupled with the shorter 60-year lease, these factors may have been priced into the sole bid.”
Nonetheless, Mr Quek believes that there may be demand in the one-north business precinct, given its proximity to the National University of Singapore, National University Hospital and the Science Park business area.
Huttons Asia chief executive Mark Yip said: “While long-stay serviced apartments serve an underserved segment of the tenant market, the lack of enthusiasm from developers may indicate that the market is not yet ready to embrace this due to higher risks of building an untested product and longer time taken to recoup capital.”
Mogul.sg chief research officer Nicholas Mak believes that the low bid submitted for Media Circle may mean the site may not be awarded.
He noted: “Not many developers are interested or have the capacity to operate serviced apartments. Furthermore, the serviced apartment rental market is untested in the location around Media Circle.”
But ERA chief executive officer Marcus Chu believes that the sole bid is within expectations.
“The developer is expected to adhere to JTC Corporation’s urban design requirements, which (consortium partner) Boustead would be familiar with, given its track record in industrial property development. Frasers, on the other hand, will bring its serviced apartment experience,” he said.
