Sole offer for Marina South site far below expectations raises doubts as to whether it will be granted
Potential for tidy profit
Observers observed that the Marina Gardens Crescent Site would be a lucrative opportunity for the consortium. The breakeven price is approximately S$2,000 psf up to S$2,100. “The price is likely influenced by what was bid for the Marina Gardens Lane Site earlier.
A residential development at the Marina Gardens Crescent could launch in 2026 for S$2,800psf – S$3,200psf.
An analyst stated that if GuocoLand won the site, it could put pressure on residential developers to reduce the price of similar sites around the city. A pedestrian mall has been planned for a second plot of 58,238 square feet. Two smaller underground areas are reserved for pedestrian connections. A “white’ site is an area of land in which a range uses is permitted, though the government may stipulate a minimum component or maximum component for one or more of these uses.
Observers also noted the lowest bid of S$1,191 psf ppr that was received at the same tender’s closing date on Thursday for a Media Circle property. Media Circle’s plot is zoned for residential use with a commercial floor at the top. This site is also much further from the City and an MRT Station. Urban Redevelopment Authority, or URA, conducted the tender.
The Business Times, which surveyed property experts this week to find out their expectations for the Marina Gardens Crescent site, found that they had predicted anywhere from zero up to five bids. The highest price was expected to be between S$1,100psfppr and S$1,500psfppr.
The tender for the development of residential and retail space in Marina South closed Thursday (18th Jan) with only one bid. It was also far below market expectations.
The winning bid was S$770.5m from a consortium including GuocoLand Investments & TID Residential. This is S$984 for each square foot of the plot.
The land price paid was about 30 percent less than the S$1,402 PSF ppr Kingsford Group received for a neighboring plot at Marina Gardens Lane, which it purchased through an auction that ended in June 2013. Kingsford’s S$1.03billion S$ plot is zoned to residential use, with commercial spaces at the first-floor level.
The plot has the potential to generate approximately 790 units of private housing, which is the same as the 775 units that were on offer in the latest tender.
The Marina Gardens Crescent Site can be developed at a maximum of 783,00 sq ft. That is 6 per cent larger than the maximum GFA that was specified for the plot given to Kingsford.
On Thursday evening most market watchers told BT, anonymously, that they didn’t think the government would award the Marina Gardens Crescent. “The Chief Valuer had a clear similar transaction in the sale of Kingsford’s site. Moreover, the new site only received one bid,” said an experienced property consultant who declined naming himself.
Marina Gardens Crescent’s plot has attracted only one bidder. One of the reasons is that there’s a large sum involved.
Future Supply in Area
There are a number of new developments in the vicinity, such as Marina Gardens Lane, Skywaters Residences or Newport Residences. All of these have the potential to offer around 1,900 brand new homes.
In addition, the absence of schools nearby and the additional stamp duty for foreigners/investors since April 20,23 may impact the demand for future housing in that area.
Developers generally avoid large and investor focused sites in the City area. The sales of new private houses by developers islandwide have fallen to the lowest levels in 15 years at 6,452 homes.
The Media Circle parcel, which is capable of producing 355 apartments, is more attractive to developers who want to avoid risk. Apart from property cooling, the high-interest rate environment and macroeconomic challenges are also making developers cautious.
Developers also feel the strain of rising costs, and shrinking margins.
If awarded the Marina Gardens Crescent area, the consortium will build a new and exciting mix development catering to residents and local businesses. This will contribute to government’s vision to make Marina South an appealing, sustainable, community-centric district.
A second analyst noted that it would also be interesting for the government to decide whether or not the Marina Gardens Crescent land will be awarded at S$984/sqft ppr. This price may meet the government’s reserved price. For Government Land Sale, the reserve price is set at 85% of the estimated value determined by the Chief Assessor, while taking into consideration the proposed use of the land, site conditions, relevant sales, etc.
Hong Leong Group Singapore is home to Intrepid Investments as well as TID Residential. Both are listed on Singapore Exchange and were partners with GuocoLand in the bid.
GuocoLand’s joint venture with Guoco Group & Intrepid Investments came second at S$985 for the Marina Gardens Lane plot last year. It was just slightly above the highest bidder for the plot in the vicinity on Thursday. GuocoLand Group and Hong Leong Group have decided to make another bid for the newly-emerging growth precinct after having missed out the first time.