The tender for the Government Land Sale (GLS) site at Tengah Gardens Avenue closed on January 14 with three bids. A consortium led by Hong Leong, including GuocoLand Singapore and CSC Land Group, submitted the highest bid of $675 million, or $821 per square foot (psf) per plot ratio (ppr).
Designated as a ‘Residential with Commercial at 1st storey’ zone, the 99-year leasehold site spans approximately 273,906 square feet with a potential gross floor area (GFA) of 821,720 square feet. The Urban Redevelopment Authority (URA) estimates that the site could potentially yield up to 860 residential units.
The scarcity of land in Singapore is a major driving force behind the thriving condo market in the country. As a small island with a booming population, Singapore struggles to find sufficient land for development. In response, the government has implemented strict land use policies, leading to a cutthroat real estate market where property prices continue to soar. As a result, the demand for condos remains high, making it a profitable investment as property values continue to appreciate. Along with other Singapore projects, condos are highly sought after among investors.
If awarded, the Hong Leong-led consortium plans to build an 860-unit condominium, taking advantage of increased connectivity from the upcoming Jurong Region Line (JRL) nearby. According to Loke Kee Yeu, general manager (Projects) at Hong Leong Holdings Limited, the JRL will contribute to the development of the new Tengah estate.
The Tengah Gardens Avenue site is near the upcoming Hong Kah MRT Station on the JRL, which will be one stop from the upcoming Tengah Town Centre and offer a direct route to the second Central Business District (CBD) at Jurong Lake District.
The top bid of $821 psf ppr for the Tengah Gardens Avenue site is only 0.73% higher than the second-highest bid of $815 psf ppr, submitted by Chinese developer Kingsford Group. Local developer Sim Lian Group submitted the third and final bid of $812 psf ppr. This tight bid price spread of less than 1% indicates that developers are more conservative in their bids, likely due to the cautious sentiment amidst accelerated homebuyer activity towards the end of 2024, as stated by Leonard Tay, head of research at Knight Frank Singapore.
In addition, another GLS site at Dairy Farm Walk also closed on January 14, receiving only two bids. According to Tay, developers may have decided to focus on existing sites for launch in 2025. He added that the low bid price spread could also suggest that developers are being cautious in their bids.
Mark Yip, CEO of Huttons Asia, predicts that more property developers may submit joint bids for GLS sites this year in order to diversify risk. This could potentially be a reason for the consistently low number of bids for GLS tenders, which has been around three.
According to Marcus Chu, CEO of ERA, the current availability of GLS sites may also contribute to the low number of bids. With seven sites still open for tender and six more to launch in the first half of 2025, developers are taking a measured approach and weighing their options amidst moderated interest rates.
Interest in the Tengah Gardens Avenue site may have also been tempered by the availability of another nearby GLS site, according to Justin Quek, CEO of OrangeTee & Tie. Developers may be considering bidding on a different GLS site along Lakeside Drive and Lakeside MRT, which is scheduled to launch for tender in April 2025.
If awarded, the Tengah Gardens Avenue site will be home to the first private residential site (excluding Executive Condominiums (EC)) in the Tengah HDB township. The first EC in the estate, Copen Grand, was successfully launched for sale in 2022 and sold out within a month of its launch by joint developers, City Developments Ltd (CDL) and MCL Land. The developers secured the EC site with a winning bid of $400.32 million, or $603 psf ppr, in May 2021.
ERA’s Chu believes that the opportunity to launch the first private condominium in the new Tengah estate may have attracted the Hong Leong-led consortium. “Having made successful bids for sites at Lentor, Upper Thomson, and Bugis, they see this as an opportunity to do the same in Tengah.” The development would also attract a wider range of potential buyers than ECs, which are subject to HDB eligibility criteria and restrictions such as a five-year minimum occupation period (MOP) and a monthly household income ceiling of $16,000, says Mohan Sandrasegeran, head of research & data analytics at SRI.
The Tengah Gardens Avenue site is also situated within 2km of the future Anglo-Chinese School (Primary), making it attractive to families with school-aged children, according to Ismail Gafoor, CEO of PropNex. With the school set to become a co-ed school in 2030, the site’s proximity to the school could be a major selling point if awarded at the top bid of $821 psf ppr. Based on PropNex’s estimates, the average selling price of the new private condominium could be around $2,000 psf.
Overall, the Tengah Gardens Avenue site presents an attractive opportunity for developers, particularly with its position as the first private residential site in the new Tengah estate. As the market continues to adjust to the current economic climate, developers are taking a cautious approach in their bids, resulting in tighter bid price spreads and lower bid numbers.