URA releases Clementi plot for 400 homes; cautious bidding expected due to market sa

URA releases Clementi plot for 400 homes; cautious bidding expected due to market saturation

Sep 12, 2024

The Urban Redevelopment Authority (URA) released a Faber Walk residential site in Clementi for sale on Thursday (Sep 12) as part of the second half of the 2024 government land sales (GLS) programme.

Analysts predict that developers will bid conservatively for the site, as they have in previous tender exercises, due to market saturation as private housing supply ramps up.

The land parcel that has been advertised for sale is on the confirmed list. Sites from the confirmed list are launched on time, regardless of demand. Sites on the reserve list, on the other hand, are put up for tender only when a developer makes an acceptable offer to the government.

The 25,795.5-square-meter (sq m) site is expected to yield 400 residential units. According to URA, this will be limited to 403 vehicles in order to keep traffic flow manageable in the area.

The maximum gross floor area is 36,114 square meters, and the lease is for 99 years.

URA said in a statement on Thursday that the 400 units on this site will be part of the 5,050 homes to be released during the second half of the 2024 GLS programme.

"The government will continue to release a steady supply of private residential units in coming GLS programmes, with the supply calibrated to account for prevailing economic and property market conditions," the statement said.

Demand was mixed

According to Mark Yip, CEO of Huttons Asia, there may be pent-up demand for private housing projects in the area, as the Faber Walk GLS site is the last parcel of land in the private residential enclave.

According to ERA CEO Marcus Chu, demand could come from landed homeowners looking to right-size their homes or multi-generational families looking for homes within the same project.

Despite being in the suburbs, the location is appealing because of its proximity to various educational institutions and the upcoming Jurong Lake District, he added.

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According to Justin Quek, CEO of OrangeTee & Tie, the last state-land site listed for sale in the Faber Walk area was West Coast Vale - where the 716-unit Whistler Grand condominium now stands - in December 2017. It is situated across the Ayer-Rajah Motorway from the Faber Walk site.

When the tender closed in January 2018, six bids were received for the West Coast Vale land parcel, with City Developments Limited submitting the highest bid of S$472.4 million, or S$800 per square foot per plot ratio.

In October of that year, Whistler Grand condo was launched with an average selling price of S$1,380 per square foot.

Caveats data also revealed that resale prices in the Faber Walk area have recently ranged between S$760,000 (S$1,642 psf) and S$2.6 million (S$1,726 psf). In late August, a 603-square-foot Parc Riviera unit sold for S$1 million, or S$1,692 per square foot.

Nonetheless, market analysts predict that the site will receive moderate developer interest, with up to three bids submitted. They anticipate that the highest bid will be between S$750 and S$850 per square foot.

According to ERA's Chu, recent tender exercises indicate a lack of market confidence among developers.

Despite its location in a popular homebuying area, the latest state land tender for a Margaret Drive site received only two bids. Hong Leong units and GuocoLand made the highest bid of S$497 million, or S$1,154 per square foot per year, which was about 5% higher than Sing Holdings' bid of S$473.6 million, or S$1,100 per square foot per year.

Chu elaborated: "Compared to previous tenders, this GLS site's location may not be as attractive, given that there are more appealing sites (on the market), such as Bayshore, Chuan Grove and Chencharu, which are supported by dense housing enclaves."

He also mentioned that several existing and upcoming projects could dilute sales. "With a saturated market and simmering uncertainty for better GLS locations, developers may choose to withhold bids, for more calculated moves to compete for other upcoming sites."

Furthermore, Quek of OrangeTee mentioned that the site's limit of 403 residential units, as well as its low-rise and low density, may be factors developers consider when assessing its potential.

The tender for the Faber Walk land parcel closes at noon on November 19th.