A group led by Frasers Property submits the only bid at S$461 per square foot for the

A group led by Frasers Property submits the only bid at S$461 per square foot for the Media Circle serviced apartment site

This falls short of market watchers' projections for a top offer that would range from S$650 psf per square foot to S$1,100 psf per square foot.

September 19, 2024

When the Urban Redevelopment Authority (URA) tender closed on Thursday (Sep 19), a Frasers-led consortium submitted a single bid of S$120 million, or S$460.8 per square foot per plot ratio (psf ppr), for a long-stay serviced apartment site in Media Circle.

For the parcel close to the one-north office hub, the only bid from a group consisting of FCL Land, Padawan MC, and Empire One North Property was significantly lower than what market observers had predicted would be the top bid, which ranged between S$650 psf ppr and S$1,100 psf ppr.

While Empire One North Property is associated with Sunray Group Holdings, Padawan MC is associated with Boustead Projects.

The first state land plot devoted to long-term serviced apartments, a new rental category known as SA2, was introduced last year to help meet market demand, and up to three bids were anticipated before the tender closing.

It is unclear if the site will go to this sole bidder or if the bid will be considered too low, according to Leonard Tay, head of research at Knight Frank Singapore. Because long-term serviced apartments have not yet proven to be profitable in Singapore, even though the site is located in an employment zone, the developer may have factored in the risk of the unknown in addition to the 60-year land tenure.

The lack of an MRT station nearby may have contributed to the lack of interest in the Media Circle site, as developers may have been concerned about the construction of more high-density residential projects in the vicinity, according to Wong Siew Ying, head of research and content at PropNex.

"A few hospitality-related developments (nearby) already exist, such as serviced apartments at Citadines Fusionopolis Singapore, a co-living space at Lyf One-North Singapore, and the hotel Citadines Connect Rochester Singapore, which are closer to public transport options, retail and dining establishments than this site," noted Justin Quek, CEO of OrangeTee & Tie.

"These factors, along with the shorter 60-year lease, may have been factored into the only bid that was submitted."

520 apartment units with commercial space on the first floor could be built on the Media Circle plot. It has a maximum gross floor area of 24,211 square meters and is situated on a 5,764.3 square metre (sq m) plot of land.

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So far, two additional SA2-eligible sites that combine residential and serviced apartments have been offered for sale. In April, a City Developments Ltd.-Mitsui Fudosan partnership that made the only bid of S$1.1 billion, or S$1,202 per square foot, won the first plot that was tendered at Zion Road. On the outskirts of the prestigious River Valley residential neighbourhood, the expansive property can accommodate up to 1,170 residential units, including 435 serviced apartments.

There was absolutely no interest in the second SA2-type site at Upper Thomson, and the tender ended in June without any bids. Risks associated with the unproven rental category, which would necessitate specialised management expertise, were cited as the reason for the poor response.

There are four upcoming residential sites in the immediate area, including the Media Circle site that was tendered on Thursday.

It is anticipated that Media Circle (Parcel A) and Media Circle (Parcel B) will go on sale in November 2024. They have the potential to produce roughly 830 private residential units in total.

Following the joint venture's successful bid of S$395 million, or S$1,191 psf ppr, Qingjian Realty and Forsea Residence were granted another site in Media Circle in February.