As developers remain cautious, measured bids for the Tengah housing plot and a bullish play for the Dairy Farm site

The Dairy Farm Walk site attracts the highest bid of S$1,020 psf ppr from the Santarli-led consortium, while the Hong Leong-led group defeats two others with a bid of S$821 psf ppr for the first Tengah private housing site.

January 14, 2025

CONDOsingapore.com



When government tenders ended on Tuesday, January 14, two suburban residential sites received moderate interest and largely measured bids. Given the current state of the economy and the abundance of land sale sites anticipated this year, developers are still adopting a cautious approach.

Three bids were made for the first private housing site in the upcoming new estate Tengah, with a group led by Hong Leong winning the highest price at S$675 million, or S$821 per square foot per plot ratio (psf ppr).

The top bid of S$504.5 million (S$1,020 psf ppr) from a consortium led by Santarli Construction, on the other hand, outbid the second bid from Sim Lian Group by 23% for a Dairy Farm Walk parcel for 540 units.

According to Tricia Song, head of research for South-east Asia at CBRE, the general lack of interest, which follows a strong increase in new home sales in the previous quarter, indicated that developers were being picky ahead of more desirable sites that would become available through the government land sales (GLS) programme. This was due to the fact that construction and financing costs were still high.

"They may be waiting for the more appealing sites like Bayshore Road, Chencharu Close, Hougang Central, and Telok Blangah Road (which have been or will be released for sale this year)," stated Mark Yip, chief executive officer of Huttons Asia.

According to Marcus Chu, CEO of ERA, there are currently seven plots on the 2024 GLS schedule that are up for bid, and six more will be introduced in the first half of 2025.

Yip of Huttons Asia went on to say: "Developers are careful to keep their land bids reasonable in order to maintain an attractive selling (price) to buyers, given the high costs."

According to him, developers will probably keep assembling groups to place joint bids for GLS sites and "spread the risk."



There was only a 1% gap between the highest and lowest bids for the Tengah Garden Avenue plot, according to Song of CBRE.

The highest bid, from Kingsford Group, was only S$6 psf ppr, or 0.7% more than the next bid of S$670.1 million (S$815 psf ppr). Third place went to Sim Lian Group, with S$668 million (S$813 psf ppr).

For the Outside Central Region (OCR) project, the bid was at the lower end of analysts' expectations, which were S$800 to S$980 psf ppr. The 25,458.4 square metre (sq m) site was the first private residential site in an area where executive condominium (EC) sites have already been sold, and consultants had expected two to four bids for it.

"The current unsold inventory from the nearby Jurong Lake area and an upcoming GLS site (in the area), which will be launching in April, may also have moderated interest in this site," stated Justin Quek, CEO of OrangeTee & Tie.

Although Tengah is "untested territory," Knight Frank research head Leonard Tay added that the project is likely to attract first-time homebuyers and public housing upgraders due to its proximity to Anglo-Chinese School (Primary) and future accessibility.

There is a healthy demand for other EC projects in the area

Last year, a joint venture between Hoi Hup Realty and Sunway Developments won a Plantation Close land parcel that attracted four bids for S$423.4 million, or S$701 per square foot per year.

In November 2024, Novo Place, the project, went up for sale. Since then, 447 units, or 89% of the 504 units, have been sold at a median price of S$1,652 per square foot.

When it debuted in October 2022, the 639-unit Copen Grand, another EC project nearby, had a healthy take-up rate of 73%, according to PropNex CEO Ismail Gafoor. The development was completely sold a month after it was launched, with the units selling for an average of S$1,300 per square foot at the time.

In a statement released Tuesday evening, Loke Kee Yeu, general manager of projects at Hong Leong Holdings, stated that the company, along with its partners GuocoLand and CSC Land Group (Singapore), plans to construct an 860-unit condominium if it is granted the Tengah Garden Avenue site.

"Future residents can contribute to the expanding development on the new Tengah estate and benefit from improved connectivity via the upcoming Jurong Region Line," he stated.

The Tengah Garden Avenue condo is expected to cost at least S$2,000 per square foot, with a break-even cost of approximately S$1,900 per square foot, given the land cost of S$821 per square foot per person.

The plot has a maximum gross floor area of 76,376 square metres and is zoned for residential use, with the first story being used for commercial purposes.

Santarli is optimistic about the Dairy Farm project

A consortium consisting of Santarli Construction, Apex Asia Group, Soon Li Heng Civil Engineering, and Kay Lim Realty submitted the highest bid of S$504.5 million, or S$1,020 per square foot, in the other tender that closed on Tuesday for the site on Dairy Farm Walk.

The group outbid Sim Lian Group, the sole bidder, by roughly 23%.

According to Knight Frank's Tay, its bid was also 4% higher than the asking price for a previous Dairy Farm Walk site that sold in March 2022 for S$980 per square foot. Seven bids were made at the time for the plot where the 386-unit condominium known as The Botany at Dairy Farm now sits.

The highest bid on Tuesday, S$1,020 per square foot, exceeded our pre-tender survey expectations. Bids between S$800 and S$950 per square foot were anticipated by the consultants.

Due to its limited accessibility and the abundance of private residences in the neighbourhood, which could have "absorbed some of the existing demand," PropNex's Gafoor stated that expectations were comparatively low.

The "near sell-out" at The Botany at Dairy Farm may have inspired the developers, according to Song from CBRE. Last year, the project sold 160 units, or more than 40% of its total, at a median price of S$2,012 per square foot.

According to Nicholas Mak, chief research officer at Mogul.sg, there is a sizable pool of prospective purchasers in the vicinity, with 21,820 public housing apartments and 13,862 condos located within 2 kilometres of the Dairy Farm Walk location.

The land parcel, which is 21,881.8 square metres in size and has a maximum gross floor area of 45,951 square metres, is situated at the intersection of Dairy Farm Walk and Petir Road. It is the fourth GLS site in the region to be made available for purchase.

The upcoming condo is expected to start at S$2,100 per square foot, with analysts projecting a break-even cost of S$1,900 to S$2,000 per square foot.