The Government Land Sale (GLS) site at Tengah Gardens Avenue has closed with three bids, after the tender closed on Jan 14. The top bid of $675 million, or $821 psf per plot ratio (ppr), was submitted by a consortium led by Hong Leong, together with GuocoLand Singapore and CSC Land Group.
The Government Land Sale (GLS) tender for the site at Tengah Gardens Avenue has closed on Jan 14 with three bids submitted. The top bid of $675 million, or $821 psf per plot ratio (ppr), was submitted by a consortium led by Hong Leong, including GuocoLand Singapore and CSC Land Group.
The 99-year leasehold site, which is zoned ‘Residential with Commercial at 1st storey’, measures approximately 273,906 sq ft with a maximum gross floor area (GFA) of 821,720 sq ft. According to URA’s estimation, the site has the potential to yield up to 860 residential units.
If awarded, the Hong Leong-led consortium plans to develop an 860-unit condo, taking advantage of the upcoming Jurong Region Line (JRL) nearby which will enhance connectivity. Loke Kee Yeu, general manager (Projects) at Hong Leong Holdings Limited, believes that the JRL will contribute to the growth of the new Tengah estate.
The Tengah Gardens Avenue site is located 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 CBD at Jurong Lake District.
The top bid of $821 psf ppr for the site is only 0.73% higher than the second-place 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.
Despite the increase in homebuyer activity seen at the end of 2024, developers remain cautious, according to Leonard Tay, head of research at Knight Frank Singapore. Another GLS site at Dairy Farm Walk closed on Jan 14 with only two bids received.
Tay believes that developers may have chosen to focus on existing sites that are preparing for launch in 2025. He also notes that the tight bid price spread (less than 1%) indicates that developers are being more conservative in their bids.
Mark Yip, CEO of Huttons Asia, suggests that developers are trying to keep their land bids reasonable in order to maintain an attractive selling price for buyers. He expects to see more developers submitting joint bids for GLS sites this year in order to diversify their risks. This may be one of the reasons behind the consistent trend of receiving only three bids for GLS tenders.
Marcus Chu, CEO of ERA, suggests that the low number of bids may also be due to the current availability of GLS sites. He believes that with seven sites still open for tender and six more to be launched in the first half of 2025, developers are taking a cautious approach and weighing their options amidst moderated interest rates.
Moreover, Justin Quek, CEO of OrangeTee & Tie, points out that developers may have been considering bidding on a different GLS site along Lakeside Drive and Lakeside MRT, which is scheduled to launch for tender in April 2025. This could have also affected the interest in the Tengah Gardens Avenue site.
If awarded, the Tengah Gardens Avenue site will be the first private residential site in the Tengah HDB township, apart from Executive Condominiums (EC). Copen Grand, the first EC in the estate, was successfully launched for sale in 2022 and sold out within a month. The joint developers, City Developments Ltd (CDL) and MCL Land, secured the EC site with a winning bid of $400.32 million, or $603 psf ppr, in May 2021.
When purchasing a condo, it is crucial to take into account the maintenance and management of the property. In most cases, condos come with maintenance fees that cover the maintenance and upkeep of common areas and amenities. While these fees may increase the overall cost of ownership, they also guarantee that the property stays in good condition and maintains its value. Hiring a property management company can assist investors in managing their condos on a daily basis, making it a more passive investment.
The opportunity to launch the first private condo in the new Tengah estate may have attracted the Hong Leong-led consortium, according to ERA’s Chu. He believes that the developers see this as an opportunity to replicate their success at Lentor, Upper Thomson and Bugis in Tengah.
As the first private condo in the area, the development could attract a wider range of buyers compared to 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. Mohan Sandrasegeran, head of research & data analytics at SRI, believes that the development’s proximity to the future Anglo-Chinese School (Primary) within 2km could make it very attractive to families with school-aged children.
Investing in a condo also comes with the added advantage of leveraging the property’s value to secure further investments. It is not uncommon for investors to use their condominiums as collateral in order to obtain additional funds for new investments, allowing them to expand their real estate portfolio. This approach can significantly amplify returns and open up new opportunities, but it also carries some risks. It is essential to have a well-planned financial strategy in place and carefully consider the potential impact of market fluctuations when making use of this tactic. With the added benefit of investing in a Singapore Condo, investors can take advantage of this leverage and continue growing their real estate investments.
PropNex estimates that if the site is awarded at the top bid of $821 psf ppr, the average selling price for the new private condo could be around $2,000 psf. This would make it the highest priced condo in the area.