Updated from : The Business Times, 30 Jun 2021
A STATE tender for the 99-year leasehold commercial and residential site at Jalan Anak Bukit came in below expectations when it closed on Tuesday with just five bids – of which three were joint bids by the same duo.
Far East Organization and Sino Group appear bent on clinching the tender, putting in three separate bids with different concept proposals.
The other two bids submitted were from Allgreen Properties in partnership with Kerry Properties and Kerry Holdings; as well as Wing Tai Holdings which teamed up with Mercatus Commercial Trust I.
JLL’s senior director of research & consultancy, Ong Teck Hui, chalked up the response to developers choosing to eschew risk, given the hefty land cost for the site and the headwinds plaguing the construction sector as a result of the pandemic.
“The timing is awkward as large projects with longer completion periods create more uncertainty for developers due to the construction delay that has resulted from the pandemic,” said Mr Ong. “With a gross floor area of more than one million square feet, the total development cost will be large, as land cost itself is expected to exceed a billion dollars. These increase the risks for developers and it appears that the majority would rather not take the risk.”
The upside of this development is reduced competition for those in the race, he pointed out.
Nicholas Mak, head of research and consultancy at ERA, highlighted that the Jalan Anak Bukit site – despite its potential – attracted a lower response vis-a-vis a recent government land sales tender for a condominium site at Ang Mo Kio Avenue 1, which closed last month with 15 bids. This is despite the fact some developers will need to replenish their landbank as their unsold inventory ticks lower.
Mr Mak said: “This could signal that most developers are not that keen to participate in concept and price revenue tenders.”
The site has a dual-envelope tender system where bidders submit their concept proposals and tender prices in separate envelopes. Only concept proposals which are shortlisted go on to the second stage, which is based on price.
Under the concept and price revenue tender for the plot, the Urban Redevelopment Authority (URA) released the names of the bidders on Tuesday but not their bid prices.
Allgreen, which has been submitting bids for integrated developments under the two-envelope system, also participated in the Holland Village and Pasir Ris Central tenders, noted Huttons Asia director of research, Lee Sze Teck. “It may be part of their strategy to have multiple projects along the Bukit Timah stretch.”
Analysts see the Jalan Anak Bukit site serving as a much-needed catalyst to rejuvenate the Beauty World precinct as a new commercial development would inject vibrancy and fresh concepts.
Launched for sale on June 30, 2020, the site, near Beauty World MRT, was on the confirmed list of the H1 2020 government land sales programme. The tender’s closing date was then extended from the original closing date of March 30 to June 29 due to a new requirement for a centralised cooling system to serve the future mixed-use integrated transport hub (ITH), The Business Times reported previously.
The 3.22 ha site can be developed up to a maximum gross floor area (GFA) of 96,551 sq m, or nearly 1.04 million sq ft. Of this, at least 5,000 sq m shall be for a bus interchange while up to 20,000 sq m GFA shall be for commercial use.
The remaining GFA shall be for residential use, or potentially 845 residential units.
Given its location in the Bukit Timah residential area and the premium that comes with being connected to an ITH, Mr Mak reckoned that the residential units could go for S$2,300 to S$2,500 per square foot (psf) when they are launched for sale in end 2022 or 2023.
Other comparable residential developments connected to an ITH include The Woodleigh Residences at Bidadari Park Drive and Sengkang Grand Residences at Compassvale Bow, which have transacted at median prices of S$1,897 psf and S$1,724 psf respectively between January last year and February this year, Mr Mak added.
Residential projects not far from Beauty World that are being marketed include View At Kismis, Daintree Residence, Verdale, The Linq@Beauty World and Forett @ Bukit Timah.