Updated from : The Business Times, 30 Nov 2021
THE Urban Redevelopment Authority (URA) has released for sale 2 residential sites at Pine Grove (Parcels A & B), it said in a statement on Tuesday (Nov 30).
The sites are released under the reserve list of the second half 2021 government land sales (GLS) programme.
Land parcels under the reserve list system will only be released for sale if it receives an offer of a minimum price that is acceptable to the government, while confirmed list sites are launched according to schedule regardless of demand.
Both sites have a lease period of 99 years.
The site at Pine Grove (Parcel A) spans 22,534.7 square metres (sq m) and has a maximum gross floor area (GFA) of 47,323 sq m. The estimated number of housing units it can have is 520.
Meanwhile, the site at Pine Grove (Parcel B) spans 25,039.2 sq m and has a maximum GFA of 52,582 sq m. The estimated number of housing units it can have is 565.
Nicholas Mak, ERA Realty’s head of research and consultancy, said he does not expect the 2 sites to be triggered for tender any time soon as the large size of the parcels may not be as attractive to real estate developers compared to other GLS sites.
He added that the “sweet spot” for most developers would be residential sites that can be developed into condominium projects with 200 to 500 units each.
“Property developments of such sizes would be big enough for the developer to enjoy some economies of scale, but still small enough for the developer to manage the risk of sudden unexpected changes in market conditions or a new round of government intervention.”
Mak expects the 2 parcels could fetch between S$920 per square foot per plot ratio (psf ppr) and S$1,000 psf ppr if they were launched for tender today.
This translates to S$468 million to S$510 million for Parcel A, and S$520 million to S$566 million for Parcel B.
Echoing him, Huttons Asia’s senior director of research Lee Sze Teck said the chances of the 2 sites being triggered for sale are not high as there are better land parcels listed on the confirmed list, such as Jalan Tembusu, as well as upcoming en bloc sites, which he said will satiate developers’ appetite for land.
He noted, too, that there may be more sites under H1 2022 GLS programme which will be announced in December.
Should the sites be triggered for sale, Lee expects the eventual price to be between S$1,000 and S$1,200 psf ppr.
Meanwhile, Cushman & Wakefield head of research Wong Xian Yang and JLL senior director of research and consultancy Ong Teck Hui said that there is a good chance that the sites can be triggered, as there is strong demand for housing in the market.
However, Wong noted that the sites would likely be triggered one at a time, given current cooling measures which do not favour large sites. He added that if both sites are triggered at the same time, developers want to take advantage of the sites’ “attractive location” and bid for both.
“The two land parcels are connected to major roads and expressways such as Ayer Rajah Expressway, Clementi Road and Ulu Pandan Road with Clementi and Dover MRT stations being about 1km away,” Wong said.
He added: “Developers who are looking to replenish their landbank may favour acquisition from the GLS programme, which is a more straightforward process than buying through the en bloc market.”
Christine Sun, senior vice-president of research and analytics at OrangTee & Tie said that developers may consider triggering the site, but they may wait a beat given the new uncertainties arising from the Covid-19 variant Omicron.
She and Ong noted developers are more likely to bid for sites separately (as compared to both sites combined), as there will be lower costs and risks.
Tricia Song, head of research at CBRE, also said that the sites could draw demand from developers, given the palatable size per parcel and relatively popular residential enclave, amid depleting unsold inventories among developers.
“However, given the large combined size of the offering and the consideration of affordability due to the minimum average unit size, we expect the top bid to be more tempered, compared to the most recent tenders of 2 parcels at Slim Barracks, which have a smaller total quantum of 400 units and had achieved top bids of S$1,210 to S$1,246 psf ppr.”
If launched for tender today, she expects the sites to draw a land rate of S$1,000 to S$1,100 psf ppr.