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Developers to remain 'selective' with GLS bids in 2025

Dairy Farm Walk and Tengah Garden Avenue tenders reflect developers' cautious approach.

Developers are maintaining a selective stance in the Government Land Sale (GLS) programme, highlighted by the recent closings of the Tengah Garden Avenue and Dairy Farm Walk sites.

Mark Yip, CEO of Huttons Asia, said developers remain cautious amid rising costs.  "Developers are mindful to keep their land bids reasonable to maintain an attractive selling quantum for buyers," he said. 

Tengah Garden Avenue received three bids, whilst Dairy Farm Walk received two, mostly from consortiums. 

Yip expects more consortiums to form for GLS bids to spread risks, explaining why the number of bidders remains around three per tender. 

Meanwhile, developers’ preference for prime sites, such as Bayshore Road and Chencharu Close, may have also impacted the bidding activity for the two sites, said Yip.

Ismail Gafoor, CEO of PropNex believes developers will stay cautious in 2025 in light of gross floor area (GFA) harmonisation rules and high construction costs, which affect break-even and selling prices.

Despite lukewarm participation in the first URA tender for 2025, Tricia Song, CBRE Head of Research for Singapore and Southeast Asia, highlighted that top bid prices met expectations for Tengah Garden Avenue and exceeded expectations for Dairy Farm Walk.

Although Dairy Farm Walk site is not near an MRT station, the bid reflects developers’ confidence in the area, driven by the success of nearby projects like The Botany at Dairy Farm and Hillhaven, Gafoor said separately.

The Dairy Farm Walk plot drew two bids, with the highest bid of $504.5m, or $1,020 per square foot per plot ratio (psf ppr), from a consortium consisting of SNC2 Realty, Apex Asia Alpha Investment Two, Soon Li Heng Civil Engineering, and Kay Lim Realty. 

The bid was 23.1% higher than the second bid submitted by Sim Lian Group, which is also developing The Botany at Dairy Farm, a nearby project that has sold 99% of its 386 units since its launch in March 2023.

“We believe that the developers have been encouraged by the near sell-out at Botany at Dairy Farm and lack of new supply in the vicinity [...] The new development could potentially be launched at prices starting from $2,200 to $2,300 psf,” Song said.

Meanwhile, the Dairy Farm Walk site is expected to launch at prices above $2,100 psf, buoyed by sustained buyer demand and limited new supply in the area.

The Tengah Garden Avenue site saw three bids, with the top bid of $675m, or $831 psf ppr, submitted by a consortium of Intrepid Investments, CSC Land Group, and GuocoLand. 

This is the first private residential GLS plot in Tengah, offering a first-mover advantage to the successful developer, said Justin Quek, CEO of OrangeTee & Tie, in a note. 

“Interest in this site may also have been moderated by the current unsold inventory from the nearby Jurong Lake area and an upcoming GLS site along Lakeside Drive and Lakeside MRT which will be launching in April 2025, which some developers may be waiting for,” Quek said.

The future project at Tengah Garden Avenue is expected to launch at prices above $2,000 psf.

Meanwhile, Leonard Tay, head of Research at Knight Frank Singapore, said in a separate note that the strong homebuyer activity in the fourth quarter of last year will likely slip into a more sustainable level and pace of takeup over the next few quarters.

“Demand will be underpinned by household net worth in Singapore that remains on a steady path of improving affluence, a low unemployment rate, and wealth that is passed down from earlier generations of Singaporeans that have benefitted from asset appreciation,” Tay said.

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