Sim Lian Places Tops Bid For Singapore Residential Site With $626M Bargain Offer

Local private developer Sim Lian Group placed the higher of just two bids for a residential plot on Jalan Tembusu in eastern Singapore at S$828.8 million ($625.5 million), in a government land sale that drew weaker than expected interest from developers..

The group’s Sim Lian Land and Sim Lian Development subsidiaries bested a joint offer by property heavyweights City Developments Ltd (CDL) and Frasers Property by just S$800,000 in in a public tender that closed on Tuesday. If awarded, Sim Lian could develop up to 840 new condos on the 2.05-hectare (5-acre) site near the future Tanjong Katong MRT station.

The scale of the project, coupled with the ample supply of homes in District 15, where three condo developments have been launched over the past four months, may have tempered bids and participation in the tender, according to Wong Siew Ying, research and content head at PropNex Realty.

“In bidding for the site, developers would have evaluated if the private housing demand in the area is deep enough to support another large project,” said Wong, noting that there are about 2,500 condo units introduced to the market with the launch of the Grand Dunman last week, The Continuum in May and Tembusu Grand in April.

East Coast Supply

Sim Lian’s bid for the Jalan Tembusu site translates to S$1,069 per square foot of of the projects maximum permissible gross floor area (GFA) of 775,000 square feet (72,000 square metres), with the height of the development capped at 246 feet.

Although the market had expected modest participation in the tender that opened in March, the top bid still came way below initial estimates by JLL of at least S$1,300 per square foot of GFA, or a total cost of more than S$1 billion.

The winning bid was also 18 percent less than the S$1,302 per square foot of built space that CDL paid for a plot it won across the street from the Jalan Tembusu site in January 2022.

Sitting at the intersection of Tanjong Katong Road and Jalan Tembusu, CDL is co-developing the 638-unit Grand Tembusu luxury project on the site together with Hongkong Land unit MCL Land. The partners have sold 364 units in the project at an average price of $2,474 per square foot since its launch three months ago.

“Developers (were likely) being wary about the supply of new private homes in the vicinity, with some potentially giving it a miss on concerns that there may be a saturation of sites in this locale, despite District 15’s popularity among buyers,” said Wong.

The future Jalan Tembusu project also poses higher development risk for Sim Lian as all units have to be sold quickly to qualify for stamp duty remission at the same time that the area is experience an overflow of supply, commented Lam Chern Woon, research and consulting head at Edmund Tie.

Developers can remit 35 percent of the 40 percent stamp duty paid on the acquisition cost, if the project is completed and sold-out within five years.

Considering the record government land sale programme set out for the second half of the year, Lam said some developers may have also chosen to watch he market before joining new tenders.

“A conservative bid price appears to be the logical and prudent approach, in order to ensure sufficient pricing manoeuvre, amid the competition to achieve a project sell-out and qualify for the ABSD remission,” Lam said.

Flurry of New Condos

Another large project near the site SingHaiYi Group’s Grand Dunman development along Dunman Road, which sold 550 units, or more than half of the 1,008 homes available since its launch last weekend, with those homes selling at an average price of S$2,500 per square foot, according to PropNex.

Since its launch in May, the 816-unit Continuum project by Hoi Hup Realty and Sunway Developments along Thiam Siew Ave has sold less than a third of its total homes, or 230 condos, at an average price of S$2,728 per square foot.

PropNex expects Sim Lian’s average selling price on the upcoming Jalan Tembusu project to hover around S$2,300 per square foot, lower than the prices fetched in the three nearby developments.

The privately-held developer scored a win in the Bukit Panjang area in March when it sold nearly half of its 386-unit The Botany at Dairy Farm condo project on the first day of sales.

Hotly Contested EC Tender

Over in the Tampines neighbourhood, a public tender for an executive condominium (EC) site at Tampines Street 62 (Parcel B) which also closed on Tuesday generated greater interest among developers as it drew a total of seven bids.

The top bid is expected to reach at least S$650 per square foot of potential built area for the hybrid public-private project, according to PropNex.

“ECs tend to attract strong demand from owner-occupiers owing to their more affordable pricing relative to other private home launches, and buyers of ECs are typically less affected by cooling measures,” said Wong.