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Property Herald: Government Land Sales (GLS) Hit The Market Again: But How Will They Do This Time?

Nicholas Mak analyses the three plots of land put up for sale as part of this month's Government Land Sales (GLS), their prospective use and pricing - and if it introduces quality developments to our market or not.



Introduction

The Singapore government released three plots of development land for sale today, one site at Woodlands in the Confirmed List and two other sites in the Reserve List.


The two sites in the Reserve List will only be launched for sale by tender after a developer has successfully applied to the government for its release.


Table 1: Details of Government Land Sale sites released in May 2023

Location

Champions Way

Lorong 1 Toa Payoh

Punggol Walk

Confirmed List

Reserve List

Reserve List

Site area (sqm)

14,432.6

15,743.0

10,011.5

Plot ratio

2.1

4.2

1.4

GFA (sqm)

30,309.0

66,121.0

14,017.0

Allowable use

Residential

Residential

Commercial

Estimated No. of housing units

350

775

0

Land tenure

99 years

99 years

30 years

Source: Mogul.sg, URA



Champions Way

The residential site situated along Champions Way at Woodlands is the only site in the Confirmed List to be launched for sale in May. It is likely to be developed into a 15 to 16-storey condominium with 350 units.


It has been 12 years since the previous GLS plot for condominiums were sold. Hence, there could be some pent-up demand for a new condo project in the Woodlands area. That site was developed into the 689-unit condominium called Parc Rosewood, completed in 2014.



Location of GLS plot at Champions Way
Location of GLS plot at Champions Way

Source: URA


Furthermore, the subject site at Champions Way is located near the Woodlands South MRT Station, which is only one station away from the Woodlands Regional centre via the Thomson-East Coast Line. The proximity to the MRT station would enhance the accessibility to the MRT network for the residents and increases the saleability of the future property on this site.


The estimated land price for the residential site at Champions Way ranges from $920 to $1,012 psf ppr (per square foot per plot ratio), which would translate to $300 million to $330 million. This tender could attract 5 to 9 bids from developers.


Lorong 1 Toa Payoh (Reserve List site)

The residential site at Lorong 1 Toa Payoh is arguable the most attractively among the residential land parcels in the Reserve List of the GLS programme for the first half of 2023. It is located in the mature housing estate of Toa Payoh, a mere 5-minute walk from Braddell MRT Station. This land parcel could be developed into a high-rise condominium with 760 to 800 units.



Location of GLS plot at Toa Payoh
Location of GLS plot at Toa Payoh

Source: URA


It has been 8 years since the previous condominium GLS site in Toa Payoh was sold in 2015. That site was developed into the condominium, Gem Residences, where the housing units in the project is transacted at the median price of $1,836 psf in the first 5 months of this year.


There is a moderately high probability that a developer could apply for this Reserve List site to be launched for tender as private residential development sites in Toa Payoh are few and far between. In the event that a new residential development is built on this site, it is likely to attract strong demand from homebuyers.


If this GLS site at Toa Payoh is launched for tender today, it could attract 8 to 13 bids from developers with the top bid ranging from $800 million to $888 million, which will translate to a land rate of $1,124 to $1,248 psf ppr.



Punggol Walk (Reserve List site)

It is quite uncommon for the government to release commercial site with land tenure of less than the usual 99 years. It is even more uncommon for such short-term commercial site to be located in the north-eastern suburbs, about 15 km from the CBD. Hence, the commercial site at Punggol Walk is an experiment by the government to test whether the property market is ready for such a product at Punggol.



Location of commercial GLS plot at Punggol
Location of commercial GLS plot at Punggol

Source: URA


The reason why the government is only offering a land tenure of 30 years for this site is that in the event that this experiment turns sour, the authorities do not need to wait more than half a century to recover the site for other uses.


At least 60% of the 14,017 sqm GFA of the development on this site is mandated for office use. The developer must also build a childcare centre of not less than 650 sqm in size. The remaining 35% of the GFA can be used for other commercial purpose such as office or retail space.


The site is attractively located next to Punggol MRT station, but that does not guarantee that a developer would trigger it to be released for tender because Punggol is an untested office market.


In addition, there is an ample supply of office space in other parts of Singapore with an overall vacancy rate of about 11% in the office property market. Therefore, this reserve list site is unlikely to be triggered for tender by developers.


In conclusion, while it is always exciting news when the government puts land up for sale and for us to speculate on the potential developments that could be built - this particular GLS ranks relatively low on the hype train until the Toa Payoh plot is up for sale at least.


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