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Property Herald - Back to the Drawing Board: Government Rejects Developer’s Bid for Marina Gardens Crescent Mixed-Use Site

Introduction

 

The Singapore government announced two different results regarding the GLS tenders for the land parcels at Media Circle and Marina Gardens Crescent.

 

Media Circle site is sold


Media Circle
Media Circle Sitemap

The Government awarded the tender for the Media Circle site to the joint-venture of Qingjian and China Communications Construction Company, which submitted the top bid of $395.29 million. The bid translates to a land rate of $1,191.01 psf ppr (per square foot per plot ratio).

 

The land parcel is located near the Mediacorp Campus and could yield about 350 housing units. The residential development on this site could be launched in 2025 at about $2,420 to $2,500 psf.

 

Marina Gardens Crescent site is back on the shelf


Marina Garden Crescent
Marina Gardens Cres sitemap

The Government rejected the sole bid in the GLS tender for the White site at Marina Gardens Crescent from a joint-venture (JV) consisting of Guocoland, Hong Leong Group and TID. The JV bid $770.45 million when the tender closed on 18 January 2024. The bid translates to a land rate of $984.01 psf ppr.

 

The land tender which attracted only one bid, also indicates the low demand for land in the Marina area among property developers. The demand for residential properties in that location, which is part of the Core Central Region (CCR) typically depends more on investors and foreign buyers than in most other parts of Singapore. The property market cooling measures and the current economic uncertainties have sapped the investment demand for residential properties, especially in the CCR.

 

Signal from the government

 

On one hand, that sole bid for the Marina Gardens site could be seen as the bidder’s pessimistic view that property prices in the downtown area will fall in the next two years, which is when the residential portion of the development would be launched for sale to buyers, if the site was acquired.

 

However, the government holds a different and more positive view that property values in that location will be sustained or rise in the near future.

 

The rejection is also an indirect signal from the government to developers not to lowball in GLS tenders, because the government has the right to reject bids deemed to be too low.

 

Potential super-normal profit

 

The Marina Gardens Crescent land parcel could be developed into a residential and commercial project. About 780 apartment units could be developed on this site. It has attractive attributes as it is located next to Marina South MRT station and Gardens by the Bay. Furthermore, some the residential units in this project could have an unblocked sea view.

 

If the Marina Gardens Crescent site is sold to the developer at the land rate of $984 psf ppr, the breakeven price could be about $1,770 psf to $1,850 psf.

 

Based on the transacted prices of comparable residential properties in that location (see Table 1), the residential units in this Marina Gardens project could potentially be sold at prices exceeding $3,000 psf. This would give the developers a super-normal gross profit of 60% to 80%.

 

Not the first GLS rejection

 

The most recent example that the government rejected a land sale bid from developers was for a dementia care village occupying 10 bungalows at Sembawang in May 2020. The sole bid was rejected by the Government for offering too low a price of $15 million. The joint tender held by URA and the Ministry of Health, was for both development concept and price. The bid was submitted by real estate and healthcare company Pre 11 and Orpea Singapore, which provides residential care for the elderly, among other services.

 

No shortage of housing supply in Downtown area

 

For buyers looking to purchase residential units under development, there is ample supply of private housing units in the Downtown area from launched residential projects (see Table 1) and upcoming developments (see Table 2).

 

Table 1: Existing launched projects near Marina Gardens Crescent

Project name

Road name

Tenure

Total no. of units

Unsold no. of units

Median price ($psf)

One Bernam

Bernam Street

99-years

351

140

$2,640

Midtown Bay

Beach Road

99-years

219

91

$3,316

The M

Middle Road

99-years

522

2

$2,992

TMW Maxwell

Tras Street

99-years

324

318

$3,337*

Source: Mogul.sg Research, URA

 

There are about 6 upcoming residential projects in the Downtown area with a total of about 2,390 units yet to be launched. Therefore, homebuyers have ample choices.

 

 

Table 2: Upcoming residential project launches near Marina Gardens Crescent

Project name

Road name

Tenure

Estimated No. of units

Estimated launch date

Marina View Residences

Marina View

99-years

683

1H 2024

Newport Residences

80 Anson Road

Freehold

246

1H 2024

Skywaters Residences

Shenton Way

99-years

215

N.A.

Marina Gardens Lane GLS

Marina Gardens Lane

99-years

790

1H 2024

Former Anson Centre

51 Anson Road

99-years

87

2H 2024

Former Central Mall

Havelock Road

Freehold

370

2H 2024

Source: Mogul.sg Research, URA

 

 

One reason for the expected slower home-buying demand in the Marina area from Singaporeans, especially families, is the lack of primary and secondary schools in that area. From the perspective of foreign buyers, with the punitive 60% Additional Buyer’s Stamp Duty (ABSD) imposed by the government, most foreign buyers will stay away from the Singapore housing market for the time being.

 

Therefore, developers would be more cautious when bidding for residential land in the Marina area.

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