Property Herald: URA Launches 7th Condo Site at Lentor

URA Launches 7th Condo Site at Lentor

Thursday, 17 October 2024

Produced by Mogul.sg Research Department

Summary

Currently, five out of the six GLS residential sites at Lentor that the government has sold were acquired by either Guocoland, and/or Hong Leong Holdings and TID or a consortium of all three developers. Guocoland, Hong Leong Holdings and TID has firmly established their presence in the Lentor condominium primary market.

Furthermore, it is very likely that one or all three of these developers will submit a bid in this tender to protect their market position in the Lentor area.

Hence, there is little incentive for other developers to bid aggressively for the seventh GLS site at Lentor because they would be competing with these three developers who have strong market presence and more robust pricing power in that sub-market.

The number of bids in this tender is not expected to exceed four. The top bid could range from $395 million to $420 million.

Introduction

The government launched the tender for the 99-year leasehold residential development site at Lentor Gardens today. This land parcel is part of the ten Confirmed List sites in the Government Land Sale programme for the second half of 2024. The tender will close on 3 April 2025.

Description of land parcel

The Lentor Gardens site covers 222,160 square feet (sq ft) and can yield about 500 dwelling units and a childcare centre of about 6,400 sq ft.

It is located within a short walking distance to the Lentor MRT Station and the six other condominium sites in the Lentor area that the government had sold previously.

Providing steady supply of condominium units at Lentor

Surrounding the subject site, Lentor Gardens, are six other private residential sites that have been sold to property developers within the past three years, with the most recent sale concluded in September 2023.

This makes the subject site, Lentor Gardens, the seventh condominium site in the Lentor area to be put up for sale. Among these, five of the condominium projects are already released for sale to homebuyers at median launch prices ranging from $2,100 psf to $2,270 psf.

Table 1: Comparable sites for Lentor Gardens

Name of Project	Road Name	Total No. of units in project	No. of unsold units (1)	Median launch prices in $psf (2)
Lentor Modern	Lentor Central	605	2	$2,108
Lentor Hill Residences	Lentor Hills Road	598	24	$2,107
Hillock Green	Lentor Central	474	189	$2,110
Lentoria	Lentor Hills Road	267	127	$2,129
Lentor Mansion	Lentor Gardens	533	70	$2,269

Source: Mogul.sg Research, URA

(1) Note: The numbers of unsold units are as of 30 September 2024.

(2) Note: The median launch price is the transacted median price in the month that the project is launched for sale.

Developers are not that hungry for land

The first tender for a site within the Lentor area closed in July 2021, attracting an impressive nine bids, reflecting the high level of market confidence among property developers at that time.

However, real estate developers’ appetite for residential land has shrunk significantly in recent years due to lower homebuying demand that is battered by property market cooling measures.

The latest GLS tenders for two residential development sites at Lentor, which concluded in 2023, garnered only one and two bids for each tender. This decline in GLS participation highlights a growing hesitation among developers regarding land acquisition, indicating a potential jadedness towards future land tenders.

Cornering the market

With five of the six surrounding land parcels were acquired by joint ventures and consortiums led by Guocoland and/or Hong Leong Holdings, these developers are on track to dominate the condominium development market in the Lentor area.

Furthermore, it is very likely that one or all three of these developers will submit a bid in this tender to protect their market position in the Lentor area.

The strong presence of this consortium of developers in the Lentor housing market would deter many other developers from participating in this tender. Hence, there is little incentive for other developers to bid aggressively for the seventh GLS site at Lentor because they would be competing with these three major developers who have a strong market presence and more robust pricing power in that location.

Therefore, the number of bids in the tender of this subject is not expected to exceed four bids, with the top bid ranging between $395 million and $420 million.

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