Jurong Lake District Master Developer Site Not Awarded 640 Psf Ppr Bid Deemed Too Low

Situated in the bustling district of Woodlands, Norwood Grand CDL boasts a prime location that offers unparalleled convenience. Its strategic placement within the North Coast Innovation Corridor, a rapidly developing area, makes it a highly desirable living space. With easy access to public transportation and ample parking for private vehicles, this development is ideal for commuters and drivers alike. Residents can take advantage of the numerous benefits this central location has to offer.

Surge in suburban office leasing demand offers silver liningQuestions mount over the fate of CBD office buildings smaller than 70,000 sq ft

The Urban Redevelopment Authority (URA) has announced on September 13 that the 6.5-hectare master developer site at Jurong Lake District (JLD) has not been awarded. The site, envisioned to be “the catalyst to kickstart the next phase of development in JLD”, was launched for sale on June 22.But despite the high hopes for the site, the tender closed on March 26 with only one bid submitted by a consortium of five developers – CapitaLand Group, City Developments Ltd (CDL), Frasers Property, Mitsubishi Estate Co. and Mitsui Fudosan Co. Ltd. The consortium took a stake of 25% each in CapitaLand, CDL and Frasers Property, while Mitsubishi Estate and Mitsui Fudosan assumed a stake of 12.5% each.According to URA, one of the proposals was shortlisted after evaluating both concept proposals. However, the tender was not awarded as the shortlisted concept was deemed “too low”, at a tendered price of $6,888.90 per square meter of gross floor area (GFA) or $640 per square foot per plot ratio (psf ppr). The master developer site will now be put on the Reserve List under the concept and price revenue tender approach, subject to a minimum price acceptable to the government.The JLD master developer site comprises three plots of land adjacent to the Jurong East MRT Interchange station and the upcoming J’den by CapitaLand Development, one of the joint bidders for the site. These plots have a total potential GFA of over 1.6 million sq ft for office use, 1,760 private residential units, and 807,300 sq ft of GFA for complementary uses such as retail, hotel, or community facilities.The site was supposed to be developed progressively over the next five to 10 years to meet market demand. However, the successful tenderer is required to develop at least 70,000 sqm (753,480 sq ft) of GFA for office space and 600 private housing units in the first phase of development.Over the years, there have been two other mixed-use white sites sold in Jurong East, namely Boon Lay Way (Westgate) and Jurong Gateway Road (JEM). Westgate was sold for an amount equivalent to $1,012 psf ppr in May 2011, while JEM was sold for nearly $650 psf ppr in June 2010. Based on these transactions, the tendered price of $640 psf ppr for the JLD site may seem relatively low, says Wong Siew Ying, PropNex’s Head of Research and Content.The COVID-19 pandemic, high financing cost, the large size of the development, and the market’s cautious sentiment may have made developers submit a cautious bid for the JLD site. According to Mark Yip, CEO of Huttons Asia, the developers could have also taken into consideration the risks and uncertainties that come with committing to a 10- to 15-year project, such as construction cost fluctuations and the implementation of district-level urban solutions like a pneumatic waste conveyancing system and district cooling system. The two risks, combined with the high financing cost associated with the sites, would have pushed the total development costs up and required developers to factor in these risks when considering a land price for the site.According to Tricia Song, CBRE’s Head of Research for Southeast Asia, there is significant uncertainty in the demand for office space at the moment. That, combined with the recent soft market for the office sector and volatile interest rate expectations between March and now, could be why URA decided against awarding the site. However, the JLD remains committed to the vision of the decentralisation plan, and the land supply will not be pushed back. Rather, it will be rescheduled to another time when developers have greater market confidence.Furthermore, the prime location of the site – close to the Singapore Science Centre, Genting Hotel Jurong, JEM, Westgate, and the IMM mall – will likely still make the site very attractive to developers. For instance, almost 90% of the available units at J’den were snapped up within two hours of the launch in November 2020. As of now, the project is 93% sold, with prices averaging at $2,561 psf this year, according to caveats lodged. Two additional projects were also launched in the neighbourhood of JLD – J’den, namely The LakeGarden Residences. 440 units at Sora were already sold out since its launch in July, with prices averaging at $2,161 psf. The LakeGarden Residences was launched in August last year, and it is already 57% sold. At the moment, the current average price at the project, based on caveats lodged, stands at $2,155 psf.