No Bids Submitted Upper Thomson Road Gls Site
No bids were submitted for a residential Government Land Sale (GLS) site along Upper Thomson Road when the tender closed on June 19. This site was batched together for tender closing with another site known as River Valley (Parcel A).
The Upper Thomson Road (Parcel A) site is a 99-year leasehold land spanning over 262,875 sq ft. Its gross plot ratio is 2.2 and it has the potential of developing up to 640 residential units, including 100 long-stay serviced apartments, with an estimated commercial space of 21,528 sq ft at the first storey. The site is zoned for residential use with commercial use at the first storey.
This is the second site to feature a new category of long-stay serviced apartments, with a minimum stay requirement of three months. The first held the Zion Road (Parcel A) land that was awarded to a joint venture (JV) between City Developments Ltd (CDL) and Mitsui Fudosan on April 16. The winning bidder submitted the only bid of $1.107 billion to secure the 164,439 sq ft site, which translates to $1,202 psf ppr.
Read also: GLS sites at Dairy Farm Walk and Tengah Garden Ave launched for sale, Bayshore Rd site open for application
Mark Yip, CEO of Huttons Asia, commented that the lack of bids for the Upper Thomson (Parcel A) site was not surprising as this type of serviced apartment is relatively untested in this area.
“The Government is probably aware of this and hence reserved only 100 units for long-stay serviced apartments,” he said, adding that “Even with a small number of SA2 units, developers may have felt that the risks are tilted towards the high side and have chosen to sit out this tender.”
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In addition, the location of the site does not place it in a key commercial area, which means that the rental demand might not be as strong as it would be in such an area. Furthermore, Leonard Tay, the head of research at Knight Frank, notes that the Upper Thomson/Springleaf zone is not typically associated with what he terms as “mid-term tenants.” This may have also been a demotivating factor for developers to participate in the tender as the minimum rental period might pose a threat to competition from individual private landlords in the surrounding landed estate. Moreover, the concept of long-stay serviced apartments for GLS sites is yet to be tested in a suburban location.
In addition to the higher risk project of long-stay serviced apartments, developers of the Parcel A site will have to compete with the adjacent Upper Thomson Road (Parcel B) residential site which was awarded to a JV between GuocoLand and Hong Leong Holdings in April. The JV submitted a bid of $779.6 million, which translates to a cost of $905 psf per plot ratio. This site can generate up to 940 residential units.
Read also: GuocoLand-Hong Leong JV submit sole bid for Upper Thomson Road GLS site at $905 psf ppr
Wong Siew Ying, head of research and content at PropNex, speculates that this site could be listed in the 2H2024 GLS programme, and the apparent lack of interest in this site might compel the government to review the requirement of the long-stay serviced apartment component in the process.
“Consistent with the responses for the past two GLS sites with long-term serviced apartment components, Huttons’ Yip commented that it might be more beneficial for developers to tender for such sites if they were closer to the city centre or major commercial areas,” says Wong. Yip’s expectation for the Media Circle GLS site is that there will only be one bid for the site.