Does this mean cheaper new-launch condos soon?

I think now we can be sure the rejected bid for Marina Gardens Crescent wasn't an isolated event. 

I'm talking about the one lonely bid that was made for a prime central site, which got turned down for being too low. And to reinforce that it wasn't a fluke, we're now seeing the same weak bids in River Valley and Upper Thomson. 

GuocoLand and Hong Leong were the only bidders for a land parcel near Springleaf MRT station, along Upper Thomson Road, for a bid price of $779.6 million (approx. $904.60 psf). This was way below projections of around $1,000 to $1,100 psf.

I do wonder if the sales numbers of condos like Lentoria (19 per cent sold at launch) might have played a part here, in addition to growing developer worries. This was altogether unsurprising, given that GuocoLand already has such a major stranglehold in the area. 

Meanwhile, CDL and Mitsui Fudosan were also the sole bidders for a land parcel along Zion Road for $1.1 billion (this is a very big site, which can yield around 1,000 residential units). That works out to roughly $1,202 psf, also below the projected $1,300 to $1,700 psf. 

Coupled with the low number of bids, we can see a general trend of developers shrinking back — particularly from high-profile areas like River Valley and Marina Bay.

The most obvious factor would be recent cooling measures, which raised ABSD to 60 per cent for foreigners; prime region properties are much more dependent on this buyer demographic compared to the OCR. 

There are other factors besides that of course; issues range from higher construction costs (we've been the fourth most expensive country for construction since last year), financing issues stemming from a higher interest rate environment, and wider global issues. But the CCR is arguably the worst hit, when you add the cooling measures on top of these. 

There are also other upcoming land parcels that are more palatable in terms of size at River Valley Green, and the new GFA harmonisation rules (read here for more) may also have been factors for the lower bids. 

The weak demand here seems strange too, when you consider that in 2017, the Jiak Kim Street GLS site (now Riviere) was hotly contested with 9 bidders and at a high of $1,733 psf ppr.

the not-very-great performance of Riviere was something of a deterrent — the developers had to resort to price discounts in 2020 and the final average price of $2,819 psf was surely not one they had in mind when they first bought the site. After all, the initial prices at launch were close to $3,000 psf. 

All of which leads me to wonder: Why release these land parcels now?

I'm sure the Government has a good reason for it; but putting up land parcels in areas like River Valley probably aren't going to draw very high bids. It seems a bit of a waste, at a time when developers show so little interest.

And it's not as if it provides a shot at cheaper homes (even at lower land prices, there's nothing in these prime districts that the average Singaporean is likely to even consider buying). 

It's also unfortunate, as it comes just at the time when prime areas like Orchard are trying to reinvent(?), renew(?) themselves. 

We're going for more balanced neighbourhoods these days, with a mix of event spaces, play spaces, etc. rather than outmoded concepts like "Orchard is just for shopping" and "City Hall is just for bank offices." And I think it's the CCR that has been slowest to progress in this "rebalancing," in contrast to its OCR counterparts like Jurong, or RCR equivalents like Beach Road and Paya Lebar. 

If developers were putting more new mixed-use projects (and Marina was a white site, see what that means here), that could help to accelerate the transformation of the area. Certainly, River Valley could do with more character than "that place with rich people's houses." 

Perhaps given the nature of CCR properties, which tend to have a high quantum and are slower to move, we should maybe consider other concessions to developers: perhaps not cheaper land prices, but a longer deadline compared to the usual five-year ABSD time limit.

This will provide more lead time to find local buyers, and perhaps bring back developer interest via the lower risks involved. Just for the CCR though.

Weekly Sales Roundup (March 25 – March 31)

Top 5 most expensive new sales (by project)

Top 5 cheapest new sales (by project)

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	TENURE
NORTH GAIA	$1,183,000	969	$1,221	99 yrs (2021)
THE LAKEGARDEN RESIDENCES	$1,188,600	527	$2,254	99 yrs
THE ARDEN	$1,239,000	657	$1,887	99 yrs
HILLHAVEN	$1,381,420	678	$2,037	99 yrs (2023)
LUMINA GRAND	$1,390,000	936	$1,484	99 yrs (2022)

Top 5 most expensive resale

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	TENURE
SUITES AT ORCHARD	$2,035,000	1378	$1,477	99 yrs (2007)
EON SHENTON	$1,838,000	753	$2,439	99 yrs (2011)
76 SHENTON	$1,820,000	969	$1,879	99 yrs (2007)
V ON SHENTON	$948,000	474	$2,002	99 yrs (2011)
ROBIN RESIDENCES	$979,000	409	$2,393	FH

Top 5 cheapest resale

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	TENURE
AALTO	$4,900,000	1959	$2,501	FH
PANDAN VALLEY	$4,625,000	4381	$1,056	FH
CUSCADEN RESERVE	$3,709,000	1163	$3,191	99 yrs (2018)
DUCHESS CREST	$3,660,000	2088	$1,753	99 yrs (1995)
ONE DRAYCOTT	$3,400,000	1346	$2,527	FH

Top 5 biggest winners

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	RETURNS	HOLDING PERIOD
PANDAN VALLEY	$4,625,000	4381	$1,056	$2,325,000	15 Years
THE TRUMPS	$2,428,000	1432	$1,696	$1,632,733	17 Years
COTE D’AZUR	$2,550,000	1270	$2,008	$1,600,000	17 Years
DUCHESS CREST	$3,660,000	2088	$1,753	$1,551,120	14 Years
AALTO	$4,900,000	1959	$2,501	$1,471,700	13 Years

Top 5 biggest losers

PROJECT NAME	PRICE S$	AREA (SQFT)	$PSF	RETURNS	HOLDING PERIOD
SUITES AT ORCHARD	$2,035,000	1378	$1,477	-$505,000	12 Years
EON SHENTON	$1,838,000	753	$2,439	-$142,000	11 Years
76 SHENTON	$1,820,000	969	$1,879	-$95,200	14 Years
V ON SHENTON	$948,000	474	$2,002	-$85,000	12 Years
ROBIN RESIDENCES	$979,000	409	$2,393	-$39,000	8 Years

Transaction breakdown

ALSO READ: 5 affordable 3-bedroom condos under $1.2m that are almost new

This article was first published in Stackedhomes.