UOL-SingLand JV tops bids for prime Orchard site at lower-than-expected S$1,617 psf ppr
In a recent state tender, developers exhibited subdued enthusiasm for a prime Orchard area site, reflecting the heightened risk associated with residential projects in the Core Central Region (CCR). The joint venture between UOL Group and Singapore Land emerged as the top bidder for the Orchard Boulevard plot, submitting a bid of S$428.3 million, valuing the District 10 residential parcel at S$1,616.75 per square foot per plot ratio (psf ppr).
Market Dynamics and Caution: The bids, although closely contested, were notably on the lower end of expectations. Developers demonstrated cautious sentiment, with the bid-price spread among the top four bids remaining tight. This caution is attributed to the increased risk and challenges facing residential projects in the CCR, especially in the wake of the Additional Buyer’s Stamp Duty (ABSD) introduced in April 2023.
Impact of ABSD and Market Performance: The first land tender in the CCR since the ABSD increase saw subdued demand, reflecting the impact of higher stamp duties for foreign buyers and investors, along with increased property tax rates and interest rates. Growth in home prices in the CCR lagged behind other regions in 2023, rising by 1.9% compared to 3.1% in the Rest of Central Region and 13.7% in the Outside Central Region.
UOL-SingLand Joint Venture Strategy: The UOL-SingLand joint venture plans to develop a high-rise luxury project with 36 storeys or more on the Orchard Boulevard site. The strategic location, coupled with direct MRT connectivity to the Orchard Boulevard station, adds attractiveness to the project. This acquisition aligns with UOL’s luxury collection in sought-after locations such as Nassim, Meyer, and Watten.
Market Challenges and Developer Considerations: While the Orchard Boulevard site boasts an attractive location, plot size, and scale, developers remain cognizant of prevailing market challenges. The impact of the 60% ABSD on foreign buyers and higher ABSD rates for investors has led to measured bid prices and a tepid response.
Outlook and Future Developments: Analysts project the break-even cost for the Orchard Boulevard project in the range of S$2,500 psf to S$2,900 psf, with selling prices anticipated to range from S$3,200 psf to S$3,500 psf. Despite the challenging market conditions, the strategic location and premium nature of the project may prove compelling for Singaporean homebuyers and permanent residents.
Conclusion: The successful bid by the UOL-SingLand joint venture for the Orchard Boulevard site underscores the delicate balance developers must strike in navigating the challenges of the current real estate landscape. As market dynamics evolve, strategic planning and a focus on premium locations remain crucial for success in the ever-changing property market.
