CDL and Mitsui Fudosan JV submit lone bid of $1,202 psf ppr for Zion Road (Parcel A)

On April 4th, the Government Land Sales (GLS) auction closed, with City Developments Ltd and Mitsui Fudosan of Singapore both placing joint bids of $1.107 billion, or an average per-square-foot rate of $1.202 per plot ratio as the winning bid.

Zion Road GLS parcel A is being chosen as the site for long-stay services apartments as part of its inaugural pilot. This 99 year leasehold property with residential on its 1st floor features both commercial and residential zones; URA estimates this can yield 1,170 housing units – including long term serviced apartments – while also featuring 25,834 sq ft worth of commercial space on site.

CDL & Mitsui Furdosan Asia Pte. Ltd. was recently awarded the site. Their Joint Venture will investigate creating a mixed-use building consisting of two blocks (69 and 64 storeys), housing approximately 740 residential housing units for sale as well as retail podium space, plus approximately 290 rental apartments on 35 stories high – creating a sustainable landmark in River Valley area of Singapore. CDL’s living sector aligns perfectly with long-term rental assets in Japan that provide consistent income stream over the long term while also increasing CDL’s income after completion.”

Last to be awarded was Jiak Kim Street and was sold to Frasers Property at $1,733 PSF PPR in December 2017 before any cooling measures had been introduced in July 2018 or since; developers face higher borrowing and building costs because GFA cuts down saleable areas by up to 6%, says Mr. Wong.

Lower land prices could be due to Zion Road’s inclusion of long stay serviced apartments into their tender. When setting land prices, it is essential to factor in their higher risks when making decisions regarding Zion Road’s two sites if such apartments were offered separately.

Zion Road currently hosts several hotels and serviced apartment buildings. Daily rates for premium studio apartments (excluding taxes and VAT ) surpass $300; comparable rates exist in four and five star hotels with similar or even higher room rates.

“These prices are 50 percent more than renting out a 1-bedroom condo nearby,” according to one developer. In that context, long-stay serviced apartments may be priced as premium to mid-range products by developers; such apartments could target working professionals and medical tourists looking for short-term work opportunities.

Read also: terra hill condo

Kwek of CDL noted the listed real estate group had an outstanding track record in this field. CDL had successfully developed luxury condos such as New Futura, Gramercy Park, Cliveden by Grange and Tribeca at the Waterfront as well as hospitality assets including Grand Copthorne Waterfront Hotels and King’s Centre. CDL currently plans on launching Irwell Hill Residential with two penhouses still remaining that average an estimated transaction price of $2.712 psf upon launch in 2021 – with two penhouses left available with an average transaction price estimated transaction of $2.712 per square foot average transaction price psf.

Hong Leong Holdings of Singapore – which also comprises CDL and GuocoLand as members – launched The Avenir freehold project as an offering in 2020 with 376 units sold for an average per-square-foot cost of $3,204.

Frasers Property’s 455 unit River building at Jiak Kim Street has sold out as of April 20, 2023.

Land prices at around S$1,202psf may result in breakeven costs between S$2,400 and 2,600 psf, depending on materials, design and technical factors.

Estimations indicate the average launch selling price for this project could reach approximately $3,000 psf, making it attractive to both Singaporean homebuyers and permanent residents.

CDL’s consortium was the sole bidder for this site due to their experience creating and overseeing large-scale projects.

Chia elaborates that long-stay service apartments provide a steady stream of recurring rent income that can help mitigate risks associated with developing units for sale, particularly in periods when homebuying interest and sales activity is low. This is especially pertinent in Singapore.

As anticipated, response to this site was muted as Core Central Region continues its struggle against low foreign demand following an additional stamp tax increase for buyers in April 2023. Developers considering this location may also want to explore River Valley Green (Parcel A), which is closer to Great World City.

error: Content is protected !!