Sole bid for Marina South way below expectation, raising doubts about its award
The Marina Gardens Crescent can be developed with a maximum GFA (gross floor area) of about 783,000 sq.ft., or 6 percent more space than the maximum GFA specified for the plot which went to Kingsford.
On Thursday (18 January), at the close of a closely-watched state tender, only one bid was received for a site designated in Marina South as residential and commercial. This bid was also significantly below what market expectations were.
The bid from the consortium GuocoLand Intrepid Investments TID Residential was S$770.5m or S$984/sqft per plot ratio.
The land rate for the adjacent plot was S$1,402 per square foot per person (ppr) that Kingsford Group purchased in Marina Gardens Lane through a state-run tender in June, last year. Kingsford’s S$1.03billion land is zoned as residential, with commercial space in the first storey.
The plot is capable of producing 790 private houses, the same as the 775 homes that were offered in the most recent tender.Observers noticed that the bid for a plot in Media Circle, next to Marina South Station, at the same tender, closed on Thursday, was S$1,191 psf ppr, which was higher than the S$1,191 psf ppr fetched from a Media Circle location. Media Circle is zoned as residential, with commercial space on the ground floor. However, it is a lot further from the centre of the city. Urban Redevelopment Authority was responsible for the bid.
The Business Times asked property consultants to predict that Marina Gardens Crescent will fetch anywhere between zero and five bids. The top bid is expected to range from S$1,100 to S$1,500.
Most market observers told BT anonymously on Thursday night that they did NOT expect the government awarding the Marina Gardens Crescent site. The Chief Valuer can clearly see a similar transaction with the site sold to Kingsford. One property consultant said, “Moreover, there was only one bid for the latest site.”
Another analyst commented: It will be interesting if government decides to award the Marina Gardens Crescent property at S$984psfppr. And if that price is in line with the government reserve price. For Government Land Sale Sites, the Reserve Price is set to 85 percent of the estimated Market Value as assessed by the chief valuer.
In the Marina Gardens Lane tender last year, GuocoLand was second in the bidding at S$985 psf. ppr. This is just a tiny bit higher than the one-off bid of Thursday for the adjacent plot. GuocoLand & Hong Leong Group, who missed the opportunity to be a part of the growing precinct in the past, are now trying again.
Marina Gardens Crescent has only attracted one bidder. The large amount at stake is one reason.
Awaiting supply in areaFor developers who are more risk-averse, the Media Circle plot is a better option. This plot can produce approximately 355 units of residential space. The high interest rate environment, as well macroeconomic headwinds and property cooling measure are all factors that make developers cautious.
The developers are also suffering from the rising costs and declining profit margins.
If the Marina Gardens Crescent is awarded to the consortium, it will create an exciting new mixed development to cater to the local residents, businesses and the government vision of Marina South as an attractive district that is sustainable and community-centric.
Hong Leong Group is the Singaporean parent company of Intrepid Investments (listed on the Singapore Exchange) and TID Residential (listed in Singapore), the two partners who are bidding for GuocoLand.
Potential for tidy profit
Observers noted the consortium could make a tidy sum of money if the Marina Gardens Crescent land is awarded to it.
The breakeven point is around S$2,000 to S$2,100. “The selling prices is likely to follow the Marina Gardens Lane site that was previously offered. The Marina Gardens Crescent site may be developed for S$2,800-S$3,200 per sq. ft. in 2026.
Analysts say that residential developers might be under pressure if GuocoLand wins the bid to develop the site. The site, which is next to Marina South Station MRT, consists of 4 plots. Of the 4, the largest one measures 186.422 sq ft. An additional plot measuring 58.238 has been designated for a pedestrian walkway. Two smaller underground spaces will be used for pedestrian links.
A “white-site” is a piece of land that allows for a variety of uses. The government will
usually specify a minimum, or even maximum, component of one or more uses to meet their planning objectives.
New homes are also coming up in the region, including Marina Gardens Lane, Skywaters Residences, and Newport Residences. They can all offer 1,900 new residences.
However, a lack of schools around the area and the increased Additional Buyer’s Tax for investors and foreigners since April 2023 could impact future demand for homes.
Developers tend to avoid large, investor-focused sites located in the urban area. In 2023, developer sales for new private homes across the island slumped to an all-time low of 6,452 housing units.