GLS Tender closing of Marina Gardens Crescent and Media Circle

The number of participants in the tender for the two government land sales (GLS) sites of Marina Gardens Crescent and Media Circle that closed today was within expectations. However, the top bid for Marina Gardens Crescent was below expectation while the top bid for Media Circle came in above expectations.

Marina Gardens Crescent

The top bid of S$770.5 million, reflecting a land unit rate of S$984 psf per plot ratio (ppr), is below expectations, as it is some 29.8% lower than the Marina Gardens Lane site that was awarded for S$1,402 psf ppr in July 2023.

The Marina Gardens Crescent parcel that closed today, when combined with the almost 800 units at the nearby Marina Gardens Lane site, will provide just under 1,500 new homes that will be completed within months of each other, sometime in the next four to five years.

The government’s ongoing intent to develop and transform the Downtown Core into a location that has a 24/7 vibe with diverse human and business activity, is reflected through the sale of these Marina Gardens sites — bringing households nearer to employment centres while at the same time, injecting residents into the area that will drive the growth of cultural, recreational, dining and entertainment activities in what is primarily a commercial zone.

Perhaps the missing piece of the live-work-play puzzle that the government is creating in the CBD is the presence of a primary/secondary level school. This would make the CBD even more attractive as a prime residential neighbourhood in which to aspire to, especially for local households.  

Bearing in mind the doubling of the Additional Buyer’s Stamp Duty (ABSD) rate for foreigners from April 2023, one has to wonder whether there are enough Singaporean investors/homebuyers to fill the units that would previously have attracted foreign buyers to CBD homes.

What if foreign professionals drawn to Singapore’s cosmopolitan modern lifestyle could be given some ABSD discount, only for the new homes in the Downtown Core (i.e. postal districts 1 and 2)? Would that be the catalyst to speed up the CBD’s evolution into a diverse-activity lifestyle destination sooner-rather-than-later?

Or else, would the development of an international school in the up-and-coming new downtown area be the key to bringing back foreign buyers to the private home market, and more specifically to infuse the CBD with life after office hours?

Media Circle

There were more bidders for the Media Circle parcel, as the ticket size is more palatable. The top bid of S$395.3 million reflecting S$1,191 psf ppr is upbeat and confident.

The top bid for Media Circle in today’s tender is also 4.4% lower than the winning bid of S$1,246 psf ppr at Slim Barracks (Parcel A), and 1.6% lower than the winning bid of S$1,210 psf ppr at Slim Barracks (Parcel B). The tender closed on 28 September 2021 for both the Slim Barracks parcels and both were awarded on 11 October 2021.

Located in a quieter section of one-north business park, the Media Circle plot is within walking distance to the specialised media enclave of Mediapolis. A residential project here would be attractive to workers in the media and entertainment industry.       

Sentiment is mixed at the moment with homebuyers taking more time to decide before making a purchase. Elevated interest rates, an uncertain economic outlook and the prohibitive nature of the cooling measures that were announced in April 2023 have also taken a toll on demand momentum.

There are now less developers taking part in the tender process, with the parcels at Lorong 1 Toa Payoh and Pine Grove Parcel B only attracting three bidders each. Clementi Avenue 1 was the most popular with six bidders.

Perhaps this is because Clementi Avenue 1 is the smallest of the three plots (in terms of Gross Floor Area) and hence the smallest land cost outlay among all the tenders that closed today.

Nevertheless, despite the lower participation rate compared to some of the Government Land Sales (GLS) tenders of 2022, developers were willing to place bullish bids in order to secure top position.

Additionally, in order to get to that top position, developers also banded together where the strength of the whole welded greater financial weight than the sum of the individual parts.

As such, the top bid of S$1,360 psf per plot ratio (ppr) at Lorong 1 Toa Payoh was 18% higher than the next highest bid.

This was somewhat similar to the Pine Grove Parcel B site where the top bid of S$1,223 psf ppr was 23.8% higher than the second placed bid.

Although the bids at the top for Clementi Avenue 1 were closer, a top bid of S$1,250 psf ppr is compelling and competitive, being 58.6% higher than the adjacent development site of the Clavon when the tender closed at S$788 psf ppr in July 2019.

Regardless of the lesser participants in recent times, it remains clear that developers continue to believe in the Singapore private residential story, where household affluence continue to drive the housing aspirations of Singaporeans, in spite of the uncertain economic outlook.