GLS Tender closing of Orchard Boulevard and Plantation Close

There were four bids each for the tenders at the government land sales sites at Orchard Boulevard and Plantation Close. While the level of interest for the executive condominium (EC) site at Plantation Close was within expectations, the interest for the Orchard Boulevard plot showed more participation by developers than anticipated.

Orchard Boulevard

The top bid of S$428.3 million, reflecting a land unit rate of S$1,617 psf per plot ratio (ppr) is within expectations given the current Additional Buyer’s Stamp Duty (ABSD) rate for foreign buyers at 60%. While the price for Orchard Boulevard is some 32% below the top bid at Cuscaden Road (the present Cuscaden Reserve) way back in May 2018, today’s tender reflects the additional risks that developers have to undertake, as well as the increased ABSD rates for foreign buyers in conjunction with the increased costs of development.

Foreigners typically gravitate towards the Orchard Road area before the increased ABSD. However, with the tenure on this site at 99-years, high-net-worth individuals and families looking to invest for purposes of capital preservation and legacy planning might look instead to freehold offerings so as to pass investment assets along generations.

Nonetheless, at a land price of S$1,617 psf ppr, the breakeven cost could possibly range between S$2,500 psf and S$2,700 psf depending on technical, material and design considerations, with launch prices starting from S$2,800 psf to S$3,000 psf. With a possible average price for the project above S$3,000 psf when launched, this price range might just prove, not only palatable, but attractive for Singaporean homebuyers and permanent residents, whether for occupation or investment, and therefore be a compelling project in the prime Orchard Road area.

Additionally, if a substantial number of large family size units of above 2,500 sf are on offer, this would attract wealthy investors who would be tempted to purchase in order to lease to affluent foreign families (that currently are on the lookout for large spaces) for recurring income.

Plantation Close

The second Plantation Close EC site garnered a top bid of S$423.4 million or S$701 psf ppr at today’s tender. This land rate of S$701 psf ppr would likely translate into a possible launch price of about S$1,400 psf with an average selling price of about S$1,450 psf to S$1,550 psf. Being more affordable than private developments, ECs currently enjoy demand from HDB upgraders as well as from couples looking to purchase a first home to start families.

The top bidder at today’s EC plot, Hoi Hup Realty and Sunway Developments, is the same as the developer that was awarded the previous Plantation Close site in September 2023. The land rate for the first Plantation Close parcel at S$703 psf ppr is also similar to the site closed today. Should Hoi Hup Realty and Sunway Developments be awarded this second Plantation Close EC plot, the developer would be in a position to strategically synchronise the timing and pricing of the launch of these ECs.