GLS Award of Zion Road Parcel A and Upper Thomson Road Parcel B

The government has awarded the two government land sales (GLS) sites at Zion Road Parcel A and Upper Thomson Road Parcel B to the respective sole bidder of each site, after these tenders closed on 4 April.

The sole bid for each parcel could have been due to the fairly large quantums for both. Perhaps the government’s decision to award could have taken into cognizance the full bundle of risks that comprise 1) the large ticket size of these sites, 2) high construction costs, 3) elevated costs of borrowing and 4) the government cooling measures. All things considered, these various factors together could have re-rated the value of GLS sites to the levels witnessed in these two tenders.

Other reasons could be that the government would also like to proceed with the inaugural development of Long-Stay Serviced Apartments (SA2, at Zion Road) to provide rental supply, start development of non-landed residences in the Upper Thomson Road/Springleaf area, and keep pace with the steady pipeline of private residential units.

Zion Road Parcel A

At a land price of S$1,202 psf ppr, the breakeven cost could possibly range between S$2,400 psf and S$2,600 psf depending on technical, material and design considerations, with launch prices starting from S$2,700 psf. Considering the scale of the residential component and with a possible average price for the project at about 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 a prime area that is close to Orchard Road and the Downtown Core.

Upper Thomson Road Parcel B

The land rate of Upper Thomson Road Parcel B at S$905 psf ppr would likely translate into a possible launch start price of just under S$2,000 psf. As the Upper Thomson Road Parcel B site would be the first in a fairly undeveloped area without high-rise residences, there is some first mover advantage in a scenic precinct of natural beauty. If the launch price is palatable, this project can be attractive to local homebuyers looking to downgrade from landed housing in the Springleaf vicinity, as well as HDB upgraders from the Ang Mo Kio and Yio Chu Kang estates. Homebuyers desiring to live near MRT stations along the Thomson-East Coast Line and being in close proximity to greenery could be enticed by this project.