Knight Frank Commentary (Tender closing for Holland Drive GLS Site)

There were three bids for the prime District 10 government land sales (GLS) site at Holland Drive, which was within expectations given the current state of developer sentiment in the private residential market. The continued low number of interested developers in the form of bids reflect the guarded sentiments that most developers have in today’s operating environment. The number of interested bidders has shrunk from regularly more than seven in 2021 to frequently less than five in 2023 and 2024. The high cost of construction, elevated costs of borrowing together with the government cooling measures, have all combined together to bring the cumulated risk to seemingly unappetising levels for most but the biggest of developers. 

The top bid of S$805.4 million at the Holland Drive site, reflecting a land unit rate of S$1,285 psf per plot ratio (ppr) is 31.9% below the closest recent comparable GLS award consisting of the commercial/residential GLS parcel at Holland Road that closed with a top bid of S$1,888 psf ppr in March 2018. Although the residential Holland Drive site is not really comparable with the mixed-use parcel that has become One Holland Village, developers are clearly submitting more conservative bids compared to six years ago. Additionally, the size of the site might have deterred others with the large ticket size.

With the top bid being just 5.2% more than the second bid of S$1,221 psf ppr, this shows that despite the challenging development environment, there are parties with resources that are still contesting for sites with good attributes. The Holland Drive site has locational advantages of being close to Holland Village MRT station, the trendy Holland Village food scene, and a prestigious Holland address that is popular among Singapore homebuyers.

At a land price of S$1,285 psf ppr, the breakeven cost could possibly range between S$2,600 psf and S$2,700 psf depending on technical, material and design considerations, with launch prices likely to start from S$2,800 psf. With a possible average price for the project at about S$2,900 psf when launched, this price range might just prove to be 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.