Knight Frank Commentary | Tender Closing for Bayshore Drive Commercial and Residential GLS Site

Knight Frank Commentary | Tender Closing for Bayshore Drive Commercial and Residential GLS Site 

While the Bayshore Drive tender drew the expected number of bidders of less than five due to the large ticket size, the top bid of approximately S$2.1 billion with a corresponding land rate of S$1,323 psf ppr came in above expectations, indicating a high degree of conviction in the long-term prospects and the strategic importance of the site as the focal point from which the Bayshore growth area will start. The highest and lowest land rates were clustered within a 6.7% gap, suggesting that major developers generally shared similar assumptions regarding future launch-ready residential pricing, commercial rental return and the expected demand due to the long-term growth trajectory of the precinct.

The Bayshore Drive parcel will be developed as an integrated transport-oriented mixed-use project, comprising approximately 1,280 homes, retail space, a bus interchange and direct integration with Bedok South MRT station on the Thomson-East Coast Line. This mixed-use site would likely be akin to a town centre, expected to function as the commercial and community key activity node for the up-and-coming Bayshore estate. With the development sitting directly above Bedok South MRT station on the Thomson-East Coast Line, residents will have direct rail access to key employment and lifestyle nodes in Central Singapore as well as quick access to the expanding Changi Airport with Terminal 5 now under construction. This will be attractive for foreign business leaders and professionals planning to live close to beachfront recreational options that is packed with convenient amenities and facilities. Residences within mixed-use integrated developments generally enjoy stronger pricing and broader buyer appeal because of convenience - shopping, dining and other offerings.

Although the Long Island is a multi-decade project, it provides an important additional long-term backdrop for the investment potential of this project. The Government's plans involve roughly 800 ha of reclaimed land stretching from Marina East to Tanah Merah, creating additional land for future development, a new reservoir, extensive waterfront parks and coastal protection infrastructure, and reinforces the long-term positioning of the East Coast corridor as a major waterfront district. Developers likely viewed this as a future structural advantage that can maintain the desirability of Bayshore over an extended timeframe.

Based on the highest land rate of S$1,323 psf ppr, prevailing construction costs, financing costs, integrated development complexity and current new-launch pricing benchmarks, a reasonable estimate would place future residential launch prices to start from S$2,900, and average around S$3,000 psf. Selected premium units with sea views, higher floors and integrated transport access could exceed S$3,200 psf.