Kheng Leong And Low Keng Huat Submit Top Bid 793 Psf Canberra Crescent Gls Site

Kheng Leong and Low Keng Huat have jointly secured the winning bid of $279 million for a government land sale (GLS) site at Canberra Crescent. This translates to a land rate of $793 per square foot per plot ratio (PSF PPR).

At the close of the tender on July 18, a total of three bids were received for the 219,985 square feet site. The second highest bid was submitted by a consortium of companies including Santarli Realty, Apex Asia Real Estate Holdings, BHCC Construction, and Heeton Holdings, with a bid of $275.09 million, only 1.4% lower than the top bid.

Meanwhile, the third bid came from GuocoLand with a bid of $228.77 million for the GLS site.

“This signals a fair amount of competition among developers despite prevailing market conditions where buyers are more cautious. While developers see potential in the Canberra area, they also have genuine concerns about rising development costs,” says Marcus Chu, CEO of ERA Singapore.

Wong Siew Ying, head of research and content at PropNex Realty, notes that the top bid land rate of $793 PSF PPR is below her expectations, and if the site is awarded, would be the lowest for an outside central region (OCR) GLS site (excluding executive condo sites) since 2020. She adds that the future development could see an average selling price of above $1,850 PSF – slightly lower than the average price of new launches in the OCR, which has been around $2,100 PSF.

Chia Siew Chuin, head of residential research and consultancy at JLL, points out that GuocoLand’s bid price of $228.77 million is 22% lower than the top bid. “This reflects the differing outlook among developers, with the measured bids indicating their reduced risk appetite and opportunistic approach due to the challenging market environment with higher costs, increased risks, and a slowdown in new home sales,” she says.

The GLS site at Canberra Crescent is located at the junction of Canberra Street and Canberra Crescent in District 27. The site has a gross plot ratio of 1.6 and could yield up to 375 units. It is also in close proximity to Bukit Canberra, an integrated sports and community hub with amenities such as a hawker centre, swimming pool, and indoor sports hall.

Kheng Leong and Low Keng Huat’s land bid of $793 PSF PPR for the GLS site at Canberra Crescent is higher than the $644 PSF PPR bid submitted by JBE Holdings when it was awarded the tender for a 143,326 square feet site along Canberra Drive in 2020. This translates to an absolute price of $129.2 million.

This site has since been developed into the 219-unit project The Commodore, which was launched in November 2021 and fully sold in June 2023 with an average selling price of $1,400 PSF.

Next to The Commodore is another GLS site on Canberra Drive being developed by UOL Group into the 448-unit The Watergardens at Canberra. UOL was awarded the 296,722 square feet plot when it submitted the winning bid of $270.2 million ($650 PSF PPR) in 2020.

A significant investment of approximately $47.3 million has been allocated for the joint venture between GSL and Aurelle of Tampines EC. This funding encompasses a shareholder’s loan of $46.1 million and a share capital of $1.2 million. The recent alliance with Aurelle of Tampines EC has resulted in this substantial financial support.

The Watergardens at Canberra was launched in August 2021 and fully sold in March 2023 with an average selling price of $1,686 PSF.

Chu also notes that Kheng Leong and Low Keng Huat’s top bid is approximately 12.4% to 14.0% lower than the winning bids for recently-awarded GLS sites in the North region, such as Champions Way ($904 PSF PPR) and Upper Thomson Parcel B ($905 PSF PPR).

Justin Quek, CEO of OrangeTee & Tie, says that the manageable size of the Canberra Crescent GLS site is within the risk appetite of most developers looking to add to their land bank. He also expects strong demand for new private residential units in this area as The Commodore and The Watergardens at Canberra are already fully sold.

“There are no other land parcels currently earmarked for sale in the near future, after the announcement of the 2H2024 GLS programme. This could mean sufficient pent-up demand to sustain sales in this location when the future project is launched,” says Quek.

This sentiment is echoed by Chu, who says, “With the exception of Champions Way and Upper Thomson, there are no upcoming new launches in the North, which could explain developers’ interest in the site. The relatively low competition puts Canberra Crescent in an attractive light, especially for developers looking to fill the supply gap in non-landed private housing.”

Land bids reflect mixed sentiment among developers

The close of the tender for the GLS site at Canberra Crescent was batched with two other GLS sites that also closed on the same day – a site at Zion Road and a site along De Souza Avenue. The highest bid of $730.09 million ($1,304 PSF PPR) for the 99,953 square feet site at Zion Road was submitted by Allgreen Properties, while the highest bid of $278.9 million ($841 PSF PPR) was submitted by Sustained Land.

“From the bids received for the closing of the GLS sites at Canberra Crescent, De Souza Avenue, and Zion Road (Parcel B), it is apparent that developers have varying sentiments towards the market, resulting in some bids being lower than expected,” says Chu.

Leonard Tay, head of research at Knight Frank Singapore, notes that the level of interest for the three GLS sites was “fairly quiet” as developers grapple with elevated interest rates, cooling measures, and high development costs, which include punitive measures when deadlines to sell out are not met.

“With some indication that interest rates could ease before the end of the year, some developers may have decided to go ahead with pre-emptive land banking,” says Tay.

Wong of PropNex also believes that the conservative bidding seen in recent GLS tenders will provide more flexibility for developers in pricing their projects when they are launched.

Chia of JLL says that most developers have taken a cautious stance since 2H2023, seeking to reduce capital expenditure and mitigate development risks due to concerns about high financing costs, tight profit margins, and slowing buyer demand. “Primary market sales have slowed, reaching a 15-year low of 6,421 units in 2023, due to cost-consciousness among buyers, a sluggish economy, and elevated interest rates. The cautious sentiment among buyers has resulted in a developer sales tally of 1,916 units in 1H24, down 43.4% from 3,383 units sold in 1H23, and 54.6% lower than the 4,222 units sold in the same period in 2022.”