GuocoLand-Hong Leong JV awarded for Upper Thomson Road GLS site at $905 psf ppr

"Springleaf Residence" will be GuocoLand & Hong Leong's venture into the new township located at Springleaf after successful tender of Upper Thomson Road Plot B.

Springleaf Residence location on URA Master Plan.

A joint venture (JV) between GuocoLand and Hong Leong Holdings has placed the only bid for a residential Government Land Sales (GLS) site on Upper Thomson Road. The JV partners offered $779.555 million for the 344,700 sq ft site when the tender concluded on April 4. This bid equates to $905 per square foot per plot ratio (psf ppr).

The bid for the Upper Thomson Road (Parcel B) land parcel is 7.8% lower than the amount submitted by a consortium of Hong Leong Holdings, GuocoLand, and CSC Land Group for a GLS site at Lentor Central last September. That site is approximately 1.8km from the Upper Thomson Road GLS site that closed today.

The consortium of Hong Leong Holdings, GuocoLand, and CSC Land Group made a winning bid of $435.1 million ($982 psf ppr) for the 158,264 sq ft residential site at Lentor Central. A second bid of $410.8 million ($927 psf ppr) was submitted by Frasers Property.

The GLS site at Upper Thomson Road (Parcel B) is projected to yield up to 940 housing units. However, the site includes a unique conservation element as part of the overall gross floor area, according to Justin Quek, CEO of OrangeTee & Tie. “This may add complexity to the project and allow the developer to come up with more unique project concepts,” he notes.

Adjacent to Upper Thomson Road (Parcel B), URA also launched a 262,875 sq ft site, Upper Thomson Road (Parcel A), for tender last December. This site is designated for residential use with commercial space on the first floor. It is expected to yield 640 housing units, including 100 long-stay serviced apartments and approximately 21,528 sq ft of commercial space. The tender for Upper Thomson Road (Parcel A) closed without any bids.

Analysts suggested that developers were deterred by risks attached to the site’s requirement that long-stay serviced apartments be included. This still-untested rental category entails higher land and development costs and requires specialised management expertise.

When the tender for Upper Thomson Road (Parcel B) was launched last December, most market observers anticipated up to five bids for the GLS site. However, the site attracted fewer bids than expected.

This indicates both a low level of interest and a cautious approach by developers, says Chia Siew Chiun, head of residential research and consultancy at JLL. The conservation requirement may lead to higher development costs, she says.

Marcus Chu, CEO of ERA Singapore, attributes the “muted interest” in the site to its relatively untested location. “The high-rise condo will be the first of its kind in this area, and not many developers will have the appetite for the size of this site. However, Guocoland is familiar with the demographics and housing requirements in the area and could replicate its success in the Lentor estate,” he says.

The tender for Upper Thomson Road (Parcel B) closed on the same day as another GLS site on Zion Road. City Developments Ltd (CDL) submitted the sole bid of $1.107 billion ($1,202 psf ppr) for the 164,451 sq ft site. It is the first GLS site to pilot the long-stay serviced apartments scheme introduced by the government last November.

If the Upper Thomson Road (Parcel B) is awarded to the GuocoLand-Hong Leong JV, acquiring the first land parcel in the Springleaf precinct could create a first-mover advantage to shape the area’s upcoming development and potentially influence the market dynamics for future land sales in the vicinity, says Mohan Sandrasegeran, head of research and data analytics at SRI.

Sandrasegeran notes that the last non-landed GLS site awarded in the vicinity was at Chuong Kuo Road, which was awarded to a consortium of local boutique developers in 2018. The site was developed into the 84-unit The Essence condominium by Lian Soon Holdings, OKP Land, and HSB Developments.

Given the lack of new condo launches in the area, the new project at Upper Thomson Road (Parcel B) could take advantage of pent-up demand for a new condo in this locale, says Sandrasegeran.

According to SRI, the new development could see a launch price between $2,000 psf and $2,200 psf, while ERA anticipates a range between $2,000 and $2,100 psf. JLL expects a selling price starting from $2,100 psf.