CDL and Mitsui Fudosan JV submit lone bid of $1,202 psf ppr for Zion Road (Parcel A)

The tender for the government land sales at Zion Road in parcel A closed on Thursday, April 4. There was only one bid: $1.107billion ($1,202 psf/ppr), from a Singapore-listed company City Developments Ltd.

The Zion Road GLS is the world’s first long-stay apartment site with a three-month minimum stay. The 99-year, 164.44 sq ft, site is zoned Residential with Commercial on the First Floor. URA estimates that the site’s plot ratio is 5.6 and its maximum gross floor area is 920,871 square feet. The site could potentially yield 1,170 apartments, including those with long-term servicing. A further 25,834 ft is commercial space on the property.

CDL will work with Mitsui Fujisan (Asia), Pte. Ltd., will look at a project that consists of two blocks with 740 apartments available for purchase, a retail podium and a 35 storey block with 290 apartment rental units. This is according to Sherman Kwek. CEO, CDL Group. We look forward, together with our valued partnership, to transforming River Valley into a new sustainable landmark. CDL has already built a portfolio with rental apartments in Japan, UK and Australia. It will also enhance CDL’s ongoing income stream following completion.”

The last award near Zion Road, (Parcel A), was Jiak Kim Street. Frasers Property bought it for $1.733 psf/ppr in December 2017. Nevertheless, it was before cooling measures were implemented in July 2018, with several additional cooling measures introduced since. He said that the costs of construction and borrowing for developers have increased. The GFA harmonization also affects land prices as the saleable surface area is reduced between 5 and 6 percent.

The lower land price may be a result of the inclusion, in the Zion Road tender (Parcel A), of long-stay apartments. Due to the fact that this is a newly created asset class, there are more risks involved. These must be taken into account when setting the land price. The two sites might attract more interest if they are separated by the long-stay apartment service.

The price of a studio apartment in a premium serviced hotel is currently above $300 per day (excluding taxes). Four- and 5-star hotel room rates are higher or similar.

He added that these rates were 50% higher than what a nearby condo renter would pay for a studio apartment. The developer could price the long stay serviced apartments between mid and premium prices, targeting medical tourists or working professionals on short term contracts.

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Kwek claims that CDL has a long history in the region, including the development of luxury condos such New Futura, Gramercy Park, Cliveden on Grange, Tribeca near the Waterfront, as well a hospitality assets such Grand Copthorne Waterfront, and King’s Centre. CDL’s latest condo is the 540 units, 99-year-leasehold Irwell Hill Residences. Launched 2021 with only two penthouses available and an average sale price of $2.712 per square foot.

Hong Leong Holdings-the private property division of Hong Leong Group Singapore (of whom CDL is part), GuocoLand Singapore and Hong Realty jointly launched the The Avenir , a 376-unit freehold in the year 2020. The project is completely sold out with an average price of 3,204 psf.

Frasers Property had sold its 455-unit Rio located on Jiak Kim Street in April 2023 for an average price $2,814/sqft.

A land price per square foot of S$1,202 could mean that the cost to break even for the Zion Road, parcel A, site would range between S$2,400 and S$2,600. This depends on the design, technical and material aspects.

Estimates project’s average selling price is about $3,000/sq.ft. This price range is not only affordable but attractive to Singaporean buyers and permanent residents.

No surprise, the site attracted only one bid. It was from a CDL led consortium.

Chia adds these serviced apartments for long-term stays can provide an additional stream of rental income. This will help to mitigate the risks involved in developing residential units that are sold, particularly when there is a low demand for homes and sales are slow.

This site is not surprising, since Core Central Region still struggles with the low demand for foreign buyers following the additional stamp duties hiked in April of 2023. The developers who are considering this site may also be interested in the River Valley Green Parcel A site which is smaller but closer to Great World City.

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