Buildings in Singapore's central business district on Nov 16, 2022. (Photo: CNA/Hanidah Amin)
One expert expects developer demand within the CBD to be subdued for at least the remainder of this year.
Buildings in Singapore's central business district on Nov 16, 2022. (Photo: CNA/Hanidah Amin)
SINGAPORE: The cautious approach that property developers are taking in their bids for Singapore's land sites appears to be spreading even to the highly sought-after central business district (CBD), home to some of the country's high-end luxury apartments.
Market watchers cited recent land tenders in the location, saying the doubling of the additional buyer’s stamp duty (ABSD) for foreign buyers to 60 per cent, as well as the lack of facilities in the area, has caused demand for housing units there to be muted.
For instance, the Marina Gardens Lane site, a prime area in the city overlooking Singapore's main attractions, attracted a S$1.034 billion – or S$1,402 per square foot per plot ratio – bid from a consortium led by Chinese developer Kingsford Huray Development.
The price is 42 per cent more than the next highest bid of S$727.04 million from GuocoLand (Singapore).
Looking at it per square foot, it is also higher than the last bid for Marina View, another site in the area.
One property expert said big players such as GuocoLand and Far East Organization were more cautious when bidding for the site, bidding at less than S$1,000 per square foot.
“The land price might be in the hundreds of millions of dollars or even close to S$1 billion,” said property veteran Nicholas Mak, chief research officer at real estate portal MOGUL.sg.
“And on top of that, the developer also has to come up with the construction cost and other development costs, financing costs and so on, which might double the overall costs for developing that site.
“As a result, the number of developers who have pockets deep enough to develop them in the downtown area are actually quite limited.”
The Marina Gardens Lane site attracted four bids.
“So some developers may adopt a more wait-and-see attitude,” said Mr Mak. “They may want to see what other developers are doing first, whether their projects are successfully well taken up before entering the market.”
Before the recent round of measures to cool Singapore's red-hot property market, foreign buyers took up about 12 per cent of units in the downtown area.
But experts are expecting the number to be halved, with the ABSD now doubling to 60 per cent of the purchase price.
“We think there will be some demand. But there are also challenges because of the ABSD for foreign buyers, higher ABSD rate for property investors, so that could also quell investor's demand,” said PropNex’s head of research and content Wong Siew Ying.
“Separately, I think the limited schools in that area may discourage some families from wanting to move there. But having said that, it's still a very new area, so we're not quite sure what are the other developments that are coming up.”
Despite the government's plan to create a downtown area where people can live, work and play, questions also remain over access to other facilities such as recreational and hawker centres, said observers.
“That lies the challenge, is there enough infrastructure and facilities to support a whole community including people of various ages, from the very young school going children to the elderly, to live in the CBD?” asked Mr Mak.
He expects developer demand within the CBD to be subdued for at least the remainder of this year.
But should the Marina Gardens Lane site be awarded to the top bid of S$1,402 per square foot, he believes the luxury condominium project could see units sold for at least S$2,680 per square foot.