A 3.8 hectare white site at Pasir Ris Central drew fairly subdued interest from developers with a lower-than-expected three bids at the close of the tender on Friday.

Among the bidders was Far East Organization, while Singapore Press Holdings and Kajima Development submitted a joint bid. The third bid was from Phoenix Residential and Phoenix Commercial; both companies are owned by Allgreen Properties and Kerry Properties, which are in turn linked to Robert Kuok.

Market watchers noted that this is the first government land sales (GLS) tender for a white site to be concluded after the July cooling measures, which could have prompted developers to take a more cautious stance. In October, the Urban Redevelopment Authority (URA) had also revised guidelines for the maximum allowable dwelling units in private residential developments outside the Central Area to curb the number of shoebox units in new projects. Those guidelines kick in from Jan 17, 2019.

The 99-year leasehold site at Pasir Ris Central, which has been launched for sale off the GLS confirmed list, is to be develofped into a mixed-use commercial and residential development. This is in line with the Housing & Development Board (HDB) plan to rejuvenate Pasir Ris Town.

Bids received are being evaluated under a concept and price revenue tender system, as tenderers had to submit their concept proposals and tender prices in two separate envelopes.

The land parcel next to Pasir Ris MRT station must be integrated with a bus interchange, a polyclinic and a town plaza, and can yield up to 600 private homes. The maximum permissible gross floor area is 95,010 square metres, with a proposed gross plot ratio of 2.5.

The three bids were below expectations, said JLL senior director (research & consultancy) Ong Teck Hui, given its prime location next to the Pasir Ris MRT station, which holds promise of a successful retail mall and keen demand for residential units.

"While potential bidders would have taken into account the relatively high absolute land price and the technical conditions, the weak response does reflect concerns over the market outlook," he said.

A Sengkang Central GLS site, seen by market watchers as sharing some similarities, had attracted seven bids before the cooling measures were implemented.

Knight Frank senior director and head of research Lee Nai Jia had expected at least six to eight bids. He reckons developers could be eyeing other land parcels in the pipeline, given the recent release of the 1H2019 GLS programme. "Some of the land parcels are in quite attractive locations," he said.

Huttons Asia research head Lee Sze Teck pointed out that some developers already have enough in their land bank to keep them busy.

He said: "Some developers have bought enough land for the next two to three years." In addition, this tender is via a concept and price system, which requires developers who have the relevant experience to participate.

At the same time, the site is relatively big and the complexity of the development brings with it a longer construction period and higher development risk, said ZACD Group executive director Nicholas Mak. For instance, during the development period, the developer must build a temporary bus interchange as a substitute for the existing one.

Desmond Sim, CBRE research head for Singapore and South-east Asia, said: "Some developers might have been put off by a condition in the tender, which requires the temporary bus interchange to be ready in June 2021 before the residential units can start to be sold. This would give the winning bidder two and a half years to offload the units before ABSD hits."

The winning bidder will have five years from the award of the tender in 1Q 2019 to sell all residential units in order to apply for ABSD remission.

Mr Sim went on to say: "What continues to attract these bidders to the site is the retail component. The last mall built in Pasir Ris was White Sands in 1996. There is a need for a good integrated project to come in."

Under the concept and price tender system, only the envelopes containing concept proposals were opened on Friday. HDB said: "A decision on the award of the tender will be made after the tenders have been evaluated."

The winning bid is expected to set the new benchmark for the potential tender of other suburban white sites in the coming year, said Mr Mak.

Among the sites is a 2.75 ha white site at Woodlands Avenue 2 that was made available for application under the GLS reserve list this week.

Adapted from The Business Times, 19 Dec 2018.