The close of the Jiak Kim Street and Fourth Avenue GLS tenders on Dec 5 saw 10 and seven bids respectively, and land prices reaching a new high in both locations. This is despite the Monetary Authority of Singapore (MAS)’s warning on a possible oversupply last week.

Excluding commercial and white sites, the top bid of $955.4 million ($1,733 psf ppr) submitted by Frasers Centrepoint for the Jiak Kim Street, formerly occupied by Zouk, is the highest land price on a psf basis for GLS sites sold, says Christine Li, director of research at Cushman & Wakefield. The second bid submitted by Hong Leong is only 0.57% lower, “one of the lowest spreads in recent history,” she adds.

The top bid is 39.9% higher than the price for the Martin Place GLS site in June 2016, which GuocoLand is developing into Martin Modern. According to Li, the bid for the Jiak Kim Street site translates into approximately $1,580 psf ppr, including an additional 10% bonus GFA. This means Frasers Centrepoint is pricing in a 6% to 7% appreciation in terms of sale price for the future development, based on the median sale price of $2,343 psf at Martin Modern in October. “This is in line with the market expectation that prices of new homes will rise by 5% to 10% next year,” says Li.

Tricia Song, head of research for Singapore at Colliers International, expects a breakeven cost of $2,400 to $2,450 psf for the project, and an average price of $2,600 to $2,700 psf, which will be 10% higher than Martin Modern’s median price in October. “The bullish bids for the Jiak Kim Street site came on the back of its attractive attributes, limited supply of sites in the area and brisk home sales in the vicinity,” says Song, who notes that 186 out of the 210 units launched at Martin Modern have been sold since it was launched in July.

“We believe the strong bids will heavily influence the demand and pricing of collective sale sites in the city, including the iconic Pearlbank Apartments in Outram,” adds Song.

The approximately 1.35 ha Jiak Kim Street site is located along the Singapore River and flanked by the Grand Copthorne Waterfront Hotel Singapore, Tribeca and Mirage Tower. It is zoned ‘Residential with 1st storey Commercial’ and has a maximum GFA of 551,478 sq ft, including a 16,146 sq ft commercial component. According to URA, it can yield an estimated 525 units. Along with the Fourth Avenue site, the 99-year leasehold site was previously on the Reserve List of the GLS programme. They were launched for tender on Nov 2 and Oct 19 respectively.

The tender results reflect developers’ preference for the Jiak Kim Street site as it drew a higher number of participants and a top bid coming at 39% higher than its reserve price, says Tay Huey Ying, head of research and consultancy at JLL Singapore. This is compared to 23% for the Fourth Avenue site.

However, the top bid of $552.97 million ($1,540 psf ppr) for the Fourth Avenue site is still bullish, according to Cushman & Wakefield’s Li, as the new development will have to be sold at around $2,250 psf. Allgreen Properties clinched the site, following its acquisition of the freehold Crystal Tower at $1,840 psf ppr and Royalville at $1,960 psf ppr through collective sale last week. The 1.85 ha residential site is adjacent to Sixth Avenue MRT station and about 300m away from Royalville. It has a maximum GFA of 359,063 sq ft and can accommodate an estimated 455 units, according to URA.

“Although most projects in the locality are of freehold status, the location of the Fourth Avenue site is good enough to offset the leasehold status,” says Li. It is also close to several reputable schools, such as Nanyang Primary School, Raffles Girls’ Primary School, Hwa Chong Junior College, she adds.