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Kampong Bugis site makes it to GLS programme for H2 this year

07 Jun, 2019

THE LONG-AWAITED Kampong Bugis site has finally made it to the government land sales programme (GLS) for the second half of this year, and market response will be keenly watched due to its size and master developer concept.

The 9.2 ha site, to be released under the reserve list and completed over the next 9 to 11 years, will be awarded to a single master developer to comprehensively master plan the site, and implement district-wide urban solutions. The precinct can potentially yield 4,000 dwelling units and 50,000 sqm of complementary uses like retail and office, out of the total gross floor area (GDA) of 390,000 sqm. In its Phase 1, a minimum of a currently estimated 1,000 housing units will have to be built.

Kampong Bugis was envisioned as a site housing about 4,000 homes and car- and bicycle-sharing facilities in the 2013 Draft Master Plan. In 2017, plans were unveiled to turn the plot of waterfront land, once home to Kallang Gas Works and largely left vacant for years, into a waterfront precinct to be tendered out to a master developer.

Tricia Song, head of research for Singapore at Colliers International, said the site should be attractive to a large developer or a consortium of developers "as it offers a rare opportunity to plan and create an urban ecosystem, over a long term".

Already, Australian developer Lendlease has in several media interviews expressed interest in this site. Cushman & Wakefield's senior manager for research, Wong Xian Yang, noted that are only a few master developer projects in Singapore, such as Marina Bay Financial Centre and Suntec City.

But he thinks that "given the current market headwinds and large cost of the development, there may be limited interest for this site for now." He added: "The total land cost for the entire site could exceed S$5 billion and would be prohibitive even for the big boys. Demand for the site would probably come from consortiums of developers which have the expertise to develop large scale projects and are able to bear the risk."

Leong Boon Hoe of List Sotheby's International Realty, said that "this large site poses higher risk to developers in light of the hefty taxes (non-remittable tax and additional buyers' stamp duty) and weakening market sentiment".

Kampong Bugis is one of four new sites on the H2 2019 GLS confirmed and reserved lists. One of these new sites that analysts believe could pique developer interest is a 1.27 ha Irwell Bank Road site in River Valley, which is located close to the future Great World City MRT, Great World City shopping mall and River Valley Primary School. The site, which is on the confirmed list, can yield 445 units and is estimated to launch in October.

Mr Leong of List Sotheby's believes the site could fetch a land bid within the range of S$1,500 to S$1,800 per square foot per plot ratio, based on the bid of S$1,733 psf ppr for the site of new project Rivière at Jiak Kim Street.

"Based on the recent sales at Boulevard 88, 3 Cuscaden and Rivière, it seems that investors are mindful of the price levels and leaning more towards freehold residential projects. We expect bidders of Irwell Bank Road will be more circumspect in their bids."

Another prime site to watch out for when it is made available for sale on reserve list is a 1.07 ha, 560-room hotel site on River Valley Road, which also can have about 2,000 sqm of commercial space. The hotel will be integrated with the Fort Canning MRT and the site is within close walking distance to Clarke Quay and Fort Canning Park.

Colliers' executive director of valuation and advisory services, Govinda Singh, said the site presents "a good opportunity to fully establish the Fort Canning area as a major tourist destination" while bringing more people to Clarke Quay.

The hotel will likely be positioned towards a mid-market or lower-tier segments because of the likely land price and DC (development charge) payable, he added. The other new site in the reserved list is the Tampines Street 62 executive condominium site. Cushman's Mr Wong believes that of all the sites in the reserve list, the Tampines executive condominium (ECs) site could be triggered for sale.

He noted that EC demand in the eastern region of Singapore is expected to see strong demand, given that most of past such launches have been in the North-East, North and West Regions of Singapore. Existing EC launches have mostly sold out their stock and there is only one expected new EC launch in 2019, he added.

Adapted From The Business Times, June 7 2019