At a glance
- Company
- CBRE Group, Inc.
- Ticker
- NYSE: CBRE
- Location
- Holland Drive, Singapore
Key figures
- Residential units at the site
- 680 units
- Number of bids
- 3 bids
- Top bid
- $805.39 mil
- Top bid land rate
- $1,285 psf ppr
- Difference from neighbouring One Holland Village site
- 32%
- Potential average selling price cited
- $2,800 psf
May 14, 2024 -- Caution prevailed at the URA tender closing today (14 May 2024) for the residential site at Holland Drive (680 units) which saw muted participation from developers and bid prices below expectations.
The measured number of bids reflects continued risk aversion and selectiveness among developers especially for prime sites and bigger sites which require larger capital outlay, in light of economic headwinds, interest rate uncertainty and cooling measures. Developer sales also slumped to a 15-year low of 6,421 units in 2023 and have remained tepid in Q1 2024 despite more launches amid negative newsflows from a slew of company layoffs and interest rate uncertainty.
Holland Drive
The plot at Holland Drive drew 3 bids within expectations but a top bid price of $805.39 mil or $1,285 psf ppr below expectations submitted by a consortium between UOL Group, CapitaLand, and Kheng Leong.
Similar to recent state land tenders, interest in today’s tender remained muted as developers continue to exercise caution amid economic weakness, tighter financing conditions, and elevated inflation. While developers could leverage the site’s good size of 680 units to reap economies of scale from more facilities, its larger size also comes with higher developmental risks. This is especially since this site falls just outside the 1 km radius of the popular Henry Park Primary School, and thus may appeal less to locals and young families. Its prime location would also appeal more to foreigner buyers and investors which have been greatly deterred by the increased ABSD under Apr 2023’s round of cooling measures.
The unit price of $1,285 psf ppr is 32% below the neighbouring One Holland Village site which drew 15 bids from 10 consortiums during the closing of its tender on 20 Mar 2018 and was eventually awarded via Concept-and-Price Tender on 16 May 2018 for $1.213bn or $1,888 psf ppr.
Even though the land rate was below expectations, we think that the proposed development has the potential to achieve an average selling price starting from $2,800 psf. This optimism stems from the site’s prime location and proximity to Holland Village MRT and the mixed-used development at One Holland Village which is shaping up as a bustling lifestyle hub offering abundant amenities.
Notably, the remaining 63 units at One Holland Village Residences were transacted at a median price of $2,881 psf in 2023, highlighting the strong demand of the area. Furthermore, with One Holland Village Residences fully sold, buyers have fewer choices in the immediate area with limited new 99-year leasehold supply around it.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
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In brief
CBRE’s commentary says the Holland Drive residential site tender drew three bids, with muted participation and a top offer below expectations. The consortium of UOL Group, CapitaLand and Kheng Leong submitted the highest bid of $805.39 mil, equivalent to $1,285 psf ppr. The commentary attributes developer caution to economic uncertainty, financing conditions and cooling measures, and notes that the site’s scale brings both potential economies of scale and greater development risk. CBRE says the location near Holland Village MRT and One Holland Village could support an average selling price starting from $2,800 psf. It also points to the area’s recent resale prices and limited nearby new supply as factors behind that view. The release notes that the site is outside the one-kilometre radius of Henry Park Primary School.
Key takeaways
- The Holland Drive tender attracted three bids, and CBRE characterized participation as muted.
- A consortium of UOL Group, CapitaLand and Kheng Leong made the top bid of $805.39 mil.
- The highest offer was $1,285 psf ppr, which the commentary says was below expectations.
- CBRE says the site’s location and nearby amenities could support an average selling price starting from $2,800 psf.
SEC filings
Earlier from CBRE Group, Inc.
- Singapore’s Grade A Office Market Registers 12th Consecutive Quarter of Rental Growth
- A strategically located B1 site with re-development potential at Bedok Reservoir Road, Singapore for Sale
- CBRE commentary on Holland Drive GLS site released on Confirmed List
- High-floor Grade A strata office floor in the heart of CBD for sale via Expression of Interest
- CBRE commentary for closing of URA sale site at Orchard Boulevard and EC site at Plantation Close (2)
