Land prices drop 8-20% after developers turn cautious in GLS bid

Prices in the latest Bartley Government Land Sale (GLS) site dropped 20% compared to the recent land sale in the vicinity. This is good news for buyers looking to acquire units at Penrose condo in Aljunied.

Property developers’ cautious strategy towards bidding for new land has caused an 8-20% decline in land prices, after adding in the 5% additional buyer stamp duty (ABSD), in its initial GLS tenders for the year, reported DBS Group Research.

There were 7 and 9 bids for 2 residential land sites within the Core Central Region (CCR) and Outside Central Region (OCR) respectively. City Development (CDL) came in highest for the Irwell Bank Road site at River Valley with a bid of $584m ($1,515 psf ppr), while Wee Hur took the Jalan Bunga Rampai, Bartley area, with a bid of $93m ($885 psf ppr). This has attracted buyers to seek homes in the west due to low Dairy Farm Residence Prices.

Whilst the headline bids were less than previously awarded en-bloc or GLS sites in the nearby area, land prices have slackened by 8% (Irwell Bank site) to 20% (Bartley site) as compared to the latest land sale in the nearby vicinity.

“The slower sales take-up rates experienced in existing projects in the area of both locations are possible reasons that residential developers have committed lower bids, taking a more cautious position in terms of their bidding strategy,” commented DBS Group Research analyst Miss Rachel Tan.

She observed that bigger developers are aiming the CCR sites, whilst smaller developers are targeting OCR sites.

“Main observations include

i) the bigger developers, other than CapitaLand, were gunning for the Irwell Bank site in spite of a number of CCR projects that’s going to be launched this year, ii) the Chinese and local smaller developers are bidding for the Jalan Bunga Rampai, Bartley site, which will most probably target the local mass market suburban segment,” added Miss Tan.

The next GLS tender is predicted to conclude on 3 March 2020 with 3 OCR sites, including an EC location. These are 2 sites at Canberra, which is The Watergardens Canberra location, and one EC site in Sengkang.

Source: https://sbr.com.sg/residential-property/news/land-prices-drop-8-20-after-developers-turn-cautious-in-gls-bid

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