Consortium led by UOL and CapitaLand casts top bid of $805.4m for Holland Drive GLS site

SINGAPORE – The first state land tender for a prime 99-year leasehold site in Holland Drive since 2018 attracted three bids on May 14, with a top bid of $805.4 million cast by a consortium led by UOL Group and CapitaLand Development.

If awarded the tender, the consortium plans to develop two 40-storey condominium towers on the District 10 site, which can yield 680 units and is next to the One Holland Village mixed-use development, a spokesman said.

The consortium, Holly Development, comprises CapitaLand Development (35 per cent), UOL (35 per cent), Singapore Land (20 per cent) and Kheng Leong (10 per cent).

Its bid works out to a land rate of $1,285 per sq ft per plot ratio (psf ppr).

GuocoLand and two entities of Hong Leong Group Singapore – Intrepid Investments and Hong Realty – came in second with their bid of $765.3 million, or $1,221 psf ppr.

Japura Development, an entity linked to Hong Kong billionaire Li Ka-shing’s CK Asset Holdings, came in third with its $632 million bid.

“With the top bid being just 5.2 per cent above the second bid, this shows that despite the challenging environment, there are parties with resources still contesting for sites with good attributes,” Mr Leonard Tay, Knight Frank Singapore’s head of research, said.

The Holland Drive site has a maximum gross floor area of more than 626,000 sq ft. With its attractive location and proximity to Holland Village MRT station and commercial amenities in Holland Village, it should command a potential price quantum of up to $1 billion, analysts had said after the tender for this site was launched in February.

Instead, the bids came in below expectations.

Mr Tay noted that the number of bids for state land tenders has also shrunk from more than seven in 2021 to fewer than five in 2023 and 2024.

Ms Tricia Song, CBRE head of research for Singapore and South-east Asia, said: “The measured number of bids reflects continued risk aversion for prime sites and bigger sites that require larger capital outlay, in light of economic headwinds, interest rate uncertainty and cooling measures.”

She added, developer sales have slumped to a 15-year low of 6,421 units in 2023, and remained tepid in the first quarter this year despite more new launches and amid company layoffs and interest rate uncertainty.

The top $805.4 million bid is 31.9 per cent below the winning bid at the last state land tender for a neighbouring Holland Road site, which was $1.21 billion, translating to a land rate of $1,888 psf ppr, back in May 2018.

One Holland Village Residences was built on that site, and launched in November 2019. Its 296 units were sold by August 2023 at an average price of $2,807 psf.

Given that One Holland Village took about four years to sell out, developers are likely cautious about the 680-unit site in Holland Drive, said PropNex head of research and content Wong Siew Ying.

Potential risks include the larger development size and price quantum, coupled with the muted market sentiment and property curbs such as the 60 per cent additional buyer’s stamp duty (ABSD) on foreign buyers, she said.

She added that if the Holland Drive site is awarded at $1,285 psf ppr, this land rate would be the lowest for a prime district GLS residential plot since the Kampong Java Road site (now Kopar at Newton) was awarded at $1,192 psf ppr in January 2019.

Developers may have been less aggressive in bidding in view of the upcoming second half 2024 GLS programme to be announced in June, which may lead to more prime district sites being released for sale in the second half this year, noted OrangeTee & Tie chief executive Justin Quek.

CBRE’s Ms Song noted that even though the land rate was below expectations, the future condo project could achieve an average selling price starting at $2,800 psf.

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, she said.

Concurring, Huttons project director Ngiam Juyong pointed out that a lack of new private home supply in the vicinity may spell healthy demand for the future project at the Holland Drive site, especially since this is the last plot for private residential development in the Holland Village enclave.

“There is no new supply of homes in this area as projects such as 15 Holland Hill, Hyll on Holland, Leedon Green, Mooi Residences, One Holland Village Residences and Van Holland are sold out,” he said.