Pollen Collection available units

At the end of the tender, on September 21, there was only one bid for Marina View’s government land sales (GLS). IOI Properties was not the only developer who submitted a bid. This was because it was the one that triggered the sale of the reserve site on June 10, before it was officially launched for sale on July 28.

Pollen Collection available units delivered 47 and 51 units respectively featuring corner terrace, terrace units, and semi-detached units.

The bid by the developer for $1.508 billion was only $101 more than its application bid. This price corresponds to a land rate at $1,379 per square foot.
The site at 84,110 is being developed into a mixed-use development that will include approximately 905 residential units, 540 hotel rooms, and a maximum of 2000 sqm (21 528 sq ft), for commercial space. The total area of the site is 1.09 million square feet.

Central Boulevard was the last GLS white location in Marina Bay. It was also awarded to IOI Properties. In November 2016, the developer submitted the highest bid of $2.57 trillion ($1,689 per plot ratio). The GLS tender attracted seven bidders at the time.

The site will be developed into Central Boulevard Towers, which is a commercial Grade A office building consisting of a 16 storey tower, 48-storey tower, and a seven-storey podium. It will contain 1.29 million square feet of Grade A office space and 30,000 square feet of F&B.

Alice Tan, Head of Consultancy at Knight Frank, stated that the bid for Marina View is 10.2% lower than the winning bid for Tan Quee Lan Street, a residential site, which was awarded in September 2019.

Comparing it to other similar GLS residential locations in the Downtown Core the bid is about 5.8% lower than the winning bid at Bernam Street, which was also awarded September 2019. It is 5.4% lower than the winning bid for Middle Road, which was awarded in April 2019.

Developers are enticed by large quantum

It is surprising that there are no other listed property developers interested in the Marina View site. Many property consultants had expected that the site’s residential provision would make the tender more competitive.

“In our opinion, developer participation was below expectation, possibly due to the large quantity of the project and uncertainties regarding the resumption or construction amidst manpower crunch,” said Wong Xian Yang (head of research, Singapore, Cushman & Wakefield).

He also said that developers might feel that residential developments in prime areas 9, 10 and 11 offer better risk-adjusted returns.

Huttons Asia CEO Mark Yip echoed this sentiment. Huttons Asia CEO Mark Yip said that there were no larger listed developers participating in the tender. This could be because they believe the risk-return ratio for this site is high.

Nicholas Mak, head research & consulting at ERA Realty says any competing bid must exceed the IOI Properties application. Mak says that the absolute land price of $1.5 billion might be too high for some developers.

Ong TeckHui, JLL senior researcher & consultant, says that the tender for Marina View GLS is likely to be affected by the “very high total development costs which could pose significant risk to the developer.” While the economy is improving, uncertainties surrounding the Covid-19 pandemic may still cause tenderers to be cautious.

Hotel component adds complexities

“Although there is uncertainty in the hospitality sector, the long-term horizon to the completion of the development was anticipated to mitigate short- and medium-term Covid concerns,” said Calvin Li, head, transaction advisory services, hotels, & hospitality, JLL Asia Pacific.

Li adds that the limited number of tenderers “suggests to me that investors remain cautious about the high minimum requirements for a hotel as well as the potential high development costs associated to an upscale or luxurious hotel that would be required to position the overall development.”

Mak says that most of the GLS white locations in Marina Bay’s downtown were sold previously.

Marina View’s white site is unique because it has large areas that are reserved for residential and hotel rooms. Mak says that the development of Marina View is expected to take over five years and that the project’s construction costs will be high. Due to the pandemic, there are many uncertainties.

Market risk has increased due to the recent financial problems of Evergrande, a Chinese property group. Mak adds that some developers may have been put off by the financial troubles of Evergrande, which could have affected their ability to fund large-ticket projects.