A prime Holland Drive residential parcel that can yield almost 700 new private housing units is likely to draw cautious bids, in a tender that could see bids top S$1 billion.

Spanning 12,388 square metres (sq m), the District 10 plot can yield about 680 units, and is the first site to be launched under the Government Land Sales (GLS) programme for the first half of 2024. 

Market watchers expect muted demand for the Holland Drive site, despite its attractive location next to the One Holland Village mixed-use development and the Holland Village MRT station. 

The parcel offered on Tuesday (Feb 27) is the second piece of state land to be sold in the Holland area in recent years, following a 2018 tender of the plot on which One Holland Village is being built. 

At the time, Far East Organization, Sekisui House and Sino Group topped 15 bids to clinch the site for S$1.2 billion, or S$1,888 per square foot per plot ration (psf ppr). 

As at August 2023, all 296 units in One Holland Village Residences have been sold at an average price of S$2,923 psf, based on caveats lodged. 

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But sentiment is markedly different today, market watchers said.  

The site is expected to draw between two and five bids, with the highest bid ranging between S$909 million and above S$1 billion or S$1,450 to S$1,600 psf ppr, analysts said. 

This would put the land cost at 15 to 23 per cent lower than what the Far East-led consortium paid for One Holland Village.

Tricia Song, CBRE’s head of research for Singapore and South-east Asia, said: “For similar-sized GLS comparables, the Lorong 1 Toa Payoh site tender with 775 buildable units saw only three bids when tender closed in November 2023, with a top bid price of S$1,360 psf ppr. Developers are generally still cautious on large investor-focused sites.”

Wong Siew Ying, PropNex head of research and content, said: “The site has many positive attributes, but the land price could be a deterrent. With the maximum gross floor area at more than 626,000 sq ft, the bid price could potentially reach S$1 billion, which may suppress developers’ interest in the plot.” 

“We expect the number of bids to be limited, and developers will likely team up, forming consortiums to submit bids, in order to mitigate development risk.” 

Marcus Chu, ERA’s chief executive officer, said: “We expect to see more cautious responses from developers for this Holland Village site, as witnessed in recent GLS tender exercises.”

The more recent state tender for a site at Orchard Boulevard drew four bids, topped by UOL and SingLand’s S$428.3 million offer at S$1,616.75 psf ppr. The UOL-SingLand bid was 32 per cent lower than the winning bid for Cuscaden Road state land lot sold in 2018 at S$2,377 psf ppr.

In the first GLS tender to close this year, a large plot in Marina Gardens Crescent received just one bid from a GuocoLand-Hong Leong Group consortium at nearly S$770.5 million or S$984 psf ppr. It was subsequently rejected by the URA as too low.  

“Higher-for-longer interest rates, macroeconomic uncertainty and the Additional Buyer’s Stamp Duty increase for foreigner buyers and investors may be additional areas of concern,” said Justin Quek, chief executive officer of OrangeTee & Tie. 

The tender for the Holland Drive site will close on May 14.