The four sites will yield approximately 3,360 residential units including the new long-stay apartments. There are two large projects with around 1,000 units each. The pilot project to include serviced apartments as part of GLS sites was announced on Nov 29, last week.

On Zion Road is a large project that will include up to 1-170 residential units including 435 serviced apartment. It’s located on the edge of the River Valley residential area and near Orchard Road.

The other site is a parcel of land at Upper Thomson Road. It would yield 640 units of residential housing, including 100 apartments with serviced. This area is being developed into a new precinct.

On Monday, analysts expect developers to be cautious in their response.

The two sites are part of the four plots that were released by the Urban Redevelopment Authority on Monday as part of the 2023 Government Land Sales programme.

The Upper Thomson Road (parcels B and A) and Zion Road plots (parcels B and A) are listed on the confirmed list. Zion Road’s parcel B, however, is still available to apply for under the Reserve List.

Developers may be interested in the serviced apartments if they can sell them to their real estate investments trusts.

A portion of a development can also be built as serviced units, reducing the overall risk. Developers have less residential properties to sell over the five year period required for additional buyer’s stamp duty remission.

If you stay for a minimum of three months, your operating costs may be lower than if you were to run a typical hotel with fewer turnaround times or serviced apartments.

Jden Showflat

The Riviere, a 455-unit development along Jiak Kim Street is the last GLS to have been sold in this area. Frasers Property was awarded the site for S$955.4 Million or S$1,733 PSF PPr in December 2017, after a ten-bidder process.

Riviere has been on sale since May 2019. It is sold out, with an average price of S$3,066 per sq ft, according to caveats. Jiak Kim Street includes 72 serviced apartment blocks.

Developers will likely partner up to bid for the latest Zion Road Site tender. This could be with a large group of developers who have experience in hospitality, such as CapitaLand Frasers City Developments Ltd or Far East Organization.

Some developers do not have the experience to operate serviced apartments. Capital expenditures for serviced units will be high upfront and require developers to have a lot of liquid assets.

In order to keep up with the rising demand for residential rentals, a minimum stay of 3 months is now required.

The Zion Road plot (parcel A), although “a beautiful site”, may not attract bidders due to its size.

Wong anticipates a bid of between S$1.47bn and S$1.66bn, based on an estimated unit land cost ranging from S$1,600-S$1,800 per sq. foot.

A shortage of manpower in the sector will also force a “rethink” on how services can be better delivered with less personnel.

The Upper Thomson Road parcel B (parcel B) must be developed in conjunction with the conservation of the former Seletar Institute.

Three large plots were released at once, two of which have more than 1,000 units. This will result in a smaller total number of bidders. High interest rates and macroeconomic uncertainties, as well as geopolitical changes and high building costs, will continue to put pressure on developers.

Upper Thomson Road, on the other hand, is an untested area for serviced apartments, and developers would need to include significant risks in their pricing.

Experts expect that developers will be cautious in regards to both Upper Thomson Road Sites. This is due to their relative quieter location amid landed homes, as well as the high supply of private homes available in the Lentor area.

Upper Thomson Road (parcel B) is expected to attract a bid between S$636m and S$723m or SS$1,100 – SS$1,250 psf ppr. Experts predicted that Upper Thomson Road (parcel C) could see bids ranging from S$862 to S$948million, or S$1,000 to S$1,100psfppr.

A tender was closed in September on a Lentor Central plot that sold for S$435m or S$982psfppr. This is the sixth site sold by the government, in an area that will see close to 3,000 private homes.

The two Upper Thomson sites, located near the Central Catchment Nature Reserve, will also require biodiversity-sensitive urban design strategies in their proposed developments.