Recent GLS tenders prove developers are cautious not to overbid

Top bid at Fernvale Road site edged the second placer by mere 0.005%.

While interest for government land sales remained keen, developers are becoming more prudent in their bidding exercises leading to the bunching of the bids within a narrow band, said Edmund Tie & Co. 

The sale of two land parcels in the GLS tender dominated investment sales in Q3, Edmund Tie & Co explained that the recent bidding of GLS sites suggested that developers remained cautious despite the need to replenish their land banks.

"The case in point was the public tender for the land parcel at Fernvale Road, which edged the second highest bid by a mere 0.005%," it said.

Separately, Edmund Tie & Co., notes that developers are also more active sourcing for land in the private market.

OUE bought two parcels of land at Nassim Road for $56.6m while Roxy-Pacific entered a conditional agreement to acquire the freehold Harbour View Gardens for $33.25m.

Year-to-date, total investment sales, excluding residential properties that cannot be subdivided to smaller lots, amounted to $9.6bn.

Investment sales volume fell below $2bn mark in Q3. The lack of major transactions in Q3 resulted in a fall in investment sales to $1.76bn from $6.18bn, according to data compiled by Edmund Tie & Co.

Looking ahead, the research house said that the interest for Singapore properties remain keen, although most buyers are interested in developments that either have additional developmental potential or are distressed. 

It added that there are also some institutional investors that are interested in Singapore for diversification of risk and preservation of value. Overall, investment sale volume in 2014 and 2015 is achievable, supported by government land sales.