Low bid for Media Circle signals hesitation on long-stay serviced apartments

The site only received one bid.

Even with the potential for recurring income, long-stay serviced apartments (SA2) don’t seem to attract developers in Singapore, as reflected by the subdued bids for the Media Circle site.

The site received just one bid from FCL Land, Padawan MC, and Empire North Property, offering $120.1m, or $461 per square foot per plot ratio (psf ppr).

The hesitation on the residential model can also be seen from the lack of bids at the Upper Thomson (Parcel A), which also had an SA2 element, said OrangeTee & Tie.

Additionally, only one site with a smaller SA2 component at Zion Road (Parcel A) was sold earlier this year.

PropNex also believes the site's untested model may have fueled its muted bid.

"The upside for developers is that long-stay serviced apartments may offer recurring income for developers, and they also need not worry about having to sell out all residential units within the 5-year ABSD deadline since the project is entirely earmarked for long-stay serviced apartments," PropNex said.

"The long-stay serviced apartments pilot is aimed at meeting rental demand for longer-term stays. Thus far, developers seem generally unconvinced and the response to tender for sites incorporated with long-stay serviced apartments has been weak," PropNex added.

CBRE, for its part, said the SA2 model "entails different capital requirements, expertise and risks," which the developers may have factors in when bidding for the site.