Developers still risk averse in bidding for Holland Drive site: experts

Holland Drive had three bids, compared to 15 offers received by neighbouring plot in 2018.

The subdued bidding for the Holland Drive site has signaled developers’ continued risk aversion for larger developments as market uncertainties persist and home sales weaken, according to property analysts.

Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, said participation among developers was muted with only three offers, and the top bid submitted by a consortium led by UOL and CapitaLand at $805.4m was below market estimates.

The top bid, 5% higher compared to the second-highest offer, works out to $1,285 psf of maximum floor area. This was 32% lower than the land cost of the neighbouring One Holland Village site, which garnered 15 bids during its tender in 2018 and the top bid came in at $1,888 psf ppr.

“Similar to recent state land tenders, interest in today’s tender remained muted as developers continue to exercise caution amid economic weakness, tighter financing conditions, and elevated inflation,” Song said. 

Despite this, she still expects the future development on Holland Drive to sell at an average of $2,800 psf and above, mainly thanks to the site’s prime location within District 10, near the Holland Village MRT. The land parcel can yield 680 new homes when developed.

If the site will be awarded to the consortium, comprising CapitaLand (35%), UOL (35%), SingLand (20%), and Kheng Leong (10%), the group plans to develop two 40-storey condominium towers.

READ MORE: CapitaLand-led consortium bids for Holland Drive plot

Wong Siew Ying, research and content head of PropNex Realty, said developers may have also priced in the muted demand for luxury housing in the area, since it took One Holland Village Residences four years to sell all its 296 units since launching in 2019.

“In particular, the hike in the additional buyer’s stamp duty (ABSD) rates on investors and foreign buyers (introduced in April 2023) has continued to weighed on home sales,” Wong said.

“We anticipate positive buying interest for future homes to be built on the site,” she said, adding that they expect starting prices to come in at above $2,700 psf.