Jurong Lake District mega site bid 'too low,' URA opts to reject tender

The sole tenderer submitted a bid of $640 psf per plot ratio.

The Urban Redevelopment Authority (URA) has rejected the bid for the Master Developer site at Jurong Lake District (JLD) as it was deemed “too low”.

The site was launched for tender under a Concept and Price Revenue approach in June 2023. The tender received two bids from a sole tenderer at its close on 26 March.

The bid of $6,888.90 per square metre of GFA (or $640 psf per plot ratio) was submitted by a sole consortium, comprising CapitaLand Development, City Developments, Frasers Property, Mitsubishi Estate, and Mitsui Fudosan.

“We think developers could have put in a cautious bid in view of the high financing cost, large size of the development, the cautious market sentiment, and potential risks that may come with being committed to a multi-year long project,” Wong Siew Ying, Head of Research and Content at PropNex said.

“In addition, there may also be other costs related to master-planning the development, including the implementation of district-level urban solutions such as a district cooling system and district pneumatic waste conveyancing system,” Wong added.

Meanwhile, Mark Yip, CEO of Huttons Asia said that this price of $640 psf ppr may be appropriate in the current market conditions. “Faced with high costs and huge uncertainty in developing a 6.5 ha site, these risks will have to be priced in and thus leading to a land price of $640 psf ppr.”

“These risks include a long gestation period to coup the huge outlay. The pandemic has affected the demand for office space and the market is still going through a period of adjustment. It is unclear whether there is sufficient demand for the 1.57 million sq ft of office space in the next 10 years,” Yip added.

Adding to this, Tricia Song, CBRE Head of Research for Southeast Asia said “We understand that URA had deliberated on this for a long time and after considering many factors, including the soft office market, relatively volatile interest rate expectations between March and now, construction cost uncertainties, and developers’ low-risk appetites, pushing through the decentralised vision regardless of land pricing may not be the best idea for now. Nonetheless, we believe it could be a matter of timing and confidence.”