URA land sales draw muted bids as home sales hit two-decade low

New home sales in the first half fell to the lowest level since 2004.

The lacklustre bidding in three state tenders that closed Thursday reflects developers’ cautious approach to land grabbing as Singapore posted its weakest first-half new home sales in two decades.

Urban Redevelopment Authority’s (URA) tenders for Zion Road (Parcel B), Canberra Crescent and De Souza Avenue sites only received two to three offers each, with top bids reaching as low as $793 per square foot per plot ratio (psf ppr). 

An ample housing supply, muted home sales, and ongoing uncertainties in the market might have suppressed developers’ appetite for sites according to Wong Siew Ying, Head of Research and Content at PropNex. 

Wong said conservative land costs will also provide developers with more flexibility and leeway in setting the prices of their projects.

Chia Siew Chuin, Head of Residential Research, Research & Consultancy at JLL shared the same view, noting that developers have been cautious since the latter half of 2023 as they try to cope with high borrowing costs, tight profit margins, and slowing buyer demand.

Singapore's new home sales plunged to a record low of 1,916 units in the first half to mark the lowest six-month tally since data was available in 2004. 

The Zion Road (Parcel B) plot, which can yield 610 units when developed, drew two bids with a top bid of $730.1m or $1,304 psf ppr. 

“The tepid interest in the site can be attributed to concerns about the potential competing supply of new private residential units that will be generated from recently awarded GLS sites in the locale,” said Chia. 

The 375-unit Canberra Crescent site garnered the most interest with three offers submitted, although the top offer fell below market expectations at $279m or $793 psf ppr. 

If awarded, Wong said this will mark the lowest land rate for a suburban GLS site since 2020 when the Canberra Drive plot was awarded. Selling prices of future homes on the plot could hover around $1,850 psf, also lower than the average home prices in the Outside Central Region, Wong said.

De Souza Avenue, meanwhile, received two bids with the highest offer of $841 psf ppr, also below analysts’ initial expectations.

JLL’s Chia said the requirement to include a pedestrian side gate and covered walkway will add to the development cost, prompting developers to temper their bids.