SINGAPORE - The tender for a 99-year leasehold master developer site in the up-and-coming Jurong Lake District was not awarded as one of the two bids received from the sole tenderer was deemed too low by the authorities.
The other bid did not make it to the second stage of the tender, where shortlisted concept proposals are assessed on price alone.
The tendered price of $6,888.90 per sq m of gross floor area for the shortlisted proposal was assessed to be too low, the Urban Redevelopment Authority (URA) said on Sept 13.
The price is equivalent to a bid of $640 per sq ft per plot ratio (psf ppr).
This works out to a land price of about $2.5 billion for the 6.5ha Government Land Sales white site, which spans 365,000 sq m of gross floor area and consists of three plots.
Designated for office, residential and commercial development, the site received two bids with different concept proposals from a consortium at the close of the tender on March 26.
The consortium comprises five real estate heavyweights – CapitaLand Development, City Developments (CDL), Frasers Property, Mitsubishi Estate and Mitsui Fudosan (Asia).
URA said one of its concept proposals had been shortlisted.
The site will now be placed on the reserve list, which will be put up for tender only when a developer makes an offer acceptable to the Government.
Bids will be evaluated under an approach that requires tenderers to submit concept proposals and tender prices separately. Only shortlisted concept proposals will proceed to the second stage, which will be based on price alone.
URA said: “The Government is committed to the development of Jurong Lake District as a model for sustainable development, integrating business, residential and recreational spaces, outside of the city centre.”
It added that it will continue to engage with the industry for feedback on the plans for the district and review the approach for the master developer site.
The site can yield about 1,700 residential units, 146,000 sq m of office space, and 73,000 sq m of gross floor area for complementary uses, such as shops, hotels, food and beverage outlets, and entertainment businesses.
Asked if the timeline of the Jurong Lake District will be affected, a URA spokesman said many of the developments in the district are on track and their completion dates will not be affected by the non-award.
He noted that the Jurong East Integrated Transport Hub next to Jurong East MRT station, which is slated for completion in 2028, will have a bus interchange, community centre, library and sports facilities.
More housing options near the MRT station and Jurong Lake Gardens are also being introduced, he added.
The spokesman said the bid price by the consortium was likely influenced by factors such as macroeconomic and property market conditions, the scale and complexity of the development, the length of time required to complete the entire development as well as business considerations.
URA previously said the proposed integrated development will be progressively completed over the next 10 to 15 years.
In the first phase, the master developer will be required to build at least 70,000 sq m gross floor area of office space, 600 private homes, an early childhood development centre, a supermarket, and a foodcourt.
URA said the master developer approach – where one developer takes on all three plots – will allow for works to be done in phases and in tandem with market demand.
The appointed developer will plan the entire project, which includes providing the necessary infrastructure and connectivity between public spaces.
It will also have to plan a district cooling system and a pneumatic waste conveyance system.
In February, the sole bid for a 99-year leasehold plot in Marina Gardens Crescent was also rejected by URA as it was assessed to be too low.
A consortium comprising GuocoLand (Singapore), Intrepid Investments and TID Residential had placed the bid of nearly $770.5 million, or $984 psf ppr.
Ms Wong Siew Ying, head of research and content at real estate firm PropNex, said she was not surprised that the Jurong Lake District site was not awarded as the tendered price of $640 psf ppr would come off as too low compared with other white sites in Jurong East.
She noted that Westgate mall was awarded for $1,012 psf ppr in May 2011, while Jem shopping mall was awarded for nearly $650 psf ppr in June 2010.
“That being said, developers could have put in a cautious bid in view of the high financing cost, large size of the development, cautious market sentiment, and potential risks that may come with being committed to a multi-year project,” she said.
Mr Mark Yip, chief executive of property firm Huttons Asia, said the tendered price is appropriate in current market conditions, taking into account the high costs and uncertainty in developing a mega site.
“These risks include a long gestation period to recoup the huge outlay. The pandemic has affected the demand for office space, and it is unclear whether there is sufficient demand for the 1.57 million sq ft of office space in the next 10 years,” he said.
The entire Jurong Lake District, spanning 410ha, will include the revamped Chinese and Japanese gardens, and the new Science Centre. It will create 100,000 new jobs and 20,000 new homes between 2040 and 2050.
