The Urban Redevelopment Authority (URA) declared on September 13 that the 6.5 hectare master developer site at Jurong Lake District (JLD) has not been awarded. The site was put up for sale on June 22, 2023, with the aim of being “the starting point for the next phase of development in JLD”.
The tender for the JLD site closed on March 26, 2024, with only one bid received from a consortium of five developers, including CapitaLand Group, City Developments Ltd (CDL), Frasers Property, Mitsubishi Estate Co. and Mitsui Fudosan Co. Ltd. The consortium offered two concept proposals for the site, with each developer taking a different stake in the project. However, URA has decided not to award the tender as the proposed price of $6,888.90 per square meter of gross floor area (GFA) was deemed too low.
The JLD master developer site will now be placed on the Reserve List under the concept and price revenue tender approach, subject to a minimum price acceptable to the government. The site is expected to yield over 1.6 million square feet of office space, 1,760 private residential units, and 807,300 square feet of GFA for complementary uses such as retail, hotel, or community facilities. The development is slated to be built progressively over the next five to ten years, with the successful bidder required to construct at least 70,000 square meters of office space and 600 private housing units as part of the first phase.
According to PropNex head of research and content Wong Siew Ying, it is not surprising that URA has decided not to award the JLD master developer site. In comparison to other white sites sold in the area, the tendered price of $640 per square foot per plot ratio (psf ppr) seems low. This could be due to developers being cautious about the high financing cost, the large size of the development, the current market sentiment, and potential risks associated with a 10-15 year project. Other costs related to the master planning of the development, such as implementing district-level urban solutions, may have also played a role in the lower bid.
Huttons Asia CEO Mark Yip notes that the pandemic has affected the demand for office space, and the market is still adjusting. He also mentions the uncertainty surrounding the high-speed rail (HSR) between Singapore and Kuala Lumpur, which may have contributed to the cautious bid. With high costs and potential risks, the developers may have priced these factors into their bid, leading to the final price of $640 psf ppr.
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While not awarding the site may provide some medium-term relief to the islandwide office supply, as about 0.7 million square feet of potential first phase office stock will be pushed back beyond 2030, the impending supply will not completely disappear as the government remains committed to the development of JLD. The master developer site is made up of three sites near the Singapore Science Centre, Genting Hotel Jurong, JEM, Westgate, and the IMM mall. Existing projects in the area, such as J’den, Sora, and The LakeGarden Residences, are still selling well, with healthy interest from buyers.
In conclusion, the decision not to award the JLD master developer site is a result of various factors such as the cautious market sentiment, developers’ risk appetites, and the potential risks and costs associated with developing a large site over a long period of time. While it may provide some relief to the islandwide office supply, the development of JLD is still on track, and existing projects in the area continue to sell well.