4-7-2023 (SINGAPORE) Singapore’s central business district (CBD) is feeling the effects of the cautious approach that property developers are taking when bidding for land sites. Market watchers have cited the doubling of the additional buyer’s stamp duty (ABSD) for foreign buyers to 60%, as well as the lack of facilities in the area, as reasons for the muted demand for housing units in this highly sought-after location.
The Marina Gardens Lane site, situated in a prime area of the city overlooking Singapore’s main attractions, attracted a bid of S$1.034 billion, or S$1,402 per square foot per plot ratio, from a consortium led by Chinese developer Kingsford Huray Development. This price is 42% higher than the next highest bid of S$727.04 million from GuocoLand (Singapore), and higher per square foot than the last bid for Marina View, another site in the area.
Big players like GuocoLand and Far East Organization were more cautious when bidding for the site, bidding at less than S$1,000 per square foot. Property veteran Nicholas Mak, Chief Research Officer at real estate portal MOGUL.sg, said that the costs involved in developing a site in the CBD, which includes the land price, construction and development costs, financing costs, and so on, might double the overall costs for developing that site. As a result, the number of developers who have pockets deep enough to develop them in the downtown area is actually quite limited.
Before the recent round of measures to cool Singapore’s red-hot property market, foreign buyers took up about 12% of units in the downtown area. However, experts are expecting the number to be halved, with the ABSD now doubling to 60% of the purchase price. Wong Siew Ying, PropNex’s Head of Research and Content, said that the higher ABSD rate for property investors and limited schools in the area could also discourage some families from wanting to move there.
Despite the government’s plan to create a downtown area where people can live, work, and play, questions remain over access to other facilities such as recreational and hawker centres, said observers. Mr Mak expects developer demand within the CBD to be subdued for at least the remainder of this year. However, should the Marina Gardens Lane site be awarded to the top bid of S$1,402 per square foot, he believes the luxury condominium project could see units sold for at least S$2,680 per square foot.
