By rejecting the too low’ bid for the Marina Gardens Crescent Site, you may miss the big picture

Financial considerations

Accepting the Marina Gardens Crescent Site bid will bring financial benefits.

Maximising revenue from land sales does matter. All revenue generated by state land sales is added to past reserve funds. Net Investment Contribution is where the money generated from the reserves is spent. This is a major contributor towards the annual budget.

By not awarding Marina Gardens Crescent to the developer, the government can achieve higher future land prices. But there’s no guarantee.

There are also costs involved in holding on to a vacant parcel of land.

The developer will generate jobs for all parties involved with the development of a project.

The Urban Redevelopment Authority, or URA, rejected the single bid for a 99-year leasehold Marina Gardens Crescent. They deemed the bid too low.

The site was initially listed for sale as part of the Government Land Sales Programme (GLS), for the first six months of 2023. It will now become available under the reserve list for H1 2020. Developers can apply for the sale, but must set a price below the minimum acceptable by the government.

Marina Gardens Crescent is located adjacent to Marina South Station MRT and can be used as a residential or commercial site. It has an area of up to 783,000 feet and can create 775 private residences.

The single bid was almost S$770.5 Million or S$984 Per Square Foot per Plot Ratio (psf/ppr) from a group consisting of GuocoLand F17 -0.69% Intrepid Investments TID Residential.

The land rate for the plot was about 30 percent less than what Kingsford Group paid, at S$1,402 per square foot per person (psf/ppr), in a tender conducted by the state and closed in June of last year.

The decision to reject a single bidder on the Marina Gardens Crescent property is neither surprising nor unheard of. However, it’s worth considering the outcome.

Financial considerations

Accepting the Marina Gardens Crescent Site bid will bring financial benefits.

Maximising revenue from land sales does matter. All revenue generated by state land sales is added to past reserve funds. Net Investment Contribution is where the money generated from the reserves is spent. This is a major contributor towards the annual budget.

By not awarding Marina Gardens Crescent to the developer, the government can achieve higher future land prices. But there’s no guarantee.

There are also costs involved in holding on to a vacant parcel of land.

The developer will generate jobs for all parties involved with the development of a project.

Housing supplies

The government should also be fully committed in selling all the sites on the GLS confirmed list within a reasonable time frame.

Land is an important resource for the housing industry. Private housing supply must be adequate to meet the growing demand of a population that is increasing, households that are forming and residents’ aspirations.

Home construction takes time. The construction of homes takes time.

Sixthly awarding the Marina Gardens Crescent property to GuocoLand Singapore and its partners in the Hong Leong Group would have added a new impetus to the Marina South area and may have helped Kingsford’s Marina Gardens Lane project.

Affordably priced homes on Marina Gardens Crescent might be well received by smart buyers. It could also have positive effects on Kingsford’s Marina Gardens Lane. Kingsford is able to raise prices at its project when the acceptance of homes by buyers in Marina South grows.

Seventhly: Rejecting the sole offer for the Marina Gardens Crescent could prevent participation in future state land auctions.

In the face of high interest rates, construction costs and economic uncertainty, developers tend to be cautious in their bidding.

URA can discourage some developers by refusing to accept what they deem as low bids. A developer that is interested in a certain site may decide not to submit a bid, as they believe it would be a waste of time.

GuocoLand is disappointed that the Marina Gardens Crescent was not sold to the single bidder. This represents a missed chance for GuocoLand. The rejection of the sole bid for the Marina Gardens Crescent site represents a lost opportunity for GuocoLand.

Transparent process

First, on June 30th 2023 the site was put up for auction. The site was released for tender on June 30, 2023.

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Because the cost for participating in land tenders by the state is not prohibitive to developers, they could submit an offer with a minimal investment and a potential upside if that bid was successful.

If there is only one bid on the plot, then the market has a high level of transparency and competition.

Second, it is reasonable to assume that Kingsford purchased the Marina Gardens Lane property with the knowledge that the land values in the area may be lower.

Moreover, an appraiser would have multiple data points in mind and could possibly give less weight to Marina Gardens Crescent, if the site is seen as an anomaly.

Thirdly, it’s hard to call the price offered for the Marina Gardens Crescent a ridiculous one.

At the tender, the Marina Gardens Lane site was awarded to the second and the third highest bidders. Their bids were S$985 for psf per person and S$953 for ppr. Kingsford was the only bidder to submit a top-of-the-line, bullish bid.

Marina Gardens Crescent and Marina Gardens Lane sites are both scheduled to close their tenders in less than seven months.


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