Frasers Property-led consortium submits top bid of $2.13 bil for Bayshore Drive mixed-use GLS site

The Government Land Sale (GLS) tender for a mixed-use site at Bayshore Site closed on July 15, garnering three bids. The highest bid was from a consortium comprising Frasers Property, Frasers Centrepoint Trust (FCT), Sunway MCL, Sekisui House and Lum Chang Building Contractors. The consortium submitted an offer of $2.128 billion, or $1,323 psf per plot ratio (psf ppr).

Bids received for Bayshore Drive site

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The consortium’s bid was 5.8% more than the second-highest offer of $2.01 billion ($1,250 psf ppr) from a Hong Leong Group joint venture including City Developments, Hong Leong Holdings, Hong Realty and TID.

The third bid, from CapitaLand Development and UOL Group, stood at around $1.99 billion ($1,235 psf ppr), or 7.1% lower than the top bid.

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The Bayshore Drive site was launched for tender on March 30. The 99-year leasehold, Outside Central Region (OCR) site measuring 618,506 sq ft is expected to yield 1,280 housing units and 242,188 sq ft of commercial space. This includes a retail mall with approximately 237,882 sq ft of gross floor area.

If awarded the site, Fraser Property, Sunway MCL, Sekisui House and Lum Chang will jointly develop the residential component, while the retail component will be developed and fully owned by FCT, Sunway MCL and Sekisui House, the partners said in a July 15 release.

“As the only mixed-use development and transit hub of Singapore’s new Bayshore waterfront precinct, this represents a defining opportunity to shape a highly connected, liveable and future‑ready community, ” commented Soon Su Lin, CEO of Frasers Property Singapore.

Third GLS site to cross $2 billion

The bids received for the Bayshore Drive plot reflect “market consensus on the value of this coveted site,” says Mark Yip, CEO of Huttons Asia. The future development will be the only integrated transport hub in the Bayshore precinct, connected to the Bedok South MRT Station on the Thomson-East Coast Line, a bus interchange and retail spaces.

If awarded, the bid submitted by Fraser Property and its partners will be only the third time a GLS site has crossed the $2 billion quantum, highlights Wong Siew Ying, head of research and content at PropNex.

The other two sites comprise a white site at Central Boulevard, awarded to IOI Properties Group for $2.57 billion in 2017, and a white site at Marina View sold for $2.02 billion in September 2007.

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Large-scale project

Analysts note that the site’s scale, along with the complexities of building an integrated transport hub, likely limited developer participation to joint ventures.

Nonetheless, the number of bids received is in line with recent GLS tenders for similar sites, according to PropNex. The most recent large mixed-use GLS site was at Hougang Central, which also drew three bids. The site was sold in January to a CapitaLand-UOL consortium for about $1.5 billion ($1,179 psf ppr).

Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, points out that the top bid for the Bayshore Drive site, at $1,323 psf ppr, is over 12% higher than the Hougang Central site and sets a new benchmark land rate for an OCR commercial and residential site. “This is indicative of sustained developer confidence in the waterfront appeal of the Bayshore precinct,” she continues.

Recent comparables of commercial and residential GLS sites in the OCR

Second plot in Bayshore

The site is the second to be launched for sale in Bayshore, following a plot at Bayshore Road tendered last year. That site was awarded to SingHaiyi Group, which beat seven other bidders with a top offer of $658.89 million, or $1,388 psf. The land rate set a record for Outside Central Region sites.

The site has since been launched as the 515-unit Vela Bay. The development, which is next to Bayshore MRT Station, saw 72% of units sold during its launch weekend in April. Units were sold at an average price of $2,886 psf.

The performance underscores resilient buyer demand for developments that offer strong connectivity, quality amenities and a well-planned living environment, says Mohan Sandrasegeran, head of research and data analytics at Singapore Realtors Inc (SRI). “These factors are likely to have provided developers with greater confidence in the [Bayshore Drive] site's long-term development potential,” he adds.

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Analysts also note the Bayshore Drive site will likely see healthy demand, given the popularity of integrated developments. For example, the 544-unit Pinery Residences, an integrated development in Tampines, saw 92.5% of units sold during its launch weekend in March. The month before, ParkTown Residences in Tampines North moved 87% of its 1,193 units during launch.

A total of 10,000 homes are earmarked for development in Bayshore, of which 3,000 will be private residences. Over half of this supply has already been released through Vela Bay and the Bayshore Drive site, which will yield 1,795 units, observes Justin Quek, deputy group CEO of Realion (OrangeTee & ETC) Group.

For the commercial component, the bid for the latest site is "strategically consistent" with FCT's suburban retail platform, writes Jefferies equity research analysts. Building a new mall in Bayshore secures an additional future income stream at a lower cost than buying a completed one, though there could be a near-term drag on FCT's distribution per unit through the contribution period, they add.

If awarded, FCT will develop and own half of the commercial commercial component, which comprises 15% of the total gross floor area and includes a retail mall with about 160,000 to 180,000 sq ft of net lettable area. Jefferies notes that the project may take four to five years to complete.

New homes: Average prices from $2,800 to $3,000 psf

Based on the top bid price of $1,323 psf ppr, analysts are predicting that units at the future residential project could have average prices ranging from around $2,800 to $3,000 psf.

Alice Tan, Knight Frank Singapore’s head of consultancy, notes that the project offers direct rail access to both key employment nodes in Central Singapore, as well as convenient access to Changi Airport. This will be attractive for foreign business leaders and professionals, especially those drawn to the waterfront recreation and amenities in the East Coast corridor, she says.

Tan anticipates prices at the future development could average around $3,000 psf. “Selected premium units with sea views, higher floors and integrated transport access could exceed $3,200 psf,” she adds.

Wong of PropNex believes prices may be “above $2,900 psf”. “As one of the first private residential projects in the new Bayshore estate, it may also offer buyers an early-mover advantage as the precinct takes shape,” she remarks.

For CBRE’s Song, the future project could see demand from upgraders staying in Bedok and Tampines, as well as right-sizers from landed enclaves around Lucky Heights, Kew Drive, Bedok Ria and Sennett Road. She predicts the joint developers could launch the project at an average price of $2,800 to $3,000 psf.