If you reject the bid that is ‘too small’ for the Marina Gardens Crescent, you risk missing the bigger picture.
Transparent process
The site first went up for bids on 30 June 2023. The developers were given over six months in which to prepare their preliminary plans,. They do the sums and determine whether they would bid for the land and at what price.
Since the cost of participating in state land auctions isn’t prohibitive, any developer interested could have submitted an offer at minimal cost and with potential good upside if it was successful.
In a transparent, competitive market for property development in Singapore, the fact that the site only had one bid should be viewed as an accurate reflection of market appetite.
Second, although accepting the winning bid could affect the value of adjacent properties, such as Kingsford Marina Gardens Lane’s site, Kingsford is assumed to have purchased the Marina Gardens Lane Site with its eyes wide open, knowing that nearby sites may fetch lower rates.
A property valuer will also have to take into account multiple factors, so he or she may give less importance to the Marina Gardens Crescent price if they consider it to be an anomaly.
Third, you can’t say that the single bid price for the Marina Gardens Crescent is outrageous.
In the tender for Marina Gardens Lane, the second- and third-highest bidding parties submitted bids of S$985 each and S$953 respectively. Kingsford’s high bid was the exception.
Moreover, the market conditions may change over the seven month period between the tender closures of Marina Gardens Lane and Marina Gardens Crescent.
The consortium of GuocoLand, Intrepid Investments & TID Residential offered a single bid for the land at S$770.5million or S$984per square foot per plot rate (psfppr).
The land price was 30 per cent less than what Kingsford Group had paid in an auction for a plot adjacent to Marina Gardens Lane.
Although the decision to reject the single bid for the Marina Gardens Crescent is neither unexpected nor unprecedented, it might be worth re-evaluating the decision.
Financial Considerations
There are also financial advantages to accepting the Marina Gardens Crescent site.
Maximising profits from land sales is important. State land sales generate revenue that is fully credited to the past reserves. The Net Investment returns Contribution is the major source of revenue for the budget.
By refusing to award the Marina Gardens Crescent, the government might be able to achieve a higher price for land in the future. This is not a guarantee.
In the meantime, it is possible to miss out on a chance to make money from the proceeds from selling an area, as well as incurring costs by holding onto an empty land parcel.
It is important to note that when a land developer develops a vacant parcel, it will create jobs and generate spin-offs.
The Urban Redevelopment Authority (URA), a government agency, has rejected a single bid for the 99-year leasehold Marina Gardens Crescent property because the bid price was too low.
The site will be offered for sale on the GLS programme reserve list, which was confirmed for the GLS Programme in the first half year of 2023. Developers are able to submit applications with a minimal price acceptable to the government for the sale.
Marina Gardens Crescent, located near the Marina South station of the MRT, is suitable for residential or commercial development. It can be developed into 775 homes with a maximum area of approximately 783,000 sq ft.
Housing supply
Fifthly, the government must be committed to selling the sites confirmed in the GLS list as soon as possible.
The government is responsible for providing land to be used in housing developments. A sufficient supply of private housing is essential to meet the demands from an increasing population, rising household formation, and aspirations by residents.
It takes time to build a house. It takes time to build homes.
Sixthly, the Marina Gardens Crescent Site would have been a great boost for the Marina South Area and Kingsford’s Marina Gardens Lane Project.
The attractively priced properties at Marina Gardens Crescent may well be welcomed by buyers who are savvy. This in turn can catalyze demand for properties in the area and have a positive impact on Kingsford’s Marina Gardens Lane. Kingsford will be able to increase the price of its projects when buyer acceptance in Marina South is higher.
Seventhly, the rejection of the single bid for the Marina Gardens Crescent may affect participation at future land tenders.
Due to the uncertainty of the economy and high construction costs, developers are rightfully cautious when bidding on sites.
URA could discourage developers from bidding in future land auctions by rejecting low-ball bids. The URA may discourage developers from bidding on land tenders if they feel that their bid will be rejected.
GuocoLand’s and its partners’ missed opportunity in the Marina Gardens Crescent is the rejection of a single bid. This is also a missed opportunity for GuocoLand and its partners to speed up the development of the Marina South area as well as to increase the supply private homes.
