5 Reasons : Why Singapore’s Rental Market Is Still Lucrative For Property Investors
Singapore's property market has always been an attractive investment option due to its stability and potential for high returns. While...
Read More
TLDR
The Government Land Sales (GLS) program in Singapore is critical for developers to obtain development land, with sites released biannually. The Urban Redevelopment Authority (URA) manages non-industrial land sales, while the Ministry of Trade and Industry (MTI) oversees industrial sites. GLS sites are categorized into confirmed and reserve lists, with confirmed sites available on specific dates and reserve sites requiring developer interest to trigger tender. Developers bid on these sites, and the highest bidder typically wins, provided they meet or exceed the reserve price, which is 85% of the site’s market value. White sites allow for mixed-use developments, with some requiring a two-envelope tender process. The GLS program influences property supply and market prices, significantly impacting neighborhoods and real estate investments.
Recently, the government land sales (GLS) program has garnered attention as developers have become more cautious in their bids due to weak market conditions. In February, the Urban Redevelopment Authority (URA) revealed that they would not proceed with awarding the Marina Gardens Crescent GLS site, as the only bid of $770.46 million ($984 per square foot per plot ratio) was considered insufficient. Last month, the tender for the Upper Thomson Road (Parcel A) GLS site concluded without receiving any bids. Furthermore, on June 25, URA announced the GLS program for the second half of 2024.
How does it work?
The GLS programmes are announced biannually, at the end of June and December. The sites included in these announcements will be available for tender over the subsequent six months. The Urban Redevelopment Authority (URA) will release the list for non-industrial sites, while the Ministry of Trade and Industry (MTI) will handle the announcement for industrial sites on their respective websites.
URA serves as the sales agent for most of the GLS sites. In contrast, the Housing and Development Board (HDB) typically manages land tenders for executive condominiums, and JTC takes charge of industrial land tenders. For additional information regarding GLS sites, interested parties can refer to the websites of the relevant government authorities. Some details on each GLS site are also accessible through EdgeProp’s LandLens.
When a site is open for tender, developers interested in bidding can submit their proposals to the appropriate government agency before the specified closing date. Developers generally have several months to prepare and submit their bids. On the tender closing date, all bids will be gathered and opened by the government body, which will also publish a list of all bidders along with their bid amounts (unless it is a price and concept revenue tender) on their websites.
The awarding of a site will be announced on the relevant government body’s website, usually about a week after the tender closes. Typically, the site is awarded to the bidder who provides the highest bid price.
Difference between confirmed and reserve lists
Each GLS program features two distinct lists: the confirmed list and the reserve list. The sites included in the confirmed list are set to be available for tender on the estimated launch date indicated.
Conversely, the sites on the reserve list will only be opened for tender if a developer submits an application to the relevant government agency. The developer’s proposed minimum bid price will be assessed against the site’s reserve price. Should the government agency find the proposed minimum price acceptable, they will publish the minimum bid price and announce the site’s availability for tender on their website. The identity of the developer responsible for triggering this process remains confidential.
As a result, the sites on the confirmed list can be regarded as certain potential supply. Additionally, the approximate launch date for future developments on these sites can be predicted based on their tender launch date. In contrast, sites on the reserve list carry more uncertainty due to the lack of a definite tender launch date.
What is reserve price?
The reserve price represents the lowest acceptable price for each GLS site. This price is set at 85% of the estimated market value for each location. The market value is assessed by the chief valuer’s office, which considers factors such as the intended land use, specific site conditions, and recent relevant land sales, including transactions involving completed buildings.
For instance, if the chief valuer’s office establishes the market value of a GLS site at $800 million, the reserve price would be $680 million (which is 85% of $800 million). Consequently, if the highest bid for the site falls short of $680 million, the site may not be granted. It’s important to note that the reserve price for each site remains undisclosed to both developers and the public.
What is a white site?
Every GLS site will have a designated land use specified in the tender documents. While a variety of sites are offered for tender through the GLS programme, residential parcels typically make up the majority of those available. The tender closings for residential sites are also the most scrutinized. The upcoming tender closing for residential GLS sites is scheduled for later this month.
Some GLS sites are categorized as white sites, allowing the successful bidder to create a mixed-use development with complementary functions on the land parcel. Permitted uses for these sites include residential units, offices, retail shops, hotels, serviced apartments, and entertainment facilities.
The latest GLS programme features two white sites: Marina Gardens Crescent (refer to Map 1) and Woodlands Avenue 2. Since these sites are on the reserve list, they will only be launched for tender if triggered.
As previously mentioned, the Marina Gardens Crescent site was offered for tender last year but did not receive an award. The Woodlands Avenue 2 site is a new addition to the GLS programme, permitting both residential and commercial uses.
Read moreGreat Reasons for Condo Owners to Sell upon Reaching TOP – A Guide to Sub-Sale Transactions
Certain white sites are tendered using a concept and price revenue tender approach, often referred to as a two-envelope tender. In this method, developers must submit their concept proposal and tender price separately. The government agency evaluates all concept proposals before shortlisting those that meet its criteria. The shortlisted proposals are then assessed based on their tender prices. This process ensures that the successful bidder’s concept aligns with the government’s vision for the site.
A recent example of a GLS site tender utilizing the two-envelope system is the Jurong Lake District GLS site (see Map 2). The tender for this site closed in March, receiving two bids from the same consortium of developers. As of this writing, the site has not yet been awarded. Concept and price revenue tenders usually require more time to finalize due to the in-depth evaluation of the developers’ concept proposals.
The importance of GLS sites
In Singapore, developers typically acquire development land through two primary methods: en-bloc sales and the Government Land Sales (GLS) programme. This allows the government to regulate the availability of development land by modifying the number of GLS sites offered for tender, which in turn influences the quantity of new properties that can be put on the market.
Astute investors should closely analyze the locations of GLS sites since the government often releases more sites in regions where it aims to promote development. For instance, a site in Media Circle was made available for tender in May, designated for long-stay serviced apartments, with the tender closing in September. Furthermore, two additional residential sites along Media Circle are included in the confirmed list for the second half of 2024 GLS programme, both set to be launched for tender in November. The timing of these three GLS site launches aligns with government objectives to increase residential developments near one-north.
A neighborhood can undergo significant changes if several GLS sites in that area are successfully awarded. Existing properties nearby can benefit from this transformation, potentially leading to a rise in their prices. A notable example is the awarding of six GLS sites close to Lentor MRT Station, which has attracted greater interest to the neighborhood and District 26.
Among these six awarded GLS sites, Lentor Modern was the first condominium to be launched for sale in September 2022 (see Map 3). An analysis of price trends in District 26 shows a remarkable 61.5% year-on-year increase in the average price of new 99-year leasehold condos in 2022. Additionally, the average resale price of leasehold condos also surpassed the $1,000 per square foot threshold for the first time during that same year.
Since 2022, the average price of new leasehold condos in District 26 has risen by 2.4% to reach $2,182 per square foot. Conversely, the average resale price of these condos surged by 25%, reaching $1,252 per square foot during the same period.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
5 Reasons Why It’s A Great Time To Buy Property In Singapore In 2024
Singapore's property market is known for its stability, high demand and strong returns. With a growing population, low unemployment rates,...
Read More
The Truth About Buying An Old Condo: Homeowners Reveal Their Top 5 Regrets
The Truth About Buying An Old Condo: Homeowners Reveal Their Top 5 Regrets Some homeowners may find themselves regretting certain...
Read More
Top 5 : Most Profitable Neighborhoods To Invest In For Singapore Property Investment 2025
As the global economy continues to recover, the real estate market in Singapore remains a promising investment opportunity for savvy...
Read More
Top 5 Tips : How Does One Choose Good Property In Singapore?
Singapore, a thriving city-state known for its impressive skyline and robust economy, has always been an attractive destination for property...
Read More
Breaking Through the Stalemate of En Bloc Sales
TLDR The Singapore property market faces challenges with the ongoing en bloc stalemate. Lower success rates, higher development risks, and...
Read More
I Wouldn’t Rely Too Heavily On Discounts Related To ABSD This Year
TLDR The ABSD discount arises when developers approach their five-year deadline to sell 90% of units, facing a 40% penalty...
Read More
When a Property Seller Pulls Out of the Deal : What Now?
TLDR When a property deal is not yet formalized, sellers can withdraw without consequences. However, once an Option to Purchase...
Read More
Is Renting Out Your HDB to Live in a Condo a Smart Move? How Rentvesting Can Help You Save Money
TLDR Rentvesting is a strategy where individuals rent a home in their desired location while purchasing investment properties in more...
Read More
Here Are 6 Interesting Facts About The Minimum Occupation Period (MOP) That Not Many People Know About In Singapore
TLDR When it comes to understanding the Minimum Occupation Period (MOP) set by the Housing Development Board (HDB) in Singapore,...
Read More
5 Risks Upgraders Should Be Aware of To Avoid Financial Troubles When Progressing Their Property
TLDR The article delves into the intricacies of property asset progression in Singapore's real estate market. It highlights the risks...
Read More
Five Pitfalls of Selling a Home for the First Time
TLDR When selling your first home, avoid holding out for a better offer as it may backfire. Let your agent...
Read More
5 Secrets To Successful Property Investing In Singapore
Investing in property is a popular option in Singapore, with many investors seeing it as a lucrative way to build...
Read More
6 Hot Property Market Trends in Singapore 2024: What Buyers Should Anticipate
TLDR When diving into Singapore's property market, expect a rollercoaster ride as trends shift drastically in 2024. Landlords and tenants...
Read More
Top 5 Most Common Red Flags To Watch Out For When Investing In Singapore Property
Investing in Singapore property has long been considered a lucrative and stable way to build wealth. However, like any investment,...
Read More
Top 5 Hawker Centres in Singapore for Local Food
Singapore, a melting pot of diverse cultures and rich culinary heritage, is home to some of the most delectable local...
Read More
Why The URA Master Plan Matters For Your Property’s Potential
TLDR The URA Master Plan entails significant shifts like the relocation of Paya Lebar Airport or creation of Punggol Digital...
Read More
How Will Singapore’s Development Influence The Real Estate Markets In Bedok, Changi, Pasir Ris, And Tampines : 2023
TLDR You will find detailed insights into upcoming housing developments in the East of Singapore, specifically in areas like Bayshore,...
Read More
35 Brand New Condominiums Nearing Their ABSD Deadline 2023
TLDR The blog post discusses the looming ABSD deadline for several new launch condos in 2023, highlighting the impact on...
Read More
Why Can’t More People Own Private Property?
TLDR The blog post discusses the aspirations of individuals like Siti and Mr. Tan regarding property ownership in Singapore. Siti...
Read More
