Singapore long-stay pilot to tackle high rents gets lone bid
By Low De Wei
(Bloomberg) — Singapore’s attempt to tackle high rents with a new type of serviced apartment for long-term stays got off to a slow start, after attracting little interest from developers.
The Urban Redevelopment Authority said in a statement Thursday that it had received a sole bid for one of the sites eligible for these projects by the time the tender period closed. The site garnered a S$1.1 billion ($817 million) bid backed by Singapore’s largest listed developer, City Developments Ltd., as well as Mitsui Fudosan (Asia) Pte.
CDL Group Chief Executive Officer Sherman Kwek said in a statement the bid for the site was to “pioneer the concept of longer-term stay rental apartments, which complements our group’s focus on expanding our living sector portfolio.”
The lack of competition signals diminished interest from developers in a slowing residential market. Another site for residential development, which closed for tender at the same time, also received just one bid, a S$780 million offer from GuocoLand Ltd. and Intrepid Investments Pte, a unit of Hong Leong Holdings Ltd. GuocoLand and Hong Leong didn’t immediately respond to requests for comment.
The single bids show “that many property developers do not hold a buoyant market outlook for the coming 12 to 24 months,” said Nicholas Mak, the chief research officer at Mogul.sg, a property portal. The land rates submitted are below those of recent comparable tenders, raising the likelihood the government won’t award them, he said.
Singapore in February turned down a sole bid led by GuocoLand — controlled by Malaysian billionaire Quek Leng Chan — for a prime state land parcel, judging it to be too low. It was the first such rejection in more than a decade.
The long-stay pilot was announced last year to cater to high leasing demand, which has led to near-record rents and caused frustration among locals and expatriates alike.
The move allows developers to build serviced apartments for three-month minimum stays, compared with the seven-day requirement for current units, which authorities say leads to competition with tourists for supply. There is currently one more pilot site available for tender.
©2024 Bloomberg L.P.
