SINGAPORE – In a move that reflects growing confidence among developers, a recent state land tender for a mixed-use development in Tampines Street 94 has attracted significant attention. On September 19, Hoi Hup Realty and Sunway Developments put forward the highest bid of S$668.3 million. This comes on the heels of an announcement from the U.S. Federal Reserve about a substantial interest rate cut, which many experts believe has positively influenced the Singapore land sales market.

The land parcel near Tampines West MRT station, capable of yielding 585 residential units and 10,500 square meters of commercial space, saw six competitive bids submitted. This vibrant bidding process stands in stark contrast to the first dedicated long-stay serviced apartment site tender in Media Circle, Buona Vista, which only garnered a single bid of S$120.1 million.

Leonard Tay, head of research at Knight Frank, pointed out that developers are showing a higher propensity to engage with familiar development models rather than unproven concepts. This sentiment is echoed by Tricia Song from CBRE, who indicated that the recent 50 basis point rate cut by the U.S. Fed may have inspired developer optimism, leading to more active participation in land sales compared to the previous ten months. Analysts foresee a potential uptick in investment sentiment as funding costs decrease and mortgage rates fall.

The winning bid for the Tampines site translates to a land rate of S$1,004 per square foot per plot ratio (psf ppr), a mere 1.9% above the second-highest offering of S$655.6 million (S$985 psf ppr). Justin Quek, chief executive of OrangeTee & Tie, noted that this is the most vigorous competition observed since November 2023.

The Tampines site, though smaller than a Government Land Sales (GLS) site recently awarded for S$1.2 billion, is deemed more manageable for developers, making it an attractive investment. The site's sizable commercial aspect is expected to complement the growing residential community, bolstering the area's retail presence.

Historically, there has been pent-up demand for private housing in Tampines, with prior developments, such as Treasure at Tampines, selling out impressively by 2022. Additionally, there's a large pool of potential buyers looking to upgrade from Housing Board flats, particularly from the surrounding areas of Tampines, Bedok, and Pasir Ris.

Hopes for further interest rate cuts might continue to instill confidence among developers, especially as projections indicate a new launch anticipated for the fourth quarter of 2025.

Conversely, the 60-year leasehold site in Media Circle saw a disappointing response, receiving only a single bid from a Frasers Property-led consortium. This bid of S$120.1 million is approximately S$461 psf ppr. Wong Siew Ying, head of research at PropNex, expressed that the lack of competitive bids was unsurprising due to the stagnation witnessed in tenders for other similar properties that did not attract substantial interest.

Experts highlight that the long-stay serviced apartment model is still relatively unproven in the Singapore market. The existing hospitality developments in Queenstown provide stiff competition, being closer to essential amenities. This factor, along with the shorter lease term, may have deterred more robust bidding activity.

However, Mr. Quek remains hopeful about the prospects of the one-north business precinct, given its proximity to significant institutions like the National University of Singapore and the National University Hospital, suggesting there may be latent demand in this evolving area.