CDL joint venture bids $1.lb for plum Zion Road site

Lone bid is below expectations, analysts say; Upper Thomson GLS site also draws single bid

- Grace Leong

A City Developments (CDL) joint venture has put in a bid of $1.1 billion for a plum plot in Zion Road the first Government Land Sales (GLS) site to pilot a new class of long-stay serviced apartments.

But analysts say this lone bid for Zion Road parcel A, which reflects a land rate of $1,202 per sq ft per plot ratio (psf ppr), is below market expectations and shows CDL's cautious stance, despite the opportunity to expand its portfolio of rental properties.

Another GLS site, in Upper Thomson Road in the Springleaf precinct, drew a bid from GuocoLand and Hong Leong Holdings unit Intrepid Investments of $779.6 million again, the only one which is a land rate of $905 psf ppr.

Analysts say this may be a defensive strategy by GuocoLand, which is developing 2,211 units in the nearby Lentor district, to maintain its strong foothold in the area.

The consensus of analysts is that the participation rate and bids for both sites came in below expectations. They noted that developers' risk aversion continues to grow for prime and bigger sites that require large capital outlay, given the economic headwinds, tepid new home sales, interest rate uncertainty and cooling measures.

The single bids that the sites drew on April 4 were at what analysts call "conservative" land rates, especially for the Zion Road plot, despite its more attractive attributes.