Jurong Lake District Developer Site Not Awarded Due to Low Bid

Jurong Lake District Developer Site Remains Unawarded

About Jurong Lake District Developer Site Not Awarded Due to Low Bid. The Urban Redevelopment Authority (URA) announced on 13th September 2024, that the highly anticipated 6.5-hectare master developer site in Jurong Lake District (JLD) has not been awarded. The site, which was expected to drive the next phase of development in JLD, was launched for sale on June 22, 2023.

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The tender for the site closed on 26th March 2024, with only one bid from a consortium of developers. This group included CapitaLand Group, City Developments Ltd (CDL), Frasers Property, Mitsubishi Estate Co., and Mitsui Fudosan Co. Ltd. Each developer held a stake in the project, with CapitaLand, CDL, and Frasers Property each owning 25%. While Mitsubishi Estate and Mitsui Fudosan each held 12.5%.

Tender Price Deemed Too Low

URA reported that although one of the consortium’s two proposals was shortlisted, the tender was not awarded. The reason cited was the low tender price of S$6,888.90 per square meter (psm) of gross floor area (GFA). Equivalent to S$640 per square foot (psf) per plot ratio (ppr). The government assessed this price as too low to justify the award of the site.

Moving forward, the JLD site will be placed on the Reserve List under the concept and price revenue tender approach. This means that it will only be awarded when a minimum price acceptable to the government is met.

Development Potential of the Site (Jurong Lake District Developer Site Not Awarded)

The master developer site consists of three plots near Jurong East MRT Interchange and the upcoming J’den, a development by CapitaLand. The combined site has the potential to provide more than 1.6 million sqft of office space, 1,760 private residential units. And 807,300 sqft of GFA for complementary uses such as retail, hotel, or community spaces.

The winning developer was expected to progressively develop the site over five to ten years. At least 70,000 square meters (753,480 sqft) of office space and 600 private residential units were required as part of the first phase of development.

Market Response: No Surprise

According to Wong Siew Ying, head of research and content at PropNex, the decision not to award the site comes as no surprise. She highlighted that in previous transactions, similar white sites in Jurong East were sold for significantly higher prices. For instance, the Boon Lay Way site (Westgate) was awarded at S$1,012 psf ppr in 2011. And the Jurong Gateway Road site (JEM) sold for nearly S$650 psf ppr in 2010.

Given the recent land tender prices for residential developments and other white sites, Wong noted that the tender price of S$640 psf ppr for the JLD site would appear too low in comparison.

Risk Considerations for Developers

Developers likely submitted a conservative bid due to the high financial risks involved in the large-scale project, says Wong. Factors such as rising financing costs, market uncertainty, and the 10-15 year commitment required for the development may have caused hesitation.

Mark Yip, CEO of Huttons Asia, further explained that the uncertainty surrounding the demand for office space added to the cautious approach. With the pandemic affecting the office market, and a long timeline required to recoup investments, developers were likely concerned about future demand for the 1.57 million sqft of office space in the district.

The situation could change if the high-speed rail (HSR) between Singapore and Kuala Lumpur is confirmed. Which might accelerate the development of JLD. Yip added that given the high costs and uncertainties. The risks were likely factored into the land price, resulting in the S$640 psf ppr bid.

Office Supply Relief (Jurong Lake District Developer Site Not Awarded)

Tricia Song, head of research for Southeast Asia at CBRE, commented that the decision not to award the JLD site may provide some relief in terms of future office space supply. With 0.7 million sqft of potential phase-one office stock now delayed beyond 2030, there will be less pressure on the current office market, which is still adjusting post-pandemic.

Although the site remains unawarded, Song emphasized that the government’s long-term commitment to the development of JLD remains unchanged.

Current Projects in Jurong Lake District

Despite the delay in awarding the master developer site, other residential developments in Jurong Lake District continue to see strong interest. For instance, CapitaLand’s J’den sold 88% of its 368 units on its launch day in November 2023. As of 2024, the project is 93% sold, with prices averaging S$2,561 psf.

Two other developments in the area also gained attention. The 440-unit Sora, launched in July 2024, is currently 24% sold, with average prices at S$2,161 psf. Meanwhile, The LakeGarden Residences, a 306-unit development that entered the market in August 2023. It has sold 57% of its units, with average prices of S$2,155 psf this year.

Conclusion (Jurong Lake District Developer Site Not Awarded)

While the Jurong Lake District master developer site remains on hold, the area continues to develop through existing projects like J’den, Sora, and The LakeGarden Residences. Buyers who are interested in living in this area can explore these current offerings, as demand for residential units in JLD is expected to remain strong despite the delay in the master development.

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