Bukit Sembawang plans nearly $200 million Kallang land purchase for private homes; launch prices estimated at $2,750–$2,900 psf

Two subsidiaries of Singapore property developer Bukit Sembawang plan to buy Kallang Distripark for $196.04 million. Compounded with the lease top-up premium and land betterment charge, the total land cost would be about $1.01 billion, or $1,256 per square foot per plot ratio.

Analysts consider the land price reasonable, but say redeveloping the site could be somewhat complex. Further costs may include demolition, road construction and the development of a public park and waterfront promenade. Private homes on the site are expected to launch at between $2,750 and $2,900 per square foot.

In a filing on the Singapore Exchange website on 16 October, Bukit Sembawang said the site covers 51,000 square metres. It plans to develop non-landed private homes with commercial space on the ground floor on about 24,902 square metres of the land. The plot ratio is 3, allowing a maximum gross floor area of 74,707 square metres.

Newmark Head of Research Wong Shanting told Lianhe Zaobao that the land cost of $1,256 per square foot per plot ratio is 11% below the winning bid of $1,415 for the Kallang Close site, and 14% below the $1,455 per square foot per plot ratio for the Tanjong Rhu Road site.

A comparable site under the Government Land Sales programme is the Lentor Central plot, awarded in March this year at $1,278 per square foot per plot ratio. However, Lentor Central is in the Outside Central Region (OCR), while Kallang is in the city-fringe Rest of Central Region (RCR), making it a relatively more attractive location.

“The land price appears reasonable and may reflect the time and execution risks involved in securing government approvals for the lease extension and change of use, as well as coordinating demolition and the required infrastructure works,” Wong said.

Mohan Sandrasegeran, head of research and data analytics at SRI, also said in an interview that the land price was relatively competitive compared with recent Government Land Sales transactions in the area.

“The proposed acquisition also allows the developer to secure a sizeable residential development opportunity within the RCR, where opportunities to assemble substantial land parcels are relatively limited,” Mohan said.

Land prices in Singapore have risen strongly in recent years. For example, a site on New Upper Changi Road fetched $1,537 per square foot per plot ratio, setting a new land price record for the area. A private residential site on Peck Hay Road near Newton MRT Station also fetched a high price of $1,865 per square foot per plot ratio.

Rising land prices and developers’ keen demand for land have prompted some to seek alternative ways of acquiring prime sites.

Wong said privately negotiated land purchases offer an alternative to Government Land Sales and collective sales. Developers are drawn to larger, well-located sites that can be redeveloped at higher densities in line with the government’s plans for the area.

However, she also said that “it is too premature to determine if this is a broader shift in how developers acquire land.”

Based on the gross floor area, Wong estimated that the site could accommodate 700 to 800 homes, with launch prices starting at $2,750 per square foot. Mohan expects average launch prices to range from $2,800 to $2,900 per square foot.

Recent major planning developments and land transactions in Kallang could transform the area into a large waterfront private residential enclave with more than 2,000 homes.

In a notice issued in August, the Urban Redevelopment Authority proposed raising the plot ratio of a parcel within Kallang Distripark to 3 for private residential development with ground-floor shops. Part of the site would become a riverside park, while existing warehouses would be retained as historical landmarks.

The entire Kallang Distripark site spans about 15 hectares. Analysts estimate that it could accommodate more than 2,500 private homes in total, including those on the land Bukit Sembawang is acquiring.

The site involved in Bukit Sembawang’s proposed transaction was formerly occupied by the Lee Rubber factory. After the factory moved out in 1985, the Lee Rubber Group developed the site into what is now Kallang Distripark. The group was founded by pioneering local Chinese businessman Lee Kong Chian.

The proposed acquisition remains subject to approval from Bukit Sembawang’s shareholders. Companies with both ties to the Lee family and stakes in Bukit Sembawang, including Lee Rubber, will abstain from voting.