Huttons’ comments on GLS sites at Zion Road (Parcel A) and Upper Thomson Road (Parcel B)

5 April 2024

The Zion Road (Parcel A) is the first GLS site to pilot serviced apartments with a minimum stay of 3 months. It is directly linked to Havelock mrt station on the Thomson East Coast line (TEL) which connects the Northern part of Singapore to the Central and East. This makes it convenient for residents and tenants to move to different parts of the island.

Upper Thomson Road (Parcel B) is a pure residential site offering an estimated 940 units.

Both sites saw 1 bidder each. The Zion Road (Parcel A) saw a top bid of $1,202 psf ppr while Upper Thomson Road (Parcel B) received a top bid of $905 psf ppr.

They are attractive for residential living with direct access to a MRT station and views.

The last site awarded in the vicinity of Zion Road (Parcel A) was at Jiak Kim Street which was sold for $1,733 psf ppr in Dec 2017. However that was before the cooling measures in Jul 2018 and several more rounds of cooling measures have been introduced. Developers are facing higher than ever construction and borrowing costs. The harmonisation of GFA also has an impact on land price as the saleable area is reduced by some 5 to 6%.

The lower land price is likely due to the inclusion of long stay serviced apartments in the tender for Zion Road (Parcel A). As this is a new asset class, the risks are higher therefore it has to be factored in the land price. The two sites may attract more interest if the long stay serviced apartments are offered separately.

For Zion Road, there are already hotels and serviced apartments in the vicinity. The daily rates for premium serviced studio apartments in the vicinity can be from $300 (excluding taxes and GST). Hotel rates for 4 to 5-star hotels are similar or higher. These rates are easily 50% higher than the rental for a 1-bedroom condo in the vicinity. The developer might position the long stay serviced apartments at mid to premium targeting working professionals on a short term contract and medical tourists as it is not far from SGH, one-north and NUS.

For Upper Thomson Road (Parcel B), the nearest GLS site would be at Lentor Central which was sold for $982 psf ppr in Sep 2023. But the Lentor Central site is smaller at an estimated 475 units compared to 940 units at Upper Thomson Road (Parcel B). The larger quantum increases the risks to the developer and may explain the slightly lower bid.