With the Government cutting the supply of commercial space, analysts said they expect two commercial sites to be triggered for tender next year. They have been placed for sale on the Reserve List under the Government Land Sales (GLS) Programme for first half of 2015.
The two sites comprise the mixed-use site at Woodlands Square and a white site located at Marina View/Union Street.
Under the Reserve List system, a site will only be put up for tender if the minimum bid price submitted by the interested party is acceptable to the Government. There are no commercial sites on the Confirmed List for the first half of 2015 under the GLS.
Sites included in the GLS for the first half of 2015 could potentially yield 265,130 square metres of commercial space – a cut of 25 per cent from the previous exercise.
All four sites were placed on the Reserve List, suggesting that the Government is monitoring the supply pipeline.
The supply of office space has been limited this year and will likely remain so next year. But analysts expect over three million square feet of office space to come on-stream between 2016 and 2018.
The four sites with commercial component under the upcoming GLS are located at Holland Road, Beach Road, Woodlands Square and Marina View/Union Street.
WOODLANDS SQUARE SITE COULD BE TRIGGERED FIRST
Consultancy Colliers International said that of the four, the mixed-development site at Woodlands Square could be the first to be triggered for sale, and it could help spur the development of the Woodlands Regional Centre, which is relatively under-developed compared to other regional hubs like Tampines and Jurong East.
According to the Urban Redevelopment Authority (URA), the plot could yield 285 residential units and 60,030 square metres of commercial space.
Ms Chia Siew Chuin, director of research and advisory at Colliers International, said: “The site in Woodlands is likely to be triggered first, given the growth potential for the area and because it is more likely to be a straight forward open tender system should it be triggered.”
“The Holland site is likely going to be more complicated because of the concept and price tender system, where the concept comes first, then the price. The development would have to be in line with the vision the Government has for the district as a whole,” she added.
The mixed-development site at Holland Road was moved from the Confirmed List to the Reserve List for the upcoming GLS to give developers more time to study the site and tender evaluation criteria.
MARINA BAY SITE EXPECTED TO ATTRACT INTEREST
Meanwhile, market watchers CBRE and Barclays expect the site at Marina Bay to also attract interest.
Mr Desmond Sim, head of research for Southeast Asia at CBRE Research, said: “This site is definitely on the wishlist or trigger list for quite a few developers, but I think the market is holding back.
“There may be more confidence now because … before the first half list came out, some of the market watchers were afraid that if they trigger it before the list came out, then there may be a better site in Marina Bay listed.”
In a report issued on Monday (Dec 8), Barclays added that the tight supply should be positive for CBD prime office Real Estate Investment Trusts.
Given the supply situation, analysts said they expect office rentals to have risen by more than 10 per cent this year.