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(Bloomberg) — Singapore’s attempt to tackle high rents with a new type of serviced apartment for long-term stays got off to a slow start, after attracting little interest from developers.
The Urban Redevelopment Authority said in a statement Thursday that it had received a sole bid for one of the sites eligible for these projects by the time the tender period closed. The site garnered a S$1.1 billion ($817 million) bid backed by Singapore’s largest listed developer, City Developments Ltd., as well as Mitsui Fudosan (Asia) Pte.
CDL Group Chief Executive Officer Sherman Kwek said in a statement the bid for the site was to “pioneer the concept of longer-term stay rental apartments, which complements our group’s focus on expanding our living sector portfolio.”
The lack of competition signals diminished interest from developers in a slowing residential market. Another site for residential development, which closed for tender at the same time, also received just one bid, a S$780 million offer from GuocoLand Ltd. and Intrepid Investments Pte, a unit of Hong Leong Holdings Ltd. GuocoLand and Hong Leong didn’t immediately respond to requests for comment.
The single bids show “that many property developers do not hold a buoyant market outlook for the coming 12 to 24 months,” said Nicholas Mak, the chief research officer at Mogul.sg, a property portal. The land rates submitted are below those of recent comparable tenders, raising the likelihood the government won’t award them, he said.
Singapore in February turned down a sole bid led by GuocoLand — controlled by Malaysian billionaire Quek Leng Chan — for a prime state land parcel, judging it to be too low. It was the first such rejection in more than a decade.
The long-stay pilot was announced last year to cater to high leasing demand, which has led to near-record rents and caused frustration among locals and expatriates alike.
The move allows developers to build serviced apartments for three-month minimum stays, compared with the seven-day requirement for current units, which authorities say leads to competition with tourists for supply. There is currently one more pilot site available for tender.
(Updates with more detail throughout. An earlier version corrected the number of sites for serviced apartments in second and third paragraph.)
More stories like this are available on bloomberg.com
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Published: 05 Apr 2024, 05:41 AM IST
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