The results of the tender for Zion Road Parcel A and Upper Thomson Road Parcel B reflect a"stark turning point" in developer sentiment, a real estate expert said.
"The writing was on the wall when the number of interested bidders shrank from regularly more than seven in 2021 to frequently less than five in 2023. This is specifically so for central locations, where the doubling of the Additional Buyer’s Stamp Duty rate for foreigners appears to have caused more developers to lose their appetite for prime residential development," Tan added.
Apart from the heavy upfront capex needed for such a project, JLL's Chia said niche expertise is also required to develop and operate a serviced apartment under the SA2 category. "More importantly, this site is the first to offer long-stay serviced apartments , which could give the developer a source of recurring income, and perhaps an advantage in being an early mover in the LSA segment," he added.
Justin Quek, CEO of OrangeTee & Tie, shared a similar sentiment, saying:"While there is great potential for developers to gain a base of recurring income with the management of the serviced apartments, there is no precedent to this type of housing given the new housing requirements for SA2 homes from normal serviced apartments."