News > Jalan Tembusu: Will it be the key to unlocking Katong’s full potential and rejuvenate the existing residential landscape?
Jalan Tembusu: Will it be the key to unlocking Katong’s full potential and rejuvenate the existing residential landscape?
24 March 2023
URA has just announced the release of a second land parcel at Jalan Tembusu as part of the first half of the 1H2023 GLS Programme. It sits directly across the road from the first land parcel, which was awarded to CDL Triton who is currently developing a 99-year leasehold condominium named Tembusu Grand. The new land site is situated in the heart of Katong, a precinct renowned for possessing a rich mixture of heritage and modernity. Its proximity to amenities such as the upcoming Thomson-East Coast Line’s Tanjong Katong MRT station, rustic cafes and several shopping malls makes it a prime residential location. It covers a site area of 20,572m2 with a maximum Gross Floor Area of 72,003m2 and Gross Plot Ratio of 3.5. With that, the REA Developer Suite is proud to bring you the latest analysis of the second Jalan Tembusu GLS land plot, including our estimate of the winning land bid price, the best building configurations, and our early stance on the development.
The Estimated Winning Land Bid Price
Surrounded by freehold condominiums, the upcoming GLS land plot at Jalan Tembusu is a 99-year leasehold site next to Tembusu Grand. The latter was awarded to CDL Triton for $768,000,000 ($1,302 psf). Given the site’s attributes, we expect that the second land plot at Jalan Tembusu to fetch a winning land bid price of $970,000,000 ($1,252 psf). Moreover, we predict that land prices will continue to rise, with the GLS Index Trend forecast to increase in 2023. Come end-2023, we believe that that GLS land tender prices will be 5.1 times more than they were in 2000. This prediction is based on our proprietary model that considers factors such as land site parameters, surrounding amenities, demand, and price index, as well as data from previous land sales.
The Best Building Configuration
As with any real estate development project, the end goal is to achieve maximum revenue in the most efficient way possible. Consequently, developers might struggle to identify an appropriate configuration for developing the building that satisfies both the developers’ preferences and market demand. REA Developer Suite’s Best-use building feature aims to help developers on this front and bring clarity towards design optimisation and building utilisation via various unit permutations and configurations. Based on our model, we have identified the optimal number of units to be 780 that will generate a maximum revenue of $1,610,000,000. This estimation considers the principal pricing and configuration factors ranging from land utility, facilities configuration, and government mandated requirements. The bigger question is, how would the breakdown of the 780 units look like?
The Katong Touch
The development of new properties at Jalan Tembusu has the potential to transform Katong into a residential hotspot within the Rest of Central Region (RCR). The second land plot at Jalan Tembusu will complement three upcoming launches in the area: Tembusu Grand, The Continuum, and Grand Dunman. While the area has historically been known for its high demand for properties, demand trends are not always linear and can fluctuate depending on various factors. For clearer insights, the launch of Tembusu Grand will provide a better estimate of demand in the Katong area. Based on the plot's location, access to amenities, and its 99-year leasehold, we expect it to shadow Tembusu Grand in terms of the potential number of bidders and winning land bid price. Our analysis indicates that the estimated selling price is about $2,302 psf in order to generate maximum revenue; and so, how would the demand be looking at this price point? What would be the correct pricing strategy to navigate through this relatively saturated area in the coming future?
Stance
Despite historical demand trends, we predict that developers may be cautious when bidding for the Jalan Tembusu plot due to several potential risks. These risks include high construction costs and interest rates, as well as the influx of new properties in the area. The increased supply may cause developers to be more reserved in their bidding prices, as they will need to take into account the potential impact on the market. Another factor that might contribute to developers' cautious approach is URA's requirements for the successful tenderer. According to URA's Control Plan and Technical Conditions of Tender, the successful tenderer of the land site is required to construct a neighborhood park directly adjacent to the western border of the land site. This park will serve residents along Tanjong Katong road and surrounding neighborhoods, as well as clients, caregivers, and staff of the upcoming Nursing Home that is directly adjacent to the park. Given that residents aged 65 and above comprise a sizable portion of the population in Katong, the integration of the land site's new development with the proposed elderly-friendly designed neighborhood park will definitely appeal to multigenerational families.
In conclusion, Katong has always been renowned as an area that is abode to both the upper middle income to ultra high net worth individuals. For the leasing market, it is an area that is popular amongst expatriates. With the data showing that the Katong area is predominantly occupied by landed properties and smaller units, such as 1- or 2-bedroom apartments, could developers expand from this knowledge to unravel a strategic building configuration to cater to multigenerational families, those that would greatly benefit from Katong's surplus of amenities.
Contact us corporate@realestateanalytics.sg to find out more details on Jalan Tembusu Land Analysis!
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Reference:
https://www.propertylimbrothers.com/discover-the-best-of-katong-at-tembusu-grand-a-new-condo-launch/
https://www.ura.gov.sg/Corporate/Land-Sales/Sites-For-Tender/jlntembusu
https://www.99.co/singapore/insider/jalan-tembusu-lentor-hills-parcel-a-gls-sites/
