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Singapore's Long-Stay Serviced Apartments Pilot Sees Limited Developer Interest

Singapore's pilot for long-stay apartments garners minimal interest, with only one bid for two out of four sites.

By Barry Stearns

4/4, 07:40 EDT
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Key Takeaway

  • Singapore's pilot for long-stay serviced apartments received limited interest, with only one bid for two of four sites.
  • City Developments Ltd. and a GuocoLand Ltd. partnership were the sole bidders, highlighting developer caution.
  • The initiative aims to ease rental market pressures but faces uncertainty regarding demand and financial viability.

Pilot Program Launch

Singapore's Urban Redevelopment Authority (URA) recently concluded the tender period for a new initiative aimed at addressing the city-state's escalating rental market. This program, introduced as a pilot, permits the development of serviced apartments designed for long-term stays, with a minimum duration of three months. The initiative was established in response to growing concerns over rising rents in Singapore, affecting both local residents and expatriates. Despite the anticipation surrounding this move, the tender process saw limited engagement from developers, receiving only one bid for two of the four available sites.

Developer Response

The response from the development community to the URA's call for bids was notably subdued. Of the four sites earmarked for this project, only two received bids by the close of the tender period. Singapore's largest listed developer, City Developments Ltd., placed a bid of S$1.1 billion ($817 million) for one of the sites. The second site attracted a bid of S$780 million from a partnership between GuocoLand Ltd. and Intrepid Investments Pte, a subsidiary of Hong Leong Holdings Ltd. The remaining two sites did not receive any bids, highlighting a cautious approach from developers towards this new category of real estate investment.

Market Dynamics

The pilot program's introduction by the Singaporean authorities was a strategic move to alleviate the pressures of a tight rental market. High rents have been a source of frustration among the city-state's residents and the expatriate community, prompting the government to explore alternative solutions to increase the availability of rental accommodations. By allowing for the construction of serviced apartments with a minimum stay requirement of three months, the initiative aims to provide more flexibility and options for those seeking long-term accommodations. However, the tepid response from developers suggests a wait-and-see approach, possibly due to uncertainties about the demand for such accommodations or the financial viability of these projects.