Developers shy away from long-stay serviced apartment projects amid weak market sentiment and economic uncertainties.
SINGAPORE: In a rare occurrence not seen in over two decades, a government housing site in Singapore has failed to attract a single bid from developers. This marks a significant setback for the city-state’s property market, which has been grappling with surging residential rents and subdued demand.
The Upper Thomson Road site, designated for a pilot project of long-stay serviced apartments, was expected to help alleviate residential rent pressures. The proposed minimum stay for these units was three months—a substantial increase from the current seven-day requirement. However, despite its intentions to address housing affordability, the site received no interest from developers.
Cautious Market Sentiment
Property experts attribute the lack of bids to several factors, including weak market sentiment, falling new home sales, and broader economic uncertainties. Nicholas Mak, Chief Research Officer at Mogul.sg, noted that developers are exercising caution, with many wary of untested concepts such as long-stay serviced apartments in suburban locations.
Leonard Tay, Head of Research at Knight Frank, remarked that while the absence of bids was “unexpected, it was not entirely surprising.” He pointed out that the concept of long-stay serviced apartments has yet to be proven, particularly outside central commercial hubs.
Similarly, Wong Siew Ying, Head of Research at PropNex, suggested that uncertainties about demand for such properties in suburban areas may have deterred developers. She highlighted that private housing demand has already shown signs of cooling, with slower sales and reduced transaction volumes in 2023.
Property Market Downturn
The broader property market in Singapore has seen declining activity, with new home sales in May falling to 221 units—the lowest for the month since 2008. This followed 278 units sold in April, marking the second consecutive month of decline.
Another pilot site on the outskirts of the city center received just one bid earlier this year, further emphasizing developers’ reluctance in the current climate.
Implications for Future Projects
The lack of interest in the Upper Thomson Road site raises questions about the viability of long-stay serviced apartment projects and the government’s efforts to tackle housing challenges. With developers hesitant to invest in new concepts during uncertain times, it remains to be seen whether adjustments to policies or project structures will reignite interest in such initiatives.
