En bloc sales hit 5-year high of $1.9b
But rapidly rising price expectations among owners could dampen market next year
By KALPANA RASHIWALA
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(SINGAPORE) With just two weeks to go before year's end, the value of collective property sales done so far has hit $1.9 billion. This is more than double the $722 million chalked up for the whole of last year and is the highest level in at least five years.
The strong uptrend captured in the latest figures compiled by CB Richard Ellis and released to BT reflects a happy convergence of the price expectations of both sellers and buyers.
Owners, however, are becoming more optimistic in their price expectations and there's a risk that they may raise their asking prices too fast for developers. This, warns CB Richard Ellis executive director Jeremy Lake, could significantly dampen collective sales next year.
Agreeing, Credo Real Estate executive director Melvin Poh says many of the deals being structured now are based on future pricing. He also points to a substantial supply of en bloc properties at various stages of readiness in the prime districts like Cairnhill, Angullia Park, Orchard Boulevard, Kim Yam, St Thomas Walk, Ardmore Park and Nassim.
'There's a lot of supply coming out. Not all will be sold. Developers don't have unlimited funds. So the key is speed. The race is on to get your collective sale organised quickly and put it on the market early.'
Collective sales, under which the owners in an estate team up to sell their homes to a developer, have been a closely watched phenomenon among Singapore property investors since 1994. These en bloc deals have arisen due to an increase in plot ratios, which specify the intensity permitted by the planning authority for a property development on a site.
This has boosted the redevelopment potential of sites, creating an opportunity for owners in an estate to get a higher price or premium if they join forces and sell their properties to a developer instead of going it alone. With improving sentiment, owners' expectations of this 'collective sale premium' have risen.
'Whereas a premium of 30-plus per cent was enough 12 months ago, you now need to look at about 40 to 50 per cent to stand a good chance of getting owners to agree to a collective sale,' says CBRE's Mr Lake.
There have been two bouts of en bloc fever - from 1994 to 1997, and again in 1999-2000. Home owners and property agents hope the current wave will not be short-lived.
Highlighting a key factor behind the impressive performance so far this year, Mr Lake says: 'For many of the deals done this year, the process of collecting signatures from owners began in 2004 or the early part of this year, before sentiment started to improve. So these properties were put on the market with more realistic price expectations from owners.'
On the demand side, developers have raised the prices they are prepared to pay on the back of improving sentiment. The strong demand they have enjoyed from home buyers in the luxury residential segment has led them to speed up replenishing their land banks with prime freehold sites. Collective sales are an excellent source of such supply, notes Mr Lake.
He cites a couple of examples of notable deals. Habitat II, sold in September this year, fetched $103.88 million, surpassing the owners' reserve price of $86 million set last year.
Likewise, Belle Vue was sold in October for $227.28 million, again exceeding the reserve price of $190 million agreed upon by the owners last year. 'Right now, it's competition among developers that has led to reserve prices being surpassed. In the next stage, we'll see whether developers are prepared to pay the higher reserve prices being set by owners,' says Mr Lake.
Owners are certainly starting to become more confident about asking prices. Says DTZ Debenham Tie Leung director Tang Wei Leng: 'In the past few weeks, we've seen cases of owners backing out from prices they had agreed to earlier in their collective sale agreement and jacking up reserve prices by about 10 to 40 per cent.'
This has been partly triggered by last week's tender for the landmark Orchard Turn site, which may include a residential component. It fetched a bullish top bid.
'Basically, we have owners saying things like, 'If a 99-year site (Orchard Turn) can fetch $1,020 psf per plot ratio, surely our plot which is also in the prime district and is morever freehold, should be able to sell for much more than the $800 psf ppr we signed up for',' says Ms Tang.
Wee Cho Yaw firms top en bloc deals
They account for $485m or 25% of $1.9b in collective sales this year
By KALPANA RASHIWALA
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COMPANIES in the stable of United Overseas Bank chairman Wee Cho Yaw have been the biggest buyers of collective sale sites this year. United Overseas Land, United Industrial Corp, Singapore Land, Kheng Leong and OUB Centre Ltd have snapped up about $485 million of such properties, or a quarter of the $1.9 billion of collective sales that have changed hands in 2005.
The en bloc sites clinched by companies in Mr Wee's stable include Maryland Park in Katong, Eng Cheong Tower in the Beach Road area, Bo Bo Tan Gardens/Mansion off Kim Tian Rd, Parry Gardens, Oasis Garden in Paya Lebar and a collective sale at Minbu Rd in the Balestier area.
Other big shoppers who have picked up sites in the en bloc market this year include Wing Tai, Sim Lian, MCL Land and Bukit Sembawang. Wing Tai clinched two prime district sites - Belle Vue at Oxley Walk for $227.28 million and Phoenix Mansion in Cairnhill for $57.9 million.
MCL Land bought Balmeg Court atop a hill in Pasir Panjang and Fernhill Place.
The most expensive collective sale site this year in terms of unit land price was Habitat II at Ardmore Park. Wheelock Properties paid $876 per square foot per plot ratio for the site in September this year, about 30 per cent more than the $671 psf ppr that nearby Falcon Crest fetched a year earlier.
The most expensive collective sale site this year in terms of unit land price was Habitat II at Ardmore Park, clinched by Wheelock Properties
Another prime district site, Belle Vue in Oxley Walk, sold for $666 psf ppr this year, or 35 per cent higher than the $492 psf ppr that Quelin Gardens in the St Thomas Walk area went for last year.
However, such increases in land prices were exceptional. Most en bloc sites sold this year registered much more modest increases in land prices, property consultants say.
An interesting deal this year was the conclusion of the maiden collective sale of a 99-year property - Eng Cheong Tower in January.
Subsequently, only one other 99-year property has changed hands through a collective sale, Evian Condominium in Holland Rd, although two more are still on the market - Waterfront View facing Bedok Reservoir and Amberville in Katong, both privatised HUDC estates.
Basically, developers who buy such sites will have to pay a sum to the state to top up the lease of the site to the original 99 years, besides the usual development charge/differential premium to tap a higher plot ratio. 'So there are two sets of payments the developer has to make to the state, leaving less money that it can offer to the owners. That reduces the incentive for owners to go en bloc for 99-year estates compared with freehold ones,' a property consultant said.
As well, many of the privatised HUDC estates are huge, with hundreds of owners. This makes it harder to get the minimum 80 or 90 per cent consent levels for an en bloc deal.
Also, because these sites are huge - Waterfront View, for instance, can be developed into a new project with about 1,400 units - developers are more cautious when bidding, because of the risk of being stuck with a big project for years, especially if oversupply develops in the area.
'This again translates to lower bids from developers for such sites, reducing the incentive for owners to agree to a collective sale,' said a property consultant.
Bt Sembawang bags Holland site for $49m
Including estimated $6.1m development charge, price works out to $541 psf per plot ratio
By KALPANA RASHIWALA
IN yet more evidence of the pick-up in the property market, Bukit Sembawang has just bought its third residential development site this year - Carlton Terrace along Holland Road, near the Botanic Gardens.
Carlton Terrace along Holland Road: Purchase of this development site is Bukit Sembawang's third this year
The listed property group, linked to the Lee family of OCBC, yesterday announced it clinched the freehold property through a $49 million collective sale.
Including an estimated development charge (DC) of about $6.1 million, Bukit Sembawang's purchase price for Carlton Terrace works out to a land cost of $541 psf of potential gross floor area. A new condo on the 72,718 sq ft site may breakeven at around $800 psf, say market watchers.
The Carlton Terrace site is zoned for five-storey residential use with a 1.4 plot ratio (ratio of potential gross floor area to land area). Knight Frank brokered the sale. Bukit Sembawang is planning to redevelop the property into a new condo with about 85 units averaging 1,200 sq ft on the site.
Bukit Sembawang's two earlier land purchases this year were the Woodleigh Grove plot in the Upper Serangoon area and a site at Lengkok Angsa just off Paterson Road. Like the latest Carlton Terrace purchase, the two earlier acquisitions involved collective sales.
The collective sale market has been hotting up this year, reflecting developers' appetite for prime freehold sites.
The group's July purchase of Woodleigh Grove for $29.8 million was its first property acquisition since 1998. The price for the 41,694 sq ft freehold site worked out to $280 psf per plot ratio (psf ppr) inclusive of a nearly $3 million DC. That site has a 2.8 plot ratio, and Bukit Sembawang is expected to build on it a 17-storey condominium with about 100 units.
The Lengkok Angsa site - comprising 32 landed houses - which Bukit Sembawang clinched for $117.2 million translates to a land price of about $650 psf ppr including DC, a substation on the site and an adjoining road strip. The site has a 2.1 plot ratio, and Bukit Sembawang is planning to build on it a 24-storey luxury condo with about 100 mostly large units - three and four bedders with an average size of 1,500 sq ft or even bigger.
Bukit Sembawang is expected to launch the condos on the Lengkok Angsa and Woodleigh sites next year.
The group is dubbed the 'King of Seletar Hills', after its massive landbank in the location. After developing numerous projects in the area over the years, it still has about four million sq ft of freehold land - all designated for landed housing - in the Sembawang Hills area.
The collective sale market has been hotting up this year, reflecting developers' appetite for prime freehold sites following strong end-user demand from home buyers in the luxury residential segment.
More than 30 collective sales have been transacted so far this year, totalling over $1.9 billion, more than double the $722 million for 17 deals last year.
AURIC Pacific, part of the Lippo Group, said yesterday it has bought Bukit Timah Mansions through a $15.4 million en bloc sale. Auric did not give the site area but sources say it is about 20,000 sq ft.
Factoring in an estimated development charge of about $6 million, the acquisition price works out to a land cost of about $510 per square foot of potential gross floor area. The site is zoned for residential use with a 2.1 plot ratio (ratio of potential gross floor area to land area).
It can be developed into a smallish apartment project with about 35 units averaging 1,200 sq ft.
Bukit Timah Mansions, at 327 Bukit Timah Road, is between Balmoral Road and Keng Chin Road. The existing property is a seven-storey block with 10 apartments. There are also car parking lots and a swimming pool.
Auric is expected to redevelop the site as soon as it receives the necessary approvals. The company said the acquisition is in line with its diversification plans.
The group's existing core business is in food manufacturing, wholesale distribution of food and allied fast-moving consumer goods and investment holding.
Auric has identified property investment, development, management and services and related activities in Singapore and abroad as an additional core business to boost profitability.
In May, Auric - which is perhaps best known for its Sunshine brand of bakery products - said it planned to buy Newton Heights, a freehold property.
Auric said then it would acquire a related company, HKCL Investments, which had signed an agreement in February to buy Newton Heights in a collective sale for $43.6 million.
The parent of HKCL is an associate of the Lippo Group, which in turn controls Auric.
PROPERTY MARKET REVIVAL
Emerald Lodge sold to HK firm for $45.2m
The Esquire at Mt Elizabeth is on the market again for almost $32m
By KALPANA RASHIWALA
EN BLOC activity continues to heat up in prime District 9, with the $45.2 million sale of Emerald Lodge in Emerald Hill Road and The Esquire at Mt Elizabeth again on the market, for almost $32 million.
Nod for sale: Emerald Lodge's sale is subject to approval by the Strata Titles Board
The buyer of freehold Emerald Lodge is understood to be a private investment company controlled by a low-profile Hong Kong family, reflecting renewed interest by Hong Kongers in Singapore property.
The sale is subject to approval by the Strata Titles Board as unanimous approval from Emerald Lodge's owners has yet to be secured, as well as to the purchase of an adjoining 3,339-sq-ft plot of state land. Knight Frank brokered the deal.
The $45.2 million purchase price works out to $803 psf per plot ratio (psf ppr) inclusive of development charge (DC). With the purchase of the state site, Emerald Lodge's buyer can potentially reduce its land price to $750 psf ppr.
A new apartment project on the site could break even at about $1,120 psf.
Emerald Lodge has a site area of 26,900 sq ft. The combined site - including the state land - of 30,239 sq ft can be redeveloped into a new project with about 50 units averaging 1,200 sq ft.
Under Master Plan 2003, the site is zoned for residential use with a 2.1 plot ratio - the ratio of potential gross floor area to land are. At $45.2 million, the owners of the 31 existing apartments stand to pocket in excess of 50 per cent more than the individual value of their units.
Over in the Mt Elizabeth area, the $32 million price indicated for The Esquire apartment block is identical to what the owners sought in May last year when they last offered their homes for collective sale.
'We received an offer that was close to what the owners were seeking, but sensing that the market was going to improve, the owners decided to wait for a while,' says Credo Real Estate executive director Tan Hong Boon, whose firm is handling the collective sale.
The $32 million price tag works out to $791 psf ppr including a $3.59 million DC. The break-even cost for a new project on the site could be about $1,150-$1,200 psf. The property has a 16,067-sq-ft freehold site area and is zoned for residential use with a 2.8 plot ratio under Master Plan 2003, with a maximum height of 36 storeys.
The site should appeal to boutique developers. It can be redeveloped into a new project of some 36 units averaging 1,200 sq ft.
Credo suggests an alternative use for the property - redeveloping it into serviced apartments for long-stay guests or short-stay visitors who come to Singapore for treatment at Mt Elizabeth Hospital and Medical Centre. However, such a use would be subject to official approval.
Angullia Mansion up for collective sale again
Owners said to be asking for $108m, slightly more than the top bid in 1999
ANGULLIA Mansion, a stone's throw from Orchard MRT Station, is back on the collective sale market - and this time the owners are said to be asking for $108 million or about $960 psf of potential gross floor area including a development charge of about $12.5 million.
Owners of 20 of the 21 apartments are understood to have signed the collective sale agreement. The last owner is expected to do so soon.
This is slightly more than the $105 million top bid the freehold property drew when it was previously put on the market in late 1999. The requisite approval level from majority owners could not be secured then. But this time around, owners of 20 of the 21 apartments are understood to have signed the collective sale agreement at a price of about $108 million. The last owner is expected to do so soon.
Keck Seng group, which is said to own four apartments at Angullia Mansion, has consented to the collective sale.
A price tag of $960 psf per plot ratio (psf ppr) is about 10 per cent higher than the highest unit land price fetched for a collective sale last year - $876 psf ppr for Habitat II. However, DTZ Debenham Tie Leung, which is marketing Angullia Mansion, has set its sights on an even higher benchmark - the $1,020 psf ppr at which the 99-year leasehold Orchard Turn site was sold to CapitaLand and Sun Hung Kai Properties last month.
CapitaLand has since given a breakdown of its bid, imputing a land price of $1,130 psf ppr for the project's retail component which will make up 70-75 per cent of total gross floor area, while the land value for the residential component is a lower $700 psf ppr.
Angullia Mansion has a land area of 44,730 sq ft. The site is zoned for residential use with a 2.8 plot ratio under Master Plan 2003. The maximum height is 36 storeys.
The site can accommodate about 56 units averaging about 2,000 sq ft. DTZ is expecting strong demand for the site given the improved take-up rate for luxurious and lifestyle apartments. In the vicinity, units in SC Global's BLVD project fetched prices of as high as $2,200 psf in October last year, DTZ pointed out in a statement.
The Vermont up for collective sale
Tender for the freehold site closes on March 3
By KALPANA RASHIWALA
THE owners of The Vermont at Peck Hay Road in the Cairnhill area are the latest to put up their prime district homes for collective sale, tapping the current uptick in the luxury residential market.
The Vermont comprises two apartment blocks at 9 and 11 Peck Hay Road in the Cairnhill area. The project was built in the mid-1980s.
The indicative price for the freehold Vermont is about $76 million, translating to $750 per square foot of potential gross floor area inclusive of an estimated development charge of $9 million. Based on this, a new condo on the 40,375 sq ft freehold site could break even at about $1,100 psf, say analysts.
CB Richard Ellis, which is handling the sale of The Vermont, says recent collective sale transactions in District 9 include Emerald Lodge at $803 psf per plot ratio (psf ppr) and Habitat II at $876 psf ppr.
The Vermont site is zoned for residential use with a 2.8 plot ratio and a maximum height of 20 storeys under Master Plan 2003.
The tender for The Vermont closes on March 3.
Property agents and home owners in the prime districts have been busy launching collective sale tenders, riding on the current upturn in sentiment in the luxury housing segment. That has improved developers' appetites for replenishing their landbanks.
Recent launches include Eng Lok Mansion near Botanic Gardens, Angullia Mansion near Orchard MRT Station and Kim Yam Mansion off River Valley Road. In addition, there is a slew of properties at various stages of readiness for an en-bloc sale launch in the prime districts like Cairnhill, Angullia Park, Orchard Boulevard, River Valley, St Thomas Walk, Ardmore Park and Nassim, say property consultants.
With a relatively huge potential supply of en-bloc sites slated for release this year, and finite demand from developers, the race is on to get collective sales organised quickly and tenders launched as soon as possible.
The Vermont comprises two apartment blocks at 9 and 11 Peck Hay Road. The project was built in the mid-1980s.
A 32-UNIT four-storey apartment building at Pasir Panjang Hill is up for collective sale with an asking price of $28 million for the freehold 63,707 sq ft site.
Based on a plot ratio of 1.4 and an additional development charge of about $5.8 million, the site should cost $370 per square foot per plot ratio, and the breakeven cost will be around $660 psf per plot ratio, according to Jones Lang LaSalle's regional director and head of investments, Lui Seng Fatt. The firm is also the sole marketing agent for the property.
Last month, MCL Land bought Balmeg Court, also in Pasir Panjang, for $79.2 million. This works out to $340 psf per plot ratio for the 182,555 sq ft site. In the same month, Hoi Hup launched the Foliage, an 88-unit freehold condominium off Pasir Panjang Road, at an average $608 psf.
A new residential development of up to 89,190 sq ft of gross floor area with a maximum building height of five storeys can be built on the Pasir Panjang Hill site, although Mr Lui points out that approval from the relevant authorities and a development charge will apply.
On the renewed interest in en bloc residential sites - there were over 30 in 2005 - Mr Lui believes there is still opportunity to 'unlock the value of old and outdated property'.
He added: 'The market value of the apartments at its current stage of obsolescence can only fetch a low market value reflected in the state of the property. Through the collective sales process, investors will be prepared to pay a higher value for the new apartments. In short, the difference between the two will be exactly the premium which the existing owners will be enjoying through the collective sale.'
Braddell Park, Telok Kurau sites go en bloc
11 Kampong Glam shophouses also among properties put on market
By KALPANA RASHIWALA
RIDING on the current improvement in property sentiment, several investment-sales properties came on the market yesterday.
They include two collective sales at Braddell Park and Lorong K Telok Kurau. Both are offered for sale in separate tender exercises.
As well, a six-storey serviced apartment in the Tiong Bahru/Outram area is going on the block. And in the Kampong Glam area, the Urban Redevelopment Authority (URA) is auctioning 11 unrestored conservation shophouse lots on March 8. The shophouses will have to be restored and are being sold on a 99-year leasehold tenure.
In May last year, URA auctioned 10 parcels of unrestored conservation shophouses. The sale prices ranged from $360,000 to $600,000 per parcel, or $295 per square foot to $440 psf of site area.
CB Richard Ellis, which is marketing Braddell Park, says the property is expected to achieve $42 million. This works out to about $330 psf of potential gross floor area (GFA).
No development charge will be payable to tap the full development potential of the 91,361 sq ft freehold site as the location has a high base density equivalent to a 2.072 plot ratio (ratio of potential GFA to land area).
This is much higher than the 1.4 plot ratio stated for the site in Master Plan 2003, which also zones the site for residential use. The site may be developed up to five storeys high.
Another collective sale site launched yesterday comprises two apartment buildings - K Garden and Wen Yuan Court - and a bungalow at 16 Lorong K Telok Kurau, being marketed by Jones Lang LaSalle. Developers may bid for the three properties, adding up to 46,473 sq ft in freehold land area, individually or combined.
Sources say the price expectation for the combined three is around $25 million, which works out to about $386 psf per plot ratio, including a development charge. The site is zoned for residential use with 1.4 plot ratio and a maximum height of five storeys.
Over in the Tiong Bahru area, Colliers International is marketing a six-storey serviced apartment at 3 Seng Poh Road which sources say has an indicative price of about $12.5 million. The freehold property is said to be put up for sale by mortgagee United Overseas Bank. The mortgagor was Kim Koon Garment Industries, BT understands.
The property has a land area of 9,143 sq ft and a GFA of 27,451 sq ft. The building has an eating house on the first storey, a car park on the second and third storeys, and 61 serviced apartments occupying the upper levels.
Colliers' executive director Grace Ng, who will be auctioning the property on Feb 8, says buyers may continue operating the building as a serviced apartment or apply to convert it into a boarding house/budget hotel.
THE Somerset area looks set to become hot property. Prices for en bloc redevelopment sites there will be closely watched, especially now that the latest land sales exercise by the Urban Redevelopment Authority (URA) at Orchard Road/Killiney Road has received a record bid of $1,085 per square foot per plot ratio.
Chez Bright Apartments at 18 St Thomas Walk is the latest property to go on sale in that area. It is marketed by Jones Lang LaSalle, whose regional director and head of investments Lui Seng Fatt believes that any new residential development on the freehold site would be able to sell at $1,500 psf.
The Somerset site is for a mixed development that may include a residential component.
Said Mr Lui: 'Based on the highest price tendered for the Somerset site, residential units there would have to sell for between $1,700 and $1,800 psf. And these are 99-year leasehold units.'
After factoring in the freehold status of Chez Bright Apartments, and the 'near prime' location, Mr Lui said a 15 per cent discount, or $1,500 psf, for the new development on the St Thomas Walk site would not be unreasonable.
The asking price for the 34,402 sq ft Chez Bright site has been set at $61.3 million (including a development charge of $6.3 million) or $640 psf per plot ratio.
The break-even price is around $960-$980 psf.
Five months ago, a larger site also on St Thomas Walk went to Centrepoint Properties for $210 million, or $601 psf per plot ratio.
The present 12-storey apartment block can be developed up to 36 storeys. With a plot ratio of 2.8, the maximum gross floor area is 96,325 sq ft.
There are several new developments in the area already on sale, including Wheelock Properties' The Cosmopolitan and Guocoland's Leonie Studios. Still, Mr Lui feels there will be ample demand from foreigners.
'Foreign investors, especially those from Hong Kong, are looking for this kind of investment grade properties,' he said.
DEVELOPER SC Global, better known for its high-end residential projects, is paying $17.8 million for a Martin Road freehold property that can be redeveloped on a residential-cum-commercial basis.
Through its wholly owned subsidiary Kimmingston Pte Ltd, SC Global struck the deal with Hock Giap Company Pte Ltd for the 17,664 sq ft property at 38 Martin Road.
With an estimated development charge of $9.1 million and a gross plot ratio of 2.8, the cost works out to about $544 per sq ft per plot ratio.
An eight-storey warehouse building now sits on the site, with tenants. It has a zoning of residential, with commercial enterprises on the first floor.
SC Global owns a vacant freehold site next to it measuring 26,813 sq ft with a plot ratio of 2.8. It could combine that site with its newest acquisition, giving a land area of 44,477 sq ft.
That could be developed into a 15-storey residential and commercial development with a potential gross floor area of 124,536 sq ft.
Other residential developments near the site include CapitaLand's 43-storey Rivergate and City Development's The Pier at Robertson.
Kimmingston has put down 10 per cent of the purchase price for 38 Martin Road and is expected to pay the balance in 12 weeks. The acquisition is expected to be completed in April. Meanwhile, SC Global has called an EGM on Feb 15 for shareholders to vote on whether to allot and issue 5,754,000 placement shares to Mass Noble Ltd at an issue price of $1.35.
Hoi Hup bags Kim Yam Mansion in $63m collective sale
Published January 26, 2006
Hoi Hup bags Kim Yam Mansion in $63m collective sale
By KALPANA RASHIWALA
PROPERTY developer Hoi Hup, part of Straits Construction Group, is understood to have bagged the 877-year leasehold Kim Yam Mansion, off River Valley Road, for about $63 million through a collective sale.
Windfall: Owners of Kim Yam Mansion's 40 apartments will receive more than $1.5 million each
The price works out to about $460 per square foot of potential floor area inclusive of a development charge of about $300,000.
Owners of Kim Yam Mansion's 40 apartments will receive more than $1.5 million each, or up to three times the $500,000-$600,000 the units would have fetched if they were sold individually.
This premium is one of the highest since en bloc sales began in Singapore in 1994. Sellers in most deals these days see collective premiums of about 30-50 per cent.
Jones Lang LaSalle brokered Kim Yam Mansion's sale.
The four-storey development is about 40 years old.
It has a land area of 49,080 square feet and the site is zoned for residential use with a 2.8 plot ratio (ratio of potential gross floor area to land area).
Based on its purchase price, Hoi Hup's breakeven cost for a new condo on the site will be about $670-$700 psf, say analysts.
Kim Yam Mansion is the first collective sale to benefit from a new law that took effect last month, facilitating en bloc sales of estates where the original landowner/developer retains the freehold title despite giving flat owners leases ranging from 850 to just under 999 years.
In such estates, strata titles were not issued under an old law, so the developer issued long leases instead. In the past, some of these landowners demanded hefty payments - amounting to millions of dollars - before they would consent to an en bloc sale.
This ate into proceeds for the flat owners, sometimes effectively blocking an en bloc deal.
Jones Lang LaSalle, Kim Yam's marketing agent, worked with real estate lawyer S K Phang to highlight the anomaly in the law to the authorities.
This was fixed through an amendment to the Land Titles (Strata) Act that took effect on Dec 1, under which such landowners lose all rights to the land upon an en bloc sale.
The Singapore Land Authority has said that in all, 24 sites will be affected by the rule change - but did not identify them to protect the privacy of the present unit owners.
Jan 31, 2006
Collective home sales set for another bumper year
Seven sites already launched, as market rides on positive economic outlook
By Joyce Teo
IT IS no surprise that optimism is flowing in the property market: The year has barely begun, but already seven collective sale sites have been launched.
And that is coming off a record year in 2005 when 37 collective sales of residential sites worth $2.09 billion were completed - more than double the deals and value achieved in 2004.
Ms Soon Su Lin, executive director of property consultancy CB Richard Ellis, said such sales will continue at the same pace as last year thanks to a good economic outlook.
Supply and demand tells the story: Sites sold en bloc last year generated a potential supply of 3,860 new homes, while overall, 8,955 new homes were sold last year.
'So potential supply from the sites being sold en bloc is expected to meet good demand when they are ready for launch,' said Ms Soon.
Home owners in collective sales typically get at least 30 to 50 per cent more than what they would have reaped from an individual sale. But the risk, said consultants, is that owners may have unrealistically high price expectations.
Typically, potential collective sale developments are more than 10 years old with rising maintenance costs.
Selling these sites require the consent of at least 80 per cent of the owners; those less than 10 years old need 90 per cent acceptance.
Because people looking to rent tend to migrate to new projects, owners of older projects find it harder to find tenants. And with maintenance costs rising, they may be keener on a collective sale, said DTZ Debenham Tie Leung director Tang Wei Leng.
But that does not mean everyone can cash in.
Prime sites in districts 9, 10 and 11 clearly have the best chances. The Cairnhill area appears to have the most potential sites, though projects in posh Ardmore, Draycott, Nassim, Leonie Hill and St Thomas Walk are also very popular, said Credo Real Estate executive director Tan Hong Boon.
'Sites in Cairnhill are very sought-after and the success rate will be good if they are not over-priced,' he said.
In general, most owners ask for about $800-$850 per square foot per plot ratio, though some want as much as $1,000 psf ppr, he said.
Still, the highest residential collective sale land price last year was only at $876 psf ppr - made by Wheelock Properties in September for The Habitat II in Ardmore Park.
Areas in Tanjong Katong Road, Meyer Road, Amber Road, East Cost Road and the Telok Kurau area also have good chances, said the head of investments at Jones Lang LaSalle, Mr Lui Seng Fatt.
The best candidates are developments of six storeys or less, with a small number of units or a large plot of land, said DTZ's Ms Tang.
'Those with facilities would have good rental value so the owners won't be very motivated to sell,' she said.
Credo Real Estate's executive director, Mr Karamjit Singh, said: 'The poorer the physical conditions, the better the chances.'
Surroundings also play a part. For instance, a low-rise development in an area with mostly high-rise projects could be a strong target, he said.
It could be tricky for mixed developments as shop owners may not want to sell. 'The revenue they derive from the shops may be much better than the property's value,' said Ms Tang. 'If they move out, they will lose the goodwill they have established over the years.'
Consultants said many former HUDC estates like Pine Grove, Gillman Heights and Farrer Court have expressed interest in selling collectively.
So have some owners of ageing private properties such as Grand Tower in Moulmein Rise, Eng Tai Mansions at St Thomas Walk, Peck Hay Mansion in Cairnhill and The Ardmore at Ardmore Park.
But getting enough owners to agree to a collective sale could take years. 'It's a waiting game,' said Ms Tang.
A home owner Gerald sold his Parry Gardens home near Yio Chu Kang in 1993, even though a neighbour said there may be plans to sell en bloc.
'I missed out on making money but the deal was only concluded in 2005! I would have had to wait for more than a decade,' he said.
Far East bags Angullia Mansion - $1,058 psf ppr land price
Published February 8, 2006
Far East bags Angullia Mansion
$1,058 psf ppr land price, including devt charges, is highest since 1997
By KALPANA RASHIWALA
(SINGAPORE) Property tycoon Ng Teng Fong's Far East Organization continues to expand its presence in the prime Orchard Road belt. This time it has clinched the freehold Angullia Mansion, near the Four Seasons Park condo, through a $120 million collective sale, sources say.
Angullia Mansion: Marketing agent secured owners' unanimous approval, and called off the tender closing tomorrow.
The price works out to a land cost of $1,058 per square foot per plot ratio (psf ppr) inclusive of development charges (DC). This is 65 per cent higher than the $643 psf ppr including DC that Wheelock Properties paid in December 2004 for Angullia View just opposite the latest site, reflecting the dramatic recovery in sentiment in the high-end residential market over the past 15 months.
More importantly, Far East's $1,058 psf ppr unit land price for Angullia Mansion is the highest for a collective sale site here since the 1996-97 market peak, property consultants say.
The price is also just 3 per cent shy of the record unit land price for a collective sale which Far East itself set in January 1997 when it bought Scotts Tower through an auction for $1,093 psf ppr including DC.
During a subsequent wave of collective sales that began in 1999, the highest price fetched was for the freehold Kim Lin Mansion on Grange Road, which went for $996 psf ppr including DC.
But the highest-ever price for a freehold residential site in Singapore is $1,122 psf ppr that Hong Leong Group paid in April 1997 for Boulevard Hotel, which has been approved for redevelopment into a condo.
And the benchmark for an all-residential 99-year leasehold site is still held by Wing Tai with its June 1997 winning bid of $1,104 psf ppr for the Draycott Park site that it has since redeveloped into the Draycott 8 condo.
Angullia Mansion, located in Angullia Park, is on 44,730 sq ft of land that is zoned for residential use with a 2.8 plot ratio (ratio of potential gross floor area to land area). A new 36-storey condo on the site could break even at about $1,400 psf or even lower, based on Far East's acquisition cost, property consultants say. The site can be redeveloped into a project of about 60-plus apartments averaging 2,000 sq ft.
Far East's offer of $120 million is understood to have led the property's marketing agent DTZ Debenham Tie Leung to call off a tender last week ahead of the scheduled closing date of tomorrow.
Market sources say DTZ may also have called off the tender partly because it already had the unanimous agreement of owners of all 21 existing apartments at Angullia Mansion for an en bloc sale at a much lower reserve price, said to be about $106 million.
In short, Far East's $120 million offer on the table surpassed the owners' already-high expectations and there was no certainty that a tender would have resulted in a still-higher bid.
'A bird in hand is better than two in the bush, as they say,' said a market watcher.
This is the second Orchard Road property Far East has bagged this year. Last month, it clinched the former Glutton's Square plot next to Somerset MRT Station and Specialists' Shopping Centre for $421.1 million or $1,085 psf ppr in a state tender. Far East is expected to do an all-retail development on the 99-year leasehold plot.
In May last year, it bought Pacific Plaza on Scotts Road for $111 million. Far East also has stakes in Far East Plaza, Far East Shopping Centre, Lucky Plaza, Orchard Shopping Centre, Orchard Plaza and Orchard Parade Hotel, besides full ownership of Orchard Parksuites, Regency House and Elizabeth Hotel, among other properties - making it the biggest private property owner in the Orchard Road area.
The collective sale market has been hotting up since last year, as developers selectively replenish their landbanks in response to the strong recovery in home buying in the luxury segment.
Collective sales are a good source of the prime freehold sites that developers are keen to have.
More prime district properties are expected to hit the en bloc sale trail soon, including Habitat I and Ardmore Point along Ardmore Park, Beverly Mai in the Orchard Boulevard area and Casa Rosita along Bukit Timah Road.
However, property consultants say that with reports of higher land prices being achieved, it becomes more trying to do collective sales as owners' asking prices also rise.
ALEXANDRA Centre has hit the market for collective sales, making an entry with a $40 million asking price.
$40m asking price: The existing two-storey building, which is about 25 years old, houses 12 ground-floor shops and 12 apartments
This works out to $270 psf per plot ratio inclusive of an estimated $1.153 million development charge.
The freehold property on Alexandra Road is zoned for residential with commercial use on the first storey. It may be redeveloped to a height of four storeys with a maximum 3.0 plot ratio - the ratio of potential gross floor area to land area.
Alexandra Centre has a land area of 50,838 sq ft. The existing two-storey building, which is about 25 years old, houses 12 ground-floor shops and 12 apartments.
Owners controlling more than 80 per cent of share values have consented to the collective sale, which is being handled by CB Richard Ellis.
Based upon $40 million, apartment owners will receive about $1.1 million each, and the shopowners about $2.1 million each.
'This is about 100 per cent more than the price which the units can achieve if they are sold individually,' says CBRE executive director Jeremy Lake.
Alexandra Centre is within walking distance of Queenstown MRT Station. Nearby landmarks include the Queens condo, Ikea and The Anchorage. The tender for Alexandra Centre closes on March 8.
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