City&Country: Offshore-- Aiming for the Peaks

An upcoming development that is expected to be the litmus test for the resilience of Singapore’s luxury residential market in the face of a jittery global stock market is Twin Peaks by Overseas Union Enterprise (OUE). Located on the corner of Grange Road and Leonie Hill Road in the prime Orchard Road area, the condominium project will have 462 units in two 36-storey towers.

According to market sources, the indicative price range for the project is S$2,750 to S$3,250 psf, with the average likely to be S$2,900 to S$3,000 psf. “This would be considered the most significant project in the luxury segment to be launched so far,” says Joseph Tan, executive director of residential services at CB Richard Ellis (CBRE), joint marketing agents with Savills Singapore for Twin Peaks.

OUE is planning to release 100 units in one of the twin towers in the first phase, with private previews scheduled to start in the second or third week of June in Singapore, followed by overseas launches in Jakarta and Hong Kong later on.

altThe development features seven units on each level — four 1-bedroom units measuring 550 to 570 sq ft; one 1,055 sq ft 2-bedroom unit; and two 3-bedroom units that range from 1,399 to 1,604 sq ft.

Quantum prices will start from S$1.5 million (about RM3.54 million)  for a 1-bedroom apartment of 550 sq ft, which CBRE’s Tan considers affordable. “One should look beyond just the psf price,” he says. “What can you buy on Orchard Road today for S$1.5 million?”

Most of the new developments in the vicinity are boutique projects with less than 100 units and mostly large-sized apartments, and therefore command higher quantum prices. For instance, along Leonie Hill Road is the 29-storey, 44-unit boutique freehold condo Leonie Parc View, where two similar-sized units changed hands in resales in March. The development contains a mix of 4-bedroom apartments, penthouses and sky villas. A 2,250 sq ft unit on the seventh floor went for S$5.71 million (S$2,538 psf) while an 18th-floor unit was sold for S$5.92 million (S$2,634 psf), according to caveats lodged with URA. The project was completed end-2009.

Also nearby is another luxury boutique development, the 68-unit Grange Infinite on Grange Road, where construction of its 3, 4 and 5-bedroom apartments is well under way. According to caveats lodged with URA, a 2,368 sq ft unit on the 9th floor of the 36-storey tower was sold for close to S$6.8 million (S$2,862 psf) in April. Last September, a 2,702 sq ft unit on the 25th floor of the freehold condo was sold for close to S$9.19 million (S$3,400 psf), according to caveats lodged.

Fully furnished — with the classics
What sets Twin Peaks apart is that it will be the first condo to be sold fully furnished. The project is expected to appeal to both Singaporeans and foreign buyers. “It is unique — Singapore property buyers would not have seen a product like this,” Stephen Riady, executive chairman of Singapore-listed OUE, tells The Edge Singapore. “It’s 100% furnished, from dining room table and chairs to the sofa and rug in the living room, [while] bedrooms will have beds and bed linen. These are all the top brands, and will easily cost thousands of dollars. I think this is particularly attractive to yuppies.”

The furniture will be a mix of contemporary pieces and elegant classics from the 1930s to 1950s. There is, for instance, the Cassina Utrecht armchair designed by Dutch designer Gerrit T Rietveld in 1935 and the iconic 1956 Eames lounge chair and ottoman from American designer couple Charles and Ray Eames.
Also lending a modernist touch are Carl Hansen woven-cord easy chairs and shell chairs designed by the late Danish designer Hans Wegner, who was famous for his Chinese Chair created in 1944 and Wishbone Chair in 1949. The 2 and 3-bedroom apartments will come with limited-edition 3m sofas from Xtra, while light fittings are floor and table lamps by famous UK designer Tom Dixon. Kitchens also get classy with SMEG kitchen appliances and the latest hob and oven by famous Australian designer Marc Newson.
“These are all timeless designer pieces,” says Thio Gim Hock, CEO of OUE. “We will also give you a menu of choice — in terms of furniture pieces and colours.”

Doing up the units yourself with the same furniture at retail prices would cost over S$100,000, estimates Suying Design, the renowned interior design firm working on Twin Peaks, including selecting the fittings, accessories, lighting and furnishings. The firm is also the interior-design consultant for other high-end projects, including Lippo Group’s Centennia Suites on Kim Seng Road and The Marina Collection at Sentosa Cove, Sing Holdings’ The Laurels on Cairnhill Road and Allgreen Properties’ Viva at Suffolk Walk off Thomson Road and Newton Road.

The total construction cost for the development, including fittings and furnishings (but excluding professional fees), is around S$220 million, says OUE. The developer had purchased Grangeford in a collective sale at the peak of the market in August 2007 for S$625 million, or S$1,810 psf per plot ratio (ppr), for the 130,981 sq ft site. But OUE had revalued the land at S$586.3 million as at March 31. This works out to S$1,479 psf ppr. Including the construction, interest and other holding costs and professional fees, the breakeven price would be S$2,250 to S$2,350 psf, estimates a property analyst.

Appeal to investors
The development also offers something similar to the dual-key concept, where buyers have the option of taking two adjacent units and turning them into adjoining ones, either putting together 1 and 2-bedroom apartments, or 1 and 3-bedroom apartments, to make bigger units. “If parents want their adult child to stay next to them, they could buy the 1-bedroom and 3-bedroom units, for example, and we will open up the units for them by putting in interconnecting doors,” says Thio. “But they have to tell us right from the start. Otherwise, it will be just a wall.”

The project is expected to appeal to both locals and foreigners, the latter including Indonesians, who traditionally like the Orchard Road neighbourhood and who may want to buy a unit for their children. “The enquiries so far have been a good mix of local and foreign buyers,” says CBRE’s Tan.

Shaun Poh, senior director of investment advisory services at DTZ, expects the project to attract long-term investors. “It will be ideal for those who want to buy multiple units or an entire floor to rent out the apartments.” Since the apartments are fully furnished, Poh says they can be rented out as “apartments with services”, as the owners can package in cleaning and other services, and charge a rental premium compared with typical apartments in the area.

According to Thio, the response from some of the directors and business associates of OUE has been very good. “A lot of them want to buy, and there are people who are looking at buying multiple units or entire floors.”

Among the upcoming launches around Orchard Road, Twin Peaks is one of the largest in terms of site area. It is therefore able to offer full condo facilities and entertainment areas for residents, such as two indoor dining suites with top-end kitchen facilities, an outdoor grill, teppanyaki and barbecue deck and poolside dining pavilions. There is also a sizeable swimming pool, tennis court and spa. Each tower, which is a mirror image of the other, will house a sky gym on the 13th to 15th floors; the sky deck, a rooftop garden from which residents can enjoy the panoramic city views; and a coin Laundromat with an adjoining lounge and reading room in the basement.

“I’m actually selling a lifestyle,” says Thio. “For example, if you feel your studio apartment is too small for you to entertain at home, you can book the gourmet dining room. And if you want a teppanyaki dinner, you can call the Mandarin Orchard and they can send over a teppanyaki chef from our Japanese restaurant,” says Thio, referring to the group’s flagship hotel. “While dinner is being prepared, you and your guests can go to the sky deck to enjoy a pre-dinner cocktail.”

The layout of the units is efficient and regular, says Phylicia Ang, director of residential at Savills Singapore. “All the positive ingredients are in place: the designer furniture, which is a unique marketing proposition, the relatively large site area with many facilities, which is quite rare right in prime Orchard Road, and of course the location,” she adds. “The dual-key concept is also the first such purpose-built development in Orchard Road.”

Stock market jitters ‘a temporary thing’
The Greek debt crisis that has shaken the global stock markets, has in turn affected market sentiment on the ground — especially the residential market, which is very sentiment-driven. David Neubronner, head of residential project sales at Jones Lang LaSalle Singapore, is understandably cautious. “Interest in the luxury segment has tapered off recently,” he concedes. “Prospective buyers in this segment would be more sensitive to the uncertainties and would therefore step back to monitor the situation.”

However, he does not expect the situation to deteriorate back to the levels seen during the global financial crisis of end-2008 to early 2009. “The dynamics are different and governments in Asia are better equipped to deal with another crisis,” he adds. “I suspect the residential market in general will plateau in the months ahead, at least until a clearer picture emerges.”

In May, another luxury project in the S$3,000 psf segment that was rolled out for private previews was Wheelock Properties’ 30-unit Orchard View on Angullia Park. To date, six units have been sold at an average of S$3,100 psf, which is at a 7% discount to the launch price of S$3,300 psf. The project is expected to be launched in June.

“When the stock market is a bit shaky, foot traffic in the show flats will probably slow down a bit,” says Wheelock Properties’ executive director Tan Bee Kim. “Everyone will go out and look, but will not commit. Likewise, when the stock market is hot, the property market buzzes.” However, Tan reckons that “at the end of the day, quality will prevail”.

The luxury segment saw strong interest and buying activity in April. According to the URA’s April new home sales figures released recently, Hong Leong Holdings has started private previews of Sage, its 33-unit boutique development in the exclusive Nassim Road area. Of 10 units released, two were sold at a median price of S$3,205 psf. In the second phase of release at Marina Bay Suites, 31 units were sold at a median price of S$2,678 psf while The Laurels saw another 22 units sold at S$2,904 psf.

At The Holland Collection, nine of its 26 units have been sold for S$4 million to S$6.2 million. Peter Tham, development director at CLSA Capital Partners, which is jointly developing The Holland Collection with Lippo Group, says: “All the large units, including one of the strata bungalows and four penthouses, have been sold.”

While some think Twin Peaks’ status as a 99-year leasehold development is “a challenge”, as most of the prime Orchard Road district properties are freehold, OUE’s Thio dismisses this idea. He points to the fact that The Orchard Residences, a 99-year leasehold luxury condo sitting on top of ION Orchard shopping mall, saw a unit sold at S$4,207 psf, as recorded in URA’s April new-home sales. In fact, the Orchard Residences still holds the record in terms of highest psf price achieved — S$5,600 psf for a penthouse in the peak of 2007.

Thio is also confident that the stock market jitters will be “a temporary thing”, and does not see it having a significant impact on demand for property. “The residential market will continue to move up,” he says. “That’s why I’m releasing 100 units. And in the next phase, I will release another 100 units and increase prices.”

Cecilia Chow is City & Country editor at The Edge Singapore

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 808, May 31-June 6, 2010

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