Offshore: Prime sites hit collective-sale market

In 1H2010, 10 collective-sale sites were sold, with the amount totalling close to S$500 million, according to Credo Real Estate. Most of the sites were in the popular suburban areas of East Coast and Upper Serangoon (New Gardens and Foh Pin Mansions) or on the fringes of the city, such as Balestier.

However, the most recent sale — the 11th site this month — was People’s Mansion at Lorong 31, Geylang. The property, which has a freehold land area of 37,497 sq ft, was sold to a developer for S$42.68 million (RM100 million). With a plot ratio of 2.8, the site can be redeveloped into 115 apartments averaging 900 sq ft each. There were four interested parties at the close of the tender, says Kevin Wong, executive director of Urban Front Real Estate, the marketing agent for the site.

“So far, the 11 known cases are relatively small, averaging only S$45 million each, with none located in the prime districts of 9, 10 and 11,” acknowledges Karamjit Singh, managing director of Credo, which brokered three of the 11 deals, the most deals brokered by a marketing agent year-to-date. However, he expects to see more en-bloc projects launched and sold in 2H2010. “We also expect larger ones to come onto the market,” he adds. 
 
More prime sites
In the past month, however, more freehold sites in the prime districts have been put on sale. One of the first en-bloc sites to be launched for sale this year was Cavenagh Mansions, a freehold 21-unit apartment block along Cavenagh Road near the Istana, in prime District 9. With a site area of 19,813 sq ft and plot ratio of 2.1, the potential gross floor area (GFA) works out to 45,768 sq ft, assuming an additional 10% space for balconies. Based on the indicative price of S$55 million to S$60 million, this translates to S$1,258 to S$1,367 psf per plot ratio (ppr).

According to Knight Frank, the marketing agent for the site, there can be a brand-new development of around 57 units averaging 800 sq ft each. The breakeven price for the developer is estimated at S$1,750 to S$1,850 psf. The existing development contains 21 apartments with sizes ranging from 969 to 1,647 sq ft. Cavenagh Mansions is fully owned by a private company, Teck Jin, also the original developer of the project. Therefore, there is no need for Strata Titles Board (STB) or High Court approval. The tender closed on July 8.

Another collective-sale site is Meng Garden Apartments, located off Killiney Road.  Its tender closed on July 7. All the owners in the development had given their consent to sell their apartments collectively; hence, the sale will not require STB approval. The existing development has 26 apartments and a penthouse, of which around half are owned by the Lim family. The indicative price given was S$135 million, which translates to around S$1,360 psf ppr, which includes the development charge (DC) of S$681,000.

On Mackenzie Road, just off Bukit Timah Road, is Mackenzie Mansions, which was put up for collective sale at end-June. The indicative price of the freehold site of 12,896 sq ft is S$25 million, including the DC estimated at S$500,000. With a plot ratio of 2.1, the site could be redeveloped into a project with a GFA of 27,080 sq ft, which translates into a seven-storey, 42-unit project, assuming the average size of the new apartments to be 600 sq ft, says Peter Chng, CEO of Global Real Estate Services, the marketing agent for the site.

“The response has been fantastic,” says Chng. The property is said to have attracted the interest of even the medium-sized to large listed players, including Allgreen Properties, GuocoLand, UIC and Roxy-Pacific, as well as giants like Hong Leong Group’s TID Pte Ltd, its joint venture with Mitsui Fudosan.

“It’s mainly because of the prime District 9 address and its location, which is within walking distance to St Margaret’s Primary School and the Little India MRT station,” adds Chng. The quantum price of S$25 million is also considered “bite size”, and translates to a breakeven price of around S$1,200 psf for the developer, according to Chng. “Small, freehold plots are still digestible to these developers even if the market corrects.”

One street away, in the Mount Emily area, condominiums such as Parc Emily, completed two years ago, were already commanding prices in the S$1,351 to S$1,785 psf range in May, according to caveats lodged with URA. Meanwhile, units at Emily Residences, completed in 2006, were changing hands at S$1,273 to S$1,325 psf in May. The existing Mackenzie Mansions development is a four-storey block with a total of 16 apartments. The project was developed by Guan Qian Realty in 1997. The collective-sale agreement was signed by the owners of 15 units, which comprise 93.33% of the total share value and 93.26% of the total strata area in the existing development. The tender will close on July 30.
 
First collective-sale site in a GCB estate
Perhaps the most prestigious collective-sale site in a prime district to be put up for sale year-to-date is Villa D’Este, a 12-unit apartment block sitting on a freehold site of 55,480 sq ft at the corner of Dalvey Road and Stevens Road. Ten of the 12 owners have already signed the collective-sale agreement.   The GFA of the project is 49,071 sq ft, and while the site can be redeveloped, there is no intensification of the existing GFA, according to CB Richard Ellis (CBRE), the marketing agent for the collective-sale site, in a press release early July.

The developer who buys the site can build a boutique ultra-luxury, exclusive condo of 13 to 14 apartments, with the large units averaging 3,500 sq ft each, says Jeremy Lake, executive director of investment properties at CBRE. The plot ratio is just 0.884 and the development is within walking distance of the Botanic Gardens and Nassim Road.

The guide price of S$115 million, therefore, translates to S$2,343 psf ppr, according to CBRE. The breakeven price for the developer is estimated to be S$2,950 psf.

In the Nassim Road area, new luxury condos are commanding prices above S$3,500 psf. At the 100-unit Nassim Park Residences, the latest transaction was for a 3,175 sq ft unit that was sold for S$11.588 million last month (S$3,650 psf), according to a caveat lodged with URA in June.

Meanwhile, units at the 30-unit Sage next door to Nassim Park Residences have been sold at prices averaging S$3,225 psf. “So, one can take a 10% discount for Villa D’Este to give a selling price of, say, S$3,150 psf, as it’s on Dalvey Road and one street away from Nassim Road,” says Lake. “This is an excellent opportunity for a developer to acquire a site in the Nassim Road vicinity, and develop an ultra-exclusive and prestigious low-density luxury project,” he adds.

The site could attract the interest of luxury developers such as Elevation, KOP Group, SC Global, Wheelock Properties and YTL Singapore. “This is the first time that a new apartment development can be built in a GCB area, which is usually reserved for bungalows,” says Lake. “Given its excellent attributes, several foreign developers and private families have expressed keen interest to acquire the site.”

Super-wealthy families from Singapore, Indonesia and China are looking for property for their extended families to live in. For instance, billionaire Peter Lim bought an entire condo block in Ardmore Park as a residence for him and his family. Alternatively, the developer can build three GCBs on the Villa D’Este site, assuming a minimum of 15,070 sq ft per plot. However, the site is more suited for a luxury-apartment project, reckons Lake.

In June last year, Frankle Widjaja, deputy chairman of the Sinar Mas Group of Indonesia, reportedly bought the four-storey, 12-unit boutique-apartment project Cree Court, also on Dalvey Road, for S$53 million. In Singapore, the Widjaja family controls plantation heavyweight Golden Agri Resources as well as Asia Food & Properties. The price of S$53 million works out to slightly over S$800 psf, based on the freehold site area of 65,416 sq ft. The Cree Court site, however, is designated as a GCB site and, therefore, can be redeveloped into a maximum of four GCBs, assuming a minimum plot size of 15,070 sq ft per GCB under the URA guidelines. Alternatively, the developer could tear down the existing building and build a boutique luxury apartment block of roughly the same size, says Lake.

Hence, the Villa D’Este site is also expected to draw keen interest from foreign buyers, especially high-net-worth Chinese and Indians, who would like to live in the prestigious GCB neighbourhood of Nassim Road, Dalvey Estate and White House Park, but are unable to own landed properties unless they obtain permission from the Land Dealings (Approval) Unit. The property has been put up for tender, which will close on Aug 4.

Cecilia Chow is City and Country editor at The Edge Singapore

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 816, July 26-Aug 1, 2010