The rate of successful collective sales was already slowing down since June, even without the cooling measures that surprised the industry on 5 July. For example, one high-profile project was Faber Gardens, which did not manage to find a buyer willing to pay the $1.18 billion asking price. Others include Lakeside Apartment and Park View Mansion in the Jurong Lake District area and Leonie Gardens in Orchard area.
As at 12 September, there were more than 50 unsuccessful tenders, of which around half were closed after the measures were implemented, including Horizon Towers with its $1.1 billion asking price which closed without a single bid.
Thus far, the only successful en bloc project is Phoenix Heights which closed on 20 August. It was sold to USB Holdings, a consortium comprising OKP Holdings, Hwa Seng Group, Chye Joo Construction and Ho Lee Group, at the price of $33.1 million.
That does not mean that property owners are giving up. There are still several collective sales tenders that are on-going and some developments that are trying to get the necessary 80 per cent mandate to launch. But some developers are taking their time to evaluate the situation by monitoring upcoming launches and the prices that the market can bear at the moment. The following considerations are also likely to make developers think twice before putting in their bids.
- Higher cost of land acquisition: developers now have to pay 30 per cent additional buyer's stamp duty (ABSD) on land – of which 25 per cent are remissible if the developer builds and sells all units in the project within five years of buying the site. A larger site means more units for developers to consider if they can sell within the deadline.
- High asking prices: with asking prices that crosses the billion-dollar mark, developers have to do their sums right and see if their planned number of units and the price that the units can fetch will make it a viable project to undertake.
- Many developers have replenished their landbanks in the past year and could be more selective now as they focus on clearing their inventory.
One should remember, though, that the value of en bloc transactions for 2018 is currently at about S$10 billion, surpassing the S$8.13 billion reached in 2017.
The S$1.1 billion collective sale tender for 99-year leasehold Horizon Towers at Leonie Hill Road closed on 12 September without a single bid, even after it was extended from the original closing date of 7 August. It is significant as it is the first major collective sale exercise to close after the property cooling measures were announced on 5 July – the very same day the tender was launched. They now have up till 20 November (10 weeks after the closing date) to seal a deal by private treaty.
Horizon Towers is a 211-unit development that sits on a 1.9ha plot. The fact that it attracted no bids from developers is no doubt getting the attention of other large sites that are also targeting to close billion-dollar deals such as Laguna Park which is asking for S$1.48 billion and Pandan Valley with its record asking price of S$2.6 billion.
This is not the first time a collective sale has failed for Horizon Towers. In 2009, a S$500 million collective sale fell apart following a dispute among the owners, and the Court of Appeal found that the sales process was improperly handled.
The tender process for the following properties, ranging from small sites like East Court and Gisborne Light to mega site Laguna Park, are still on-going. Another major site, yet to be launched, is Pandan Valley which could become the biggest collective sale in Singapore history if it is successful. While sites such as Windy Heights are readjusting their collective sales plans by relooking at their reserve price, yet others are in the midst of getting their 80 per cent mandate.
East Court’s guide price of S$19 million works out to S$1,031 per square foot per plot ratio (psf ppr) including development charges. East Court is a freehold property and sits on a 13,351 sq ft plot that is zoned for residential use with a gross plot ratio of 1.4. The tender will close on 26 October.
The tender for Gisborne Light, a freehold development in prime District 10, started on 13 September and will close on 11 October. The absolute quantum of its asking price is relatively more affordable at S$37 million, which translates to $1,671 per square foot per plot ratio (psf ppr). As a point of reference, the land rate was S$1,734 psf ppr in nearby Balmoral Mansions, and S$1,847 psf ppr for City Towers. The 17-unit condominium at Ewe Boon Road sits on a 13,841 sq ft site. If the sale is successful, each owner stands to receive between S$1.7 million and S$4.3 million.
Owners of Laguna Park in East Coast have set a reserve price of $1.48 billion in their third and latest collective sale effort. Their previous attempts were in 2007 and 2010 which were affected by poor market conditions after the global financial crisis. The 80 per cent mandate to sell the 528-unit former HUDC estate was reached about two months before deadline. There are 58 years left on Laguna Park’s 99-year lease.
Owners of the 516 residential units in Laguna Park stand to receive $2.6 million to $5 million each, while owners of the 12 shops will each get $2.53 million to $2.66 million. The 669,484 sq ft site could yield around 1,700 units sized at 100 sq m each. The tender sale started on 18 September and will close on 1 November.
Freehold development Pandan Valley is aiming for a record-breaking price tag of $2.6 billion in its second attempt at a collective sale. The sprawling 865,000 sq ft estate, with 623 units, is one of the very first condominiums in Singapore when it was built in the late 1970s. Once closed, it would be the biggest collective sale transaction in dollar terms. Pandan Valley last tried for a collective sale deal in 2011.
Windy Heights in Kembangan is taking another stab at a sale, after its $806.2 million tender closed without a buyer in April. It is going through a re-signing process to revise the reserve price to $750 million.
Other properties still in the process of getting their 80 per cent mandate include:
- Ivory Heights
- Pine Grove
- Mandarin Gardens
- Braddell View
- The Dairy Farm