Success of collective sales continues

2017 continues to be a good year for the collective sales market with Shunfu Ville given the go-ahead from the Court of Appeal last week and the sale of One Tree Hill Gardens site for $65 million this year.

OneTreeHillGardensThe Lum Chang Group has purchased the latter freehold landed residential development site near Orchard Road at $1,644 psf. Its proximity to Orchard Road makes it a prime site that is rare also because of its freehold status. It is of sizeable land ratio and developers have expressed considerable interest. The site was initially put up for sale at $72.8 million. Despite the $7.2 million shortfall, individual owners of the 6 maisonettes and 7 apartments will still receive $4.3 to $9.1 million depending on the size of their units.

Under a 2014 masterplan, the freehold site is zoned for 2-storey semi-detached residential use within a 39,063 sq ft land area. What it could potentially yield are 8 semi-detached houses, 5 bungalows or 10 semi-detached homes and 3 bungalows. With such landed properties near Orchard Road a scarcity, the freehold homes will no doubt receive much interest from investors and high net-worth buyers.

venturaheightsWhile the market is still tender from the previous years of slow growth, developers are beginning to replenish land stock and collective sales may be their means to the ends as the government has recently cut back on the release of land plots. Though price-sensitivity continues to rule developers’ bids, the collective sale market will be active this year especially with more home owners enquiring about en bloc sales and the sale of Eunosville and Rio Casa last month.

$653 million asking price makes Eunosville largest collective sale

Should the asking price of between $643 to $653 million for the HUDC estate of Eunosville truly go through, it would be the largest collective sale of late as it surpasses the $638 million paid for Shunfuville last year and the expected $450.8 million asking price for Rio Casa in Hougang which went on sale last month.

EunosvilleAnd it would mean each unit owner at the Sims Avenue estate would receive $780 to $790 psf or $1.9 to $2 million approximately. The estate has already reached the 80 per cent requirement for consent and the sheer size of the estate would be a dream for the winning developer. The 376, 713 sq ft site currently holds 225 maisonettes in 10 blocks and upon redevelopment, could yield 1,035 units of approximately 90 sq m each.

With 70 years left on its lease, $181 million on top of the bid will be required for intensification and a new 99-year lease. The site is just 100 metres away from the Eunos MRT station and strong showings at recent property launches show that buyers are still keen on new launches at good locations. Recent sales at Grandeur Park were a good example. All 420 of the units available at the launch were sold with the first weekend at the average price of $1,350 psf.

GrandeurParkResidencesThough bidding will be prudent as developers are keenly aware of the completion and sales deadlines imposed by the qualifying certificate and additional buyer’s stamp duty, some may be willing to put more into sites with long-term potential as land banks have been running low for the past year or so.

More collective sales in the pipelines?

Following the successful en bloc sale of Shunfu Ville, the property market is once again energised. It has reignited the fire for some developments which have been unsuccessful with previous collective sale attempts, while also pushing some properties to reach out to property firms and developers for quotes. The minimum approval for a property to be sold en bloc is 80 per cent.

TheCapriAt a former HUDC in Potong Pasir Avenue 1, blocks 110 to 112, 60 per cent approval has already been secured. Another similar HUDC property in Tampines have begun drafting a sale agreement while Eunosville on Sims Avenue is also looking to restart the collective sale process. As most of these HUDCs are older establishments in mature estates, their potential value may heavily outweigh the units’  current condition and value.

ShunfuVilleThe recent collective sale of Shunfu Ville garnered each owner an average of $1.78 million each, that is almost 50 per cent more than what each unit would have received when sold individually in the current market. Other properties which are also trying their hand at the process are Changi Garden and The Capri. In the commercial property realm, Katong Shopping Centre has reached the 80 per cent minimum approval criteria and will be launching the site for sale soon.

To balance off the government’s recent diminished land sales, these private collective sales could be attractive to developers looking for an opportune time to  strike it out in the market.