Kopi Talk – Crystal Tower enbloc – 3rd time lucky for the owners?

Crystal Tower up for en bloc sale at S$138m – The Business Times



Kopi Talk:

Crystal Tower had 2 previous collective sale attempts back in 2011 and 2012, when asking prices were S$155 mil (S$1,600 psf ppr) and S$150 mil (S$1,458 psf ppr). This 3rd time round, the asking price of S$138 mil (S$1,406 psf ppr) looks more palatable to developers.

The current asking price would translate to an estimated breakeven price of about S$1,900 psf, and at an average selling price of the new units at S$2,300 psf, the developer would enjoy a nice profit margin of 18% base on SPK’s estimates. Not bad in the current competitive market for land. The is still room for developers to increase their bid to secure the land, and developers can still bid up to S$144 mil (4% above asking price) and yet maintain a decent 15% margin. Downside risk seems limited as in a worse case where the developer has to sell at breakeven price, it is unlikely to be an issue for a freehold development in the area. S$138 mil is also a reasonable quantum to acquire a piece of prime land in Orchard Road area. There should be sufficient interests from developers for this site.

If the enbloc sale goes through, the 18 owners of the 2,713 sq ft unit will each receive S$4.6 mil, the 9 owners of the bigger 3,261 sq ft unit will each get S$5.0 mil and the single penthouse unit owner will receive S$9.2 mil. Current penthouse owner bought the unit for S$4.05 mil in 2006. If the enbloc goes through, the owner gets to profit S$5.15 mil, or an attractive annualised return of 7.7% per annum. The penthouse unit is currently put on sale at S$9.8 mil.

Probably a 3rd time lucky this time round? Let’s wait for the results on 28th November.


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