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Singapore Property Kaki

A place for sharing property, investments and financial management ideas among kakis

More estates get in on collective sale action. Who may get lucky this time?

http://www.straitstimes.com/business/property/more-estates-get-in-on-collective-sale-action

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Another day, another enbloc news. Another 3 residential estates are going for collective sale. Let us take a look at 2 of these projects – How Sun Park and Pearl Bank Apartments, to evaluate their chances of success for their enbloc attempts.

How Sun Park

Quick Facts

  • Tenure: Freehold
  • Location: How Sun Road, near Bartley MRT (12 min walk)
  • Number of owners: 20
  • Land Area: 54,942.7 sq ft
  • Zoning: 5-storey residential with 1.4 plot ratio
  • Permissible GFA: 76,920 sq ft (before bonus GFA)
  • Asking Price: S$78 mil (S$1,052 psf ppr, including development charge of S$2.92 mil)

Kopi Talk: Price quantum of S$78 mil is low enough to attract developers. Asking price of S$1,052 psf ppr is 21% lower than the price that SingHaiyi paid for nearby Sun Rosier. Considering that this piece of land is smaller in size (which means a development would come with less facilities) and has a long west-facing frontage, it is not unexpected for this site to come with a lower asking price.

But is a 21% price differential (compare to Sun Rosier’s price) a good enough price gap for developers to snatch this site? It probably does, considering the margin of safety that a developer has at this price point. Based on SPK’s estimate, breakeven price for How Sun Park would be around S$1,400 to S$1,450 psf and selling price would probably be around S$1,650 psf to S$1,750 psf. With the expectation of Chip Eng Seng’s new 99-year residential development at Woodleigh selling at S$1,720 psf to S$1,800 psf and Sun Rosier selling at an even higher price, the estimated selling price of How Sun Park would appeal to buyers due to its Freehold and proximity to the other 2 projects.

Verdict:

220px-Facebook_like_thumb    How Sun Park is likely to be sold, but owners should not expect a huge premium from developers.

 

Pearl Bank Apartments

Quick Facts

  • Tenure: 99-year leasehold from
  • Location: Pearl Bank Road, near Outram Park MRT Interchance
  • Number of owners: 280 residences + 8 commercial units
  • Land Area: 82,376 sq ft
  • Zoning: Residential with 7.2 plot ratio (Baseline plot ratio is 7.4479)
  • Permissible GFA: 613,530 sq ft (before bonus GFA)
  • Reserve Price: S$728 mil (S$1,505 psf ppr, including upgrading premium of S$195 mil)

Kopi Talk: This is the fourth time that Peal Bank has gone for an enbloc attempt. This time round, the asking price of S$728 mil is slightly lower than the S$750 mil that owners were asking for back in 2011. Would this make Pearl Bank an attractive enbloc opportunity for developers now?

Let us take a quick look at the numbers. Asking price of S$728 mil works out to be around S$1,505 psf ppr after adding in a lease upgrading premium of S$195 mil. That means a whopping S$923 mil for a 82,376 sq ft of mid-size prime land! A new development on the Pearl Bank site will need to be built high, and come with sky facilities due to land constraints and to leverage on its unblock views in order to make the development more premium and sellable (probably Sky Habitat would be a good reference). But all these would come at a higher construction costs to developer. Base on SPK’s estimate, such a project would probably breakeven at S$1,900 psf to S$2,000 psf and developer will need to sell at S$2,200 psf for a decent margin. Despite Pearl Bank’s prime location, it might be a challenge to achieve such a high pricing for a 99-year leasehold in current market. Moreover, the investment quantum is huge. Hence, the risk-reward for this site might not be optimal for most developers.

Verdict:

897px-Not_facebook_not_like_thumbs_down     Pearl Bank still looks too expensive for any sensible developers to absorb. But let’s hope a rich foreign developer comes in and make it fourth time lucky for the owners!

 

Good luck to all the enbloc owners!

 

IMPORTANT NOTICE

The information and opinion contained in this blog posting above are based solely on the personal analysis of Singapore Property Kaki (“SPK”) and is for general information purposes only. SPK assumes no responsibility for errors or omissions in the contents of this blog posting. In no event shall SPK be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence or other torts, arising out of or in connection with the use of the content in this blog posting. SPK reserves the right to make additions, deletions, or modification to the contents at any time without prior notice.

Happy reading!

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