Vista Park owners have jumped on the enbloc bandwagon and launch the tender for enbloc sale today. Vista Park sits on a big plot of rectangular-shaped land with an area of 319,250 sq ft. The site has a plot ratio of 1.4 and height limit of up to 5 storeys. Maximum potential plot ratio (before bonus) would be around 446,951 sq ft. The site has a remaining leasehold of 61 years and the buyer will have to pay a lease top-up premium of S$66 million to top up the leasehold to 99-year.
Vista Park owners are asking for at least S$350 mil, which translates to S$969 psf ppr. If bonus GFA is included, price per plot will reduce to S$903 psf ppr. Each owner could take back S$1.16 mil to S$3.5 mil, and this is 60% more than what they can sell in the market.
News report on Vista Park enbloc can be read here.
Vista Park will be an interesting and yet challenging project for developers
Why does SPK say so?
If you look at Vista Park’s location, it seems to lack the factors to sell, such as proximity to MRT and transportation, amenities, shopping centres and schools etc. But let’s not discount the location too soon yet. Vista Park does have some unique attributes, such as its proximity to nature, exclusivity of the estate and unique hill location that offers Pasir Panjang container port views (for port lovers?).
The typical build-small-and-sell-cheap strategy may not work for this site as the location would not be particularly attractive to investors and there could also be potential issues relating to the new policy relating to traffic impact on surroundings (SPK shall discuss more on this in the next section).
Primary target market would probably be the well-to-do families staying in the surrounding landed estates, upgraders in the neighbourhood, and nature lovers. Hence, this project may require an experienced and creative developer who can come out with an interesting product to leverage the uniqueness of the location. And this would probably mean that there might not be strong competition among developers for this site, since there are so many enbloc sites to choose from and some developers would probably go for the easier-to-sell enbloc sites.
Any potential issue from the traffic impact assessment?
Access to Vista Park is via the 2-way road (single lane each way) – South Bouna Vista Road. As SPK had flagged out in his previous blog post, Vista Park seems to fall into the category that is considered at higher risk of facing restrictions in the allowable number of new units in redevelopment.
Having said so, is this a cause for concern?
Not really if the developer is not going to build to the maximum number of units and this is likely to be the case for the buyer of Vista Park if the project is positioned for owner stay rather than for investment. A sigh of relief for Vista Park owners?
Can developer still make money after paying S$350 mil for the site?
Yes, SPK would think that it is possible. SPK estimates that the breakeven price for the redevelopment of Vista Park would be in the region of S$1,350 psf to S$1,400 psf. A nearby comparable project would be the recently launched 24 One Residence, a freehold 24-unit development by Tee Land. This project was sold at around S$1,630 psf on average. If we assume that the redevelopment of Vista Park is being sold at S$1,650 psf which is at premium considering its size and probably a unique positioning of the project that could more than compensate the premium of 24 One Residence’s freehold status, the developer could potentially make a nice profit margin of 15% to 18%! Not bad isn’t it?
Thumb’s up or down?
Yes, SPK would probably give the potential enbloc of this project a thumb’s up. Good luck to all the Vista Park owners!