It was probably 3rd time unlucky for the owners of Jalan Besar Plaza.
The Business Times reported that no bids were received for the property at the close of the enbloc tender on 10th November 2017. However, there was an expression of interest from a developer to purchase the property.
An attempt that is doomed to fail from the start?
It is probably no rocket science to guess why there was no bidder for Jalan Besar Plaza despite the enbloc craze. Owners were asking for S$390 mil or S$2,170 psf ppr for this freehold mixed-use development. Whilst the price quantum is still within the investment appetite of most developers, its high per square foot price would probably mean very little (or no) profit potential and higher risk for a developer to redevelop this place.
Based on SPK’s estimation, a new development on the site will have a breakeven price point of around S$2,800 psf to S$2,900 psf. Such a pricing might still be achievable if the developer can strata-sell small retail units, like what we had seen a few years back in the early 2010s. But with the strata-retail resale market as good as dead now, this leaves developers with one less trick in their bags and hence making it more difficult for developers to achieve the required selling price to justify the high enbloc acquisition price.
At this asking price, SPK believes that it will be a tough sell for the owners of Jalan Besar Plaza.
Hopefully, the owners can strike jackpot if they can conclude a deal with the developer that expressed interest in the property. Anyway, there is probably no pressure for owners to sell since they are sitting on a freehold land. Owners can always sit back and wait for a good offer to come. But let’s hope they will not wait too long for it!
Keep calm and carry on waiting!