The enbloc craze just keeps getting crazier. There were many significant developments in collective sale market over the past week.
The Next Enbloc Blockbuster – Mandarin Gardens
First, we have a potential blockbuster collective sale exercise coming up! Mandarin Gardens is one step closer to being put up for collective sale. A mind-blowing reserve price of S$2.45 billion has been set for Mandarin Gardens. This price has not even taken into account of the additional lease upgrade premium that a developer will need to pay the state for a fresh 99-year leasehold.
If Mandarin Gardens is successful in its collective sale attempt, it will set a new record as the most expensive collective sale transaction in Singapore.
In a Business Times news article, Mr Raymond Khoo from C&H Realty mentioned that “Chinese developers might want to showcase what they have done in Johor Baru and want to bring it over to Singapore”. Chinese developers such as Guangzhou R&F Properties and Country Garden Holdings do come to my mind as what Mr Raymond Khoo had described as possible bidders for the site.
Other potential bidders named by another “industry specialist” includes big names like Capitaland, Qingjian, Longan Property and Nanshan Group. Capitaland is probably still in an early stage of its landbank replenishing exercise, having only acquired 1 site since the market recovers.
It seems that the strategy is already in place in search of buyers for this mega-site and if Mandarin Gardens succeed in its collective sale attempt, the risk appetite of developers may be raised to a higher level and there will be a significant amount of enbloc money to flow back into the property market and hence sustaining the sales momentum.
The date for an extraordinary general meeting to approve sale conditions for Mandarin Gardens has been set for March 25. With a requirement of 80% approval from the over 1,000 owners in the development, this is not an easy task to achieve. I will definitely be looking forward to the EGM results next week!
Achieving 20% Premium over Reserve Price – Katong Park Towers
Sitting on a piece of prized land? Don’t worry, developers are still willing to pay a good premium for your land.
Last Friday, Bukit Sembawang acquired Katong Park Towers for S$345 mil, a 20% premium over the reserve price of the development.
Katong Park Towers is located along Arthur Road in District 15, near the future Katong Park MRT station. It is within short driving distance to town and CBD via East Coast Parkway expressway. The property has a 99-year leasehold tenure from 5th April 1982. An estimated lease upgrade premium of S$60 mil is payable by Bukit Sembawang to top up the leasehold to a fresh 99-year. Including the LUP, total land acquisition cost payable by BSEL will add up to a total of S$405 mil or S$1,280 psf ppr.
Prior to the collective sale of Katong Park Towers, there were 4 collective sales concluded in District 15 around Amber/Meyer Road since last year. These sites were sold at an average land price of S$1,442 psf ppr. Katong Park Tower’s price of S$1,280 psf ppr is 11.2% below the average land price of a freehold land in the area reflecting a fair discount due to the difference in the land tenure.
Looks like we have 116 happy owners at Katong Park Towers now. And the redevelopment by Bukit Sembawang is definitely a project to look forward!
2nd biggest enbloc sale in Singapore – Pacific Mansion
Just this morning, Guocoland and Hong Leong Group announced the acquisition of Pacific Mansion for S$980 mil, 4.5% above the reserve price of S$938 mil. This is the most expensive acquisition made by developers in this round of collective sale cycle, and the 2nd biggest enbloc sale ever in Singapore property market. The S$1.3 bil sale of Farrer Court still holds the record as the largest enbloc transaction (for now).
Base on my estimate, the breakeven price for Pacific Mansion is approximately S$2,400 psf to S$2,500 psf and eventual selling price for the project could be more than S$3,000 psf.
Each owner of the development’s 290 apartments will stand to receive a gross payout of S$3.26 million to S$3.48 million, while the owners of the two shop units there will pocket between S$2.2 million to S$4.5 million each. Units at Pacific Mansion were just going for S$1.7 mil to S$1.9 mil less than a year ago! You would have made a huge profit if you bought a unit there last year!
290 happy owners out there!
Looks like the collective sale market is heating up and not cooling down. Let’s see if Mandarin Gardens can bring the heat up to the next level. Akan Datang!