The recent enbloc wave has swept Singapore by storm and it has now come to the Marine Parade area. It was reported in yesterday’s news that Mandarin Gardens has formed a collective sale committee over the weekend. Mandarin Garden sits on a sprawling 1.07 mil sq ft leasehold land with a remaining tenure of around 67 years left. There are more than 1,000 units in this development. Industry experts believe that Mandarin Gardens can fetch more than S$2 bil and each owner could potentially take away S$2 mil on average.
Along this stretch of Marine Parade Road in District 15, there are other developments alongside Mandarin Gardens:
- Neptune Court – A 99-year leasehold development built in 1975 with 752 units. This development has not been fully privatised yet as the land is still own by Ministry of Finance
- Laguna Park – A 99-year leasehold development built in 1978 with 516 units, fully privatised
- Lagoon View – A 99-year leasehold development built in 1977 with 480 units, fully privatised
- Seaside Residences – A new development by Frasers Centrepoint, with 841 units
All of these developments are popular and sought-after developments due to their sea view, proximity to the east coast park and accessibility. Come 2023, the completion of the Thomson East-Coast MRT line will further enhance the connectivity of the area.
Among the 5 developments in the area, 3 of them – Laguna Park, Lagoon View and Mandarin Gardens, are now going for collective sale. The landscape is definitely going to change and one development that might benefit from enblocs in the area is likely to be Seaside Residences.
Below are the 3 reasons why Seaside Residences may sell like hotcakes this year if an enbloc happens in the area:
- Enbloc owners are likely to look for smaller replacement units in the area
Living in the East Coast area has become a part of the lifestyle of residents there and this is exactly the reason why there are so many opposing voices against enbloc in these developments. In the event of an enbloc, it is likely that these owners will prefer to find another place that is close to their existing homes. Considering that many owners are retirees who may not need big spaces, Seaside Residences is the only development in the area that is new and offers smaller units. With their S$2 mil windfall (in the case of Mandarin Gardens), enbloc sellers can buy a smaller unit at Seaside Residences for around S$1.2 mil and yet still have S$800k for their retirement funds.
- Seaside Residences will look relatively cheaper compared to the future launch at Mandarin Gardens site
According to Savills’ Mr Alan Cheong, a developer who pays an all-in price, including a land lease topping up premium and other charges, would likely “set a base price of S$1,300 to S$1,400 psf ppr”. Based on the land price guided by Mr Cheong, the all-in land price would work out to be around S$3.9 bil to S$4.2 bil. Adding an estimated construction costs and fees of S$1.1 bil, total development cost for a new project on Mandarin Gardens site will work out to be around S$5.0 bil to S$5.3 bil, translating to a breakeven selling price of S$1,851 psf to S$1,962 psf, which is already higher than the selling price of Seaside Residences which was around S$1,700 psf. If Mandarin Gardens can achieve the kind of price that Mr Cheong is projecting, this will definitely attract more buyers to Seaside Residences, which looks relatively cheaper compare to the future launch at Mandarin Gardens site.
- Potentially a supply shortfall in the area
In the Mandarin Gardens vicinity, there are currently a total of 3,595 units from the 5 developments. If the 3 enbloc potential sites are sold (on the best case assumption), the number of units in the area will decline to 1,593 units. This is a clear-cut case of supply-demand imbalance.
For buyers and investors who are interested in this area, I would suggest to start doing your homework and stay up-to-date on the enbloc developments in the area and be prepared to act when the market moves. Good luck!