Mandarin Gardens goes for new record by upping en bloc asking price to S$2.79 billion
Mandarin Gardens goes for new record by upping en bloc asking price to S$2.79 billion
By WONG PEI TING
Published 11 NOVEMBER, 2018
SINGAPORE — Despite the cooling en bloc market, owners of Mandarin Gardens condominium have raised their asking price for the 99-year leasehold development in East Coast to S$2.79 billion — up from its original price of S$2.48 billion.
This will see it leapfrogging the previous high set by Pandan Valley’s S$2.6 billion asking price.
Mr Leonard Jayamohan, the spokesperson for Mandarin Gardens’ Collective Sale Committee (CSC) said that they had recently discovered that the land which the 1.07 million sq ft development is sitting on had been undervalued by over S$300 million.
While property experts told TODAY that the move is unusual, the CSC and its managing agent C&H Properties believe that the 12.5 per cent increase in the asking price is a winning proposition for both developers and sellers.
To counter the cooling measures introduced by the authorities in July, C&H Properties has made the development more attractive to prospective buyers by reducing its price per square foot per plot ratio (psf ppr) from S$1,236 to S$1,191.
In a bulletin to residents dated Sunday (Nov 11), CSC chairman Vincent Teo said the committee found out about the disparity in land value after conducting a check of Mandarin Gardens' development baseline record with the Urban Redevelopment Authority (URA)
He said in the letter: “The drastically increased baseline we received resulted in a corresponding reduction of the differential premium, which enable us to increase the reserve price, and at the same time reduce the psf ppr for the developers.”
Pointing out that developers could launch their new development at S$2,200 psf, Mr Teo added that the reduction of the estimated land cost (psf ppt) to S$1,191 could land them an even higher profit margin.
Each owner of the 1,006-unit condo will also stand to pocket more in gross proceeds, and rake in an average of S$2.8 million should the sale go through.
The committee believes that the move would also give the collective sale bid a shot in the arm, as they have so far garnered 62 per cent approval from residents — 18 per cent short of the 80 per cent requisite for an en bloc sale.
The announcement of the increased asking price was met with cheers and claps from some 150 residents present at the town hall meeting on Saturday (Nov 10).
“What is great is that the supporters are energised and we hope they can convince their neighbours,” said Mr Jayamohan. No vote had to be taken for the change in asking price — which is also known as the reserve price — as its collective sale agreement allows for the committee to increase the price on behalf of residents.
When asked if more owners had come forward to sign the collective sale agreement after hearing the news, Mr Jayamohan said it was too early to tell, as the impact would likely only be felt in the coming weeks.
The CSC spokesperson told TODAY that they were initially at their wit’s end after the cooling measures “effectively killed en bloc activity”.
With the March 29, 2019, deadline for residents’ consent coming up, C&H had urged CSC members to join the firm in forking out the S$1,605 fee to check the property's baseline record with URA. This was when they found that supporters of Mandarin Gardens’ en bloc bid had been relying on an inaccurate estimation of the baseline figure, which resulted in an undervaluation of over S$300 million.
URA’s development baseline record gives developers clarity in estimating the differential premium that they need to pay to the authorities.
WHAT EXPERTS, RESIDENTS SAY
Property expert Ku Swee Yong, chief executive officer of International Property Advisor, told TODAY that this is the first time he has heard of a development changing its asking price due to the discovery of an inaccurate land value estimation.
He noted that developers will use Mandarin Garden’s neighbouring condominium, Seaside Residences — which was launched last year at S$2,000 psf — as a benchmark. As such, Mr Ku said that buying Mandarin Gardens at S$1,191 psf will give the developer sufficient margins.
But while it appears to benefit both sellers and buyers, Mr Ku said the price adjustment could be “futile” exercise as S$2.79 billion is a huge price tag.
“Under the current market conditions, what is the point? “ he said.
“The single investment risk is too high for developers to take. Also, how many banks are willing to lend against such a large investment?”
Noting that cooling measures had slowed the market down considerably, Mr Chris Koh, director and key executive officer of real estate agency Chris International, said that the potential for a Mandarin Gardens sale would be dependent “not on just price tag alone”, but on market sentiment.
But there are a number of positives in its favour, as it is located on a good parcel of land in the East Coast, and boasts a sea view, added Mr Koh.
With such a large plot, he said that developers could take a leaf from other projects such as a privatised former Housing and Urban Development Company (HUDC) site in Bedok Reservoir, which was developed into the Waterfront series of condominiums by Far East Organisation and Frasers Centrepoint, and sold in phases.
While the bigger price tag has generated some buzz in the neighbourhood, Mandarin Gardens resident Andre Vaz told TODAY that he is not optimistic the committee will be able to get the 80 per cent consent before the March deadline. Mr Vaz, 55, a manager at Hewlett-Packard, bought his 1,000 sq ft apartment for about S$900,000 seven years ago.
Some residents are reluctant to give the go ahead for the sale due to the property’s spacious and well-laid out apartments, and its accessibility to amenities and schools.
“Increase or decrease, it is kind of a moot point because it is not so much about the reserve price anymore,” said Mr Vaz, who voted yes early on in the collective sale.
“Some people might think it (the increase in price) helps people sign, but who knows?”
