General 'en-bloc' News; Bids & Tenders
Jan 31, 2006
Collective home sales set for another bumper year
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Seven sites already launched, as market rides on positive economic outlook
By Joyce Teo
Property Correspondent
IT IS no surprise that optimism is flowing in the property market: The year has barely begun, but already seven collective sale sites have been launched.
And that is coming off a record year in 2005 when 37 collective sales of residential sites worth $2.09 billion were completed - more than double the deals and value achieved in 2004.
Ms Soon Su Lin, executive director of property consultancy CB Richard Ellis, said such sales will continue at the same pace as last year thanks to a good economic outlook.
Supply and demand tells the story: Sites sold en bloc last year generated a potential supply of 3,860 new homes, while overall, 8,955 new homes were sold last year.
'So potential supply from the sites being sold en bloc is expected to meet good demand when they are ready for launch,' said Ms Soon.
Home owners in collective sales typically get at least 30 to 50 per cent more than what they would have reaped from an individual sale. But the risk, said consultants, is that owners may have unrealistically high price expectations.
Typically, potential collective sale developments are more than 10 years old with rising maintenance costs.
Selling these sites require the consent of at least 80 per cent of the owners; those less than 10 years old need 90 per cent acceptance.
Because people looking to rent tend to migrate to new projects, owners of older projects find it harder to find tenants. And with maintenance costs rising, they may be keener on a collective sale, said DTZ Debenham Tie Leung director Tang Wei Leng.
But that does not mean everyone can cash in.
Prime sites in districts 9, 10 and 11 clearly have the best chances. The Cairnhill area appears to have the most potential sites, though projects in posh Ardmore, Draycott, Nassim, Leonie Hill and St Thomas Walk are also very popular, said Credo Real Estate executive director Tan Hong Boon.
'Sites in Cairnhill are very sought-after and the success rate will be good if they are not over-priced,' he said.
In general, most owners ask for about $800-$850 per square foot per plot ratio, though some want as much as $1,000 psf ppr, he said.
Still, the highest residential collective sale land price last year was only at $876 psf ppr - made by Wheelock Properties in September for The Habitat II in Ardmore Park.
Areas in Tanjong Katong Road, Meyer Road, Amber Road, East Cost Road and the Telok Kurau area also have good chances, said the head of investments at Jones Lang LaSalle, Mr Lui Seng Fatt.
The best candidates are developments of six storeys or less, with a small number of units or a large plot of land, said DTZ's Ms Tang.
'Those with facilities would have good rental value so the owners won't be very motivated to sell,' she said.
Credo Real Estate's executive director, Mr Karamjit Singh, said: 'The poorer the physical conditions, the better the chances.'
Surroundings also play a part. For instance, a low-rise development in an area with mostly high-rise projects could be a strong target, he said.
It could be tricky for mixed developments as shop owners may not want to sell. 'The revenue they derive from the shops may be much better than the property's value,' said Ms Tang. 'If they move out, they will lose the goodwill they have established over the years.'
Consultants said many former HUDC estates like Pine Grove, Gillman Heights and Farrer Court have expressed interest in selling collectively.
So have some owners of ageing private properties such as Grand Tower in Moulmein Rise, Eng Tai Mansions at St Thomas Walk, Peck Hay Mansion in Cairnhill and The Ardmore at Ardmore Park.
But getting enough owners to agree to a collective sale could take years. 'It's a waiting game,' said Ms Tang.
A home owner Gerald sold his Parry Gardens home near Yio Chu Kang in 1993, even though a neighbour said there may be plans to sell en bloc.
'I missed out on making money but the deal was only concluded in 2005! I would have had to wait for more than a decade,' he said.
Latest freehold plot at Skyline Angullia expected to fetch at least $100m
Singapore
Published March 13, 2006
Property agents race to launch prime sites
Latest freehold plot at Skyline Angullia expected to fetch at least $100m
By KALPANA RASHIWALA
PROPERTY agents continue to rush launches of prime residential sites. Cashing in on its recent successful sale of Angullia Mansion, DTZ Debenham Tie Leung is releasing another plot in the location for sale - Skyline Angullia.
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Angullia Mansion: Sold last month for $1,060 psf ppr. The nearby Skyline Angullia is targeting $1,073 psf ppr
The latest property, with a 35,810 sq ft freehold land area, should fetch at least $100 million, working out to $1,073 psf per plot ratio (psf ppr) inclusive of a development charge (DC) of about $7.6 million.
Angullia Mansion, sold last month to Far East Organization, fetched about $1,060 psf ppr including DC. That was a collective sale, whereas Skyline Angullia, completed in 1992, is held by a single party, Skyline Investment Holdings Pte Ltd, controlled by Kang Swee Liat and his wife.
They developed the property, completing it in 1992 and have kept it since for rental income. The boutique property group also developed houses along Barker Road in the 1980s.
The existing Angullia Skyline is a 14-storey tower comprising 22 apartments and two penthouses. It has achieved 'very high occupancy since its completion in 1992', DTZ said.
The site is zoned for 36-storey residential use with a 2.8 plot ratio (ratio of potential gross floor area to land area). The site may be redeveloped into a new project with about 45 units averaging 2,000 sq ft, according to DTZ.
Property agents are racing to launch collective sales and other residential sites in Singapore's prime districts, as they ride on developers' current large appetite to replenish landbank in these areas. This is being fuelled by strong demand led by foreigners in the luxury housing sector.
Earlier last week, DTZ launched the tender for Hilltops Apartments in Cairnhill Circle and some adjacent terrace houses.
CB Richard Ellis is expected to launch soon the collective sale of Beverly Mai, an 80,000 sq ft freehold site in the Orchard Boulevard area, having secured the requisite minimum consent levels from owners. Sources said that the owners are hoping to achieve close to $250 million or $1,190 psf per plot ratio including DC.
And in the Grange Road area, BT understands that collection of signatures from Lucky Tower owners' is at an advanced stage. Astoria Apartments at Cairnhill Rise and Futura at Leonie Hill are among the other prime district sites expected to be launched this year.
DTZ director Tang Wei Leng said: 'There's a race to push out all the high end sites as we may not achieve our reserve prices as the market reaches saturation point.'
Competition among sites in the prime districts is set to intensify. 'Run of the mill sites will come under greatest pressure, whereas sites with some unique selling points may have some room still to ride on sentiment,' she added.
However, CB Richard Ellis executive director Jeremy Lake reasons that the profile of bidders for different-sized sites varies. 'Somebody who might bid for a $40 million site may not be interchangeable with a developer who can bid for a $200 million site. So while there may be quite a few sites, they may not necessarily be in direct competition for the same buyers,' he said.
'But clearly, developers faced with more choice may prefer to be slightly less aggressive than in the past. Buying interest is still quite strong, but going forward, the sites that will be successful will be the ones that are more desirable. If your site is less desirable, or overpriced, you may get left behind,' added Mr Lake.
Duchess Court up for sale again
Published March 16, 2006
Duchess Court up for sale again
By KALPANA RASHIWALA
AFTER two earlier attempts at a collective sale in 1997 and 2000, the owners of Duchess Court in the Bukit Timah area are once again teaming up to sell their homes. This time, the price tag is lower, with marketing agent Credo Real Estate saying the expected figure is $100 million to $108 million.
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Third try: The current expected price tag is between $100-$108 million compared to $160 million in 1997 and $130 million in 2000
This compares with price tags of $130 million in 2000 and and an even higher $160 million during the first attempt in 1997.
Based on the current price expectations, the land price for the 999-year leasehold property works out to between $563 and $601 psf of potential gross floor area including an estimated $20 million in development charges. 'At this price, the developer should be able to break even at about $880 to $925 psf or so for a new condo development on the site,' said Credo executive director Karamjit Singh.
The site is zoned for residential use with a 1.4 plot ratio and a five-storey maximum height. Mr Singh drew attention to two nearby low-rise units at Astrid Meadows on Coronation Road West which changed hands in December and January for $1,000 psf and $1,020 psf respectively - which he described as 'an impressive feat for a 16-year-old development'.
Assuming Duchess Court fetches $108 million, owners of the 36 townhouses and maisonettes stand to receive between $2.58 million and $3.5 million each - or about 75 per cent more than the $1.45 million to $2 million that they will individually fetch.
Given that Duchess Court has 36 owners currently, the 152,250 sq ft land area of the property works out to an average of 4,230 sq ft per owner. 'That's almost equivalent to the minimum size required to build one detached house and must make it among the highest land area per owner ratios among recent collective sales,' said Mr Singh.
The tender closes on April 18.
Who is afraid of the rate hikes?
Who is afraid of the rate hikes?
Experts give their views how rising development charges will affect land sales
Weekend • March 4, 2006
shobha Tsering Bhalla
[email protected]
EVEN as market watchers warn of a slow down in en-bloc sales and the redevelopment of certain areas of Singapore such as the Central Business District (CBD) following the recent hike in development charge (DC) rates, some property developers say they would not be deterred if the properties were in the right location.
They will "factor in the higher DC rates in their bid prices and also be very eager to lock in the prevailing DC rate once they have bought the site", said Mr Jeremy Lake, executive director, Investment Properties, CB Richard Ellis.
Development charge refers to the tax imposed by the Government to enhance land use. DC rates, which are revised every six months, are closely tracked in the industry as they reflect property values and have a direct impact on the breakeven costs of developers seeking to redevelop sites.
A senior executive from one of Singapore's top four property developers said if the property were in a prime area such as Bukit Timah, Districts 9 and 10 and the East Coast, they would continue to buy.
"The big boys will not see the rate hikes as an obstacle but the smaller players might. We're still 40 per cent off the peak (in property prices) so big developers will look at the potential not at the cost."
But, the buying would not continue at the same pace as they would be more selective," said the executive.
In agreement, Knight Frank's head of research & consultancy Nicholas Mak said the higher rates would mean owners would get less "so they may be less eager to sell."
Underscoring this view is the fact that the prime districts — the epicentre of such sales — have seen some of the biggest DC rate hikes. They range from an increase of 7 per cent in the Oxley and Leonie Hill area to 19 per cent in the Ardmore Park/Draycott area.
The quantum of the rate hikes this time was a shock to industry watchers who say they are much higher than the rise in property prices over the last two quarters.
"I was taken aback because the transacted prices have only gone up by 0.8 and 0.9 per cent for landed and non-landed properties. Whereas the DC rate hike for non-landed residential property was an average of 9.4 per cent and 4.6 per cent for landed," said Mr Colin Tan, head of research & consultancy at property consultancy Chesterton International.
"The DC rate is supposed to take into account the transacted prices — this rate hike is out of sync as it's more than twice that of property price increases. So what is the basis for calculating the DC rate?" he said.
Some of the DC rate hikes announced this week are the biggest in six years. The highest increases have been for non-landed residential rates in the CBD — by as much as 20 to 33.3 per cent, which experts say could deter owners of old office buildings from developing them for residential use.
Explaining the rationale for the rates, a spokesman for the Chief Valuer who sets the rates said as these rates need to closely reflect the land value within each sector at the time of review, "they cannot be merely adjusted based on property price index (PPI)".
"The adjustments are not even for all the sectors due to the different levels of market activities and interests across all sectors. If the rate hike for a particular sector is steeper than the actual market trend it could be because the previous rate adjustment for that sector was too conservative," said the spokesman.
Still, the stiff rate hike has few fans. "It's a zero sum game if the DC quantum goes up and the absolute land value and residual land value that owners can look forward to receiving would go down correspondingly," said Mr Karamjit Singh, executive director of Credo Real Estate which specialises in collective sales.
But while the rate hike will cause a slow down in en bloc sales, it could have the beneficial effect of slowing down the "frantic" pace at which land is being bought by developers. "They would need to slow down by mid-year or the third quarter as the pace at which land is being bought is unsustainably high," said Mr Singh.
"Historically, the market has only been able to absorb that many units but the amount of land that has been bought over the last few months show that they would yield far more units than can be absorbed."
Amberville sale is unlikely to be repeated, say analysts
Amberville sale is unlikely to be repeated, say analysts
AS the first HUDC estate to be sold through the en-bloc route, the Amberville acquisition by Far East Organization earlier this week is a milestone in the collective sale market and no doubt a shot in the arm for owners of aging HUDC estates.
But while the price set by Far East's $396 per sq ft bid for the estate is higher than expected, other HUDC owners should not expect a similar price — or even similar interest — for their estates say experts.
Amberville, which cost Far East a total of $183 million, is the first privatised HUDC estate to be sold en bloc and is believed to have attracted bids from three other major developers — City Developments, MCL Land and Wing Tai.
The 218,435 sq ft site can be redeveloped into a condo with 530 units measuring 1,200 sq ft on average.
Far East is estimated to have paid a development charge of $35.2 million and $23.8 million to top up the site's lease
While it is definitely a "benchmark price", the amount that Far East paid for Amberville "can't be used as a referral point for the prices of other HUDC estates because Amberville was unique", said Mr Foo Suan Peng, executive director & head of investment sales at Knight Frank which brokered the sale.
None of the other prospective HUDC estates are in as desirable a location as Amberville with its "breathtaking sea view and long frontage", he said.
Agreeing, Knight Frank's head of research & consultancy Nicholas Mak said other HUDC estates were not very near MRT stations, were surrounded by HDB estates and without any sea views, "so definitely the price would be quite different".
Newton Meadows up for en bloc sale
Property
Published March 28, 2006
Newton Meadows up for en bloc sale
THE en bloc fever is infectious - this time, the owners of the freehold Newton Meadows have caught it. Sources say the price expected is about $75 million, or about $680 per square foot of potential gross floor area inclusive of an estimated $6.9 million development charge.
Based on this, the breakeven cost for a new condo is about $900-$950 psf, say analysts. The 42,886 sq ft elevated site is zoned for residential use with a 2.8 plot ratio (ratio of potential gross floor area to land area). The plot can be redeveloped into a 36-storey condo with about 95 units averaging 1,300 sq ft each.
Assuming the 10-storey Newton Meadows does fetch $75 million, owners of the existing 28 units stand to receive about $1.4 million to $3.5 million in proceeds, depending on the size of their units, which range from about 1,200 to 3,600 sq ft. The sums the owners will receive are roughly 60 per cent higher than what the apartments would have fetched if sold individually.
Jones Lang LaSalle is marketing Newton Meadows through an expressions of interest exercise that closes on April 27.
Pinetree plans en bloc sale with a twist
Published March 30, 2006
Pinetree plans en bloc sale with a twist
By KALPANA RASHIWALA
MOST of the owners at the 50-unit Pinetree Condominium at Balmoral Park would end up out of pocket if they did a collective sale today, as they had bought their apartments at the peak of the market.
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Pinetree Condo: bidders will have to provide an exchange unit in the new project on the site to all owners who would suffer a financial loss
So their property agent Jones Lang LaSalle is proposing a collective deal in which bidders will have to provide an exchange unit in the new project they build on the site to all owners who would suffer a financial loss.
Those who will not incur a loss would have the option of receiving a cash payment from the developer.
Real estate lawyer SK Phang says current en bloc sale legislation provides that in a collective sale where the majority consenting owners are given exchange units in a new development, the minority who object to the sale must be offered a cash payment option. However, the minority still have grounds to object if they suffer a financial loss.
Under the legislation, an owner is deemed to have incurred a financial loss if the sale proceeds, after any deduction allowed by the Strata Titles Board, are less than the price paid for the property.
Another basis for objection by a minority owner to a collective sale is if the sale proceeds are insufficient to redeem the outstanding mortgage on the property.
JLL estimates that the current-day value of an exchange unit in a new development at the Pinetree Condo site would be roughly 30-40 per cent more than what the units in the present condo would fetch if sold individually today.
Owners who want a cash-out option would probably reap a lower collective sale premium of about 25 to 30 per cent. But as a market watcher points out, this premium may not be big enough to erase the financial loss for some of the owners.
Even if the financial-loss cases agree to the exchange option, other hurdles may await them - such as the expense of renting a property while they wait for the new project to be built on the current site. Likewise, owners who are renting out their apartments will have to forego rental income while the property is being redeveloped.
Owners will also have to make arrangements with their bank to roll over the mortgage to the new property, failing which they will have to redeem their existing mortgage.
Still, JLL says its proposal provides an exit opportunity for owners to move on, and that otherwise they may have no feasible way of exiting their investment under current en bloc legislation.
The original developer of Pinetree Condominium, Land Resources Group, still holds a substantial number of the project's 50 apartments, BT understands. The majority, however, are held by other individuals.
JLL is inviting bidders to take part in an expression-of-interest exercise closing on April 27. They will have to indicate their bids providing at least two options - an exchange unit, and cash for owners who want out.
Bidders are also welcome to list a third option - offering the owners a unit in a completed project by the developer nearby.
'This is the first time where competitive bids are being invited for a collective sale involving both cash and exchange options,' said JLL's regional director and head of investments Lui Seng Fatt.
Pinetree Condo is on a freehold site of 41,361 sq ft, zoned for residential use with 1.6 plot ratio and a 12-storey height limit. Bidders can also offer to buy four adjoining semi-detached houses, which would result in a bigger site of 50,329 sq ft. This would be big enough to house a new development of about 60-70 apartments averaging 1,100 sq ft, JLL says.
Trading places: a spin on en bloc sales
Property
Published April 4, 2006
Trading places: a spin on en bloc sales
Collective exchange gives owners an instant upgrade, but it is not without problems, writes KALPANA RASHIWALA
A VARIATION of the popular collective sale called the collective exchange has been in the news lately. First the owners of Paterson Lodge concluded such a deal. And last week it was announced that the owners of Pinetree Condominium are seeking expressions of interest from developers keen on a similar proposal.
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Arriving at a win-win solution: The most practical way to do a collective exchange is to get unanimous approval from all owners - whether it is for an all-exchange deal as in the case of Paterson Lodge (above), or one where there is the option of an exchange unit or a cash-out payment, as in Pinetree Condo
Basically, a developer, instead of buying the land outright from the owners, agrees to give them replacement units in the new project to go up on the site.
This has been touted as a 'win-win solution', with owners getting a new unit in the same location and the developer not having to pay upfront for the land, thereby saving on costs.
Such deals are not new, says CB Richard Ellis executive director Jeremy Lake. 'However, collective exchange transactions are few and far in between and not without their own problems,' he says. 'For a start, for such deals to work, you must have owners' unanimous approval, which means there's a higher chance of success if the number of owners involved is small and they are like-minded.'
Agreeing, Jones Lang LaSalle (JLL) regional director and head of investment sales Lui Seng Fatt does not expect the trend to take root. 'Traditional collective sales will continue to dominate because these can be done with just the 80 per cent consent level,' he says.
However, some owners and property consultants are undeterred, as the collective exchange can solve several problems.
In the case of Paterson Lodge, the collective exchange with a subsidiary of mainboard-listed Ace Dynamics was structured as a solution for the property's owners, who faced the usual difficulty in a collective sale - finding a replacement property of the same size in the same location with their proceeds.
And in the case of Pinetree Condo at Balmoral Park, the collective exchange is mooted as a way to reduce the loss for most owners, who would be out of pocket in an en bloc sale today because they bought their apartments at the peak of the market.
How do the numbers stack up?
A developer doesn't have to fork out a large amount to buy the land upfront - basically he only has to spend money on construction, so he saves on finance costs and cash outflow. The developer then splits some of this saving with the owners by offering them a higher collective sale premium through a replacement property.
JLL's Mr Lui, whose firm is marketing Pinetree Condo, estimates the current value of an exchange unit at some 30-40 per cent more than a unit in the existing development would fetch if sold individually today. Owners who want a cash-out option would reap a lower collective sale premium of some 25-30 per cent.
Some of the owners could still make a financial loss, albeit a lower one. Nonetheless, the proposal provides an exit opportunity for those willing to take a haircut and move on.
The developer makes his profit by building more and higher value units than those in an existing project. After giving the owners their exchange units, the developer is free to sell the remaining units for a profit.
But for a collective exchange to work, owners must agree unanimously on the structure of the deal, as Knight Frank executive director Foo Suan Peng, whose firm brokered the Paterson Lodge transaction, explains. This is unlike the typical collective sale, where consent from majority owners controlling at least 80 per cent of share value is sufficient, subject to approval from the Strata Titles Board (STB).
'Even in a normal collective sale, the 80 per cent that agree to the deal must include all financial loss cases since anyone making a loss will have grounds to block an en bloc sale when it comes up for hearing at the STB under current legislation,' says Mr Foo.
The same law also provides that in a collective sale where the majority consenting owners are given exchange units in a new development, the minority who object to such an arrangement must be offered a cash payment option.
This is why, in the case of Pinetree Condo, developers bidding for the property will have to provide owners with a choice of a one-for-one exchange or a cash-out option.
And the deal can still be blocked at the STB hearing if the minority argue that the cash-out price is not fair value. As Credo Real Estate managing director Karamjit Singh explains: 'Therein lies a challenge - what value should be used to determine the fair cash-out compensation for such dissenting owners?'
Knight Frank's Mr Foo says the most transparent method is to have a tender and use the highest bid as the basis for the cash-out price.
But developers not willing to provide both exchange and cash-out options will not participate in such a tender. To avoid all this hassle, consultants say the most practical way to do a collective exchange is to get unanimous approval from all owners - whether it is for an all exchange deal like Paterson Lodge, or one where there is the option of an exchange unit or a cash-out payment, like Pinetree Condo.
Even then, a host of problems can bedevil what is conceptually a win-win proposition, says Credo's Mr Singh. 'The moment owners get down to reviewing the legal paperwork, they can get overwhelmed by the issues they would have to wrestle with, and often then resort back to an outright sale,' he recounts from a recent case he worked on in the River Valley area.
There are also other issues.
Owners may have to redeem outstanding mortgages with banks when a developer starts work on their site - even if the land is not transferred to that developer until the new project is completed and those owners have received the titles to their new apartments. Owners will also have to factor in the rental expense they will incur while waiting for the site to be redeveloped.
On the other side of the fence, a contractor/developer who participates in such a scheme will have to find a financier willing to give him a construction loan without the security of the land to be developed.
'One way would be for the contractor, if it's an established company, to give a corporate guarantee tied to other assets of the company,' suggests Mr Foo.
Robinson Rd office block to go residential
Top Print Edition Stories
Published April 19, 2006
Robinson Rd office block to go residential
By KALPANA RASHIWALA
(SINGAPORE) Another ageing CBD office block looks set to make way for homes. BT understands that SingTel is likely to sell 71 Robinson Road - which houses Robinson Post Office - after securing provisional permission to redevelop the property into a 51-storey project.
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From office to homes: SingTel has obtained provisional permission to redevelop the CBD site
Provisional approval has been granted for 315 apartments on the upper 44 storeys, which will be above a six-storey carpark podium and one level of commercial space.
The commercial space is expected to be at street level. The plot ratio - the ratio of potential gross floor area to land area - approved is 11.2. This means the project can be built up to a gross floor area of 274,746 sq ft - a significant enhancement from the existing 99,383 sq ft.
Approval is subject to the site being rezoned from commercial use to residential with commercial use on the first storey. A development charge will be payable to the state in exchange for the right to develop a bigger project on the site.
In addition, the successful developer is expected to apply to the authorities to top up the 24,531 sq ft site's lease from the remaining 45 years to the original 99 years.
The seven-storey building, formerly known as Crosby House, is at the corner of Robinson Road and McCallum Street.
Other ageing office blocks expected to make way for homes include NatWest Centre and Asia Chambers - both in McCallum Street - 1 Shenton Way and the HMC Building in Mistri Road.
SingTel is expected to put up 71 Robinson Road for sale in line with its policy of divesting non-core property to redeploy the resources to its core telco business.
In February, it sold a former telephone exchange in Old Holland Road for $30 million.
Tenders have closed for two sites in West Coast and Hillcrest roads.
Horizon View in Cairnhill up for en bloc sale at $123m
Horizon View in Cairnhill up for en bloc sale at $123m
6 May 06
THE owners of Horizon View in Cairnhill Road are the latest to hit the en bloc trail, asking $123.2 million or $3.4 million per existing unit. This works out to about $951 psf of potential gross floor area, inclusive of an estimated development charge of $1.1 million - the same unit land price achieved for Hilltops Apartments at Cairnhill Circle recently.
If the asking price of $3.4 million per unit is achieved, the owners of the existing 36 units at Horizon View will reap a collective sale premium of about 100 per cent based on the last individual transaction - $1.7 million for an apartment sold in March last year.
CB Richard Ellis, which is marketing the property through a tender that closes on June 8, says Horizon View has a freehold land area of 46,661 sq ft. The site is zoned for residential use with a 2.8 plot ratio and a 36-storey maximum height.
By KALPANA RASHIWALA
Airview Towers owners woo developers
Airview Towers owners woo developers
More flexibility, upside seen in 'collective exchange' than sale
By ARTHUR SIM
AIRVIEW Towers in River Valley Road is for sale - sort of. DTZ Debenham Tie Leung has been appointed by a sale committee of owners to look for developers keen on the 63,264 sq ft property.
Airview Towers: Through a collective exchange, owners hope to reap future capital appreciation
DTZ's director of investment advisory services Tang Wei Leng said an expression-of-interest exercise will give both buyers and sellers 'flexibility' to negotiate the terms before anyone actually signs on the dotted line, or even before a contract is drawn-up.
With the recent 'collective exchange' of Paterson Lodge - existing home owners opted for new units in the redevelopment of their building rather than cash payment - more home owners are considering this route rather than a traditional collective sale, as there could be more upside.
Based on recent prices at new developments in the area, Ms Tang reckons the land price for Airview Towers, which has a plot ratio of 2.8, could be about $750-$800 psf ppr. This would work out to about $135-$142 million in total. On average, existing owners would reap a 30-40 per cent premium on the current market price for individual units.
But through a collective exchange, Ms Tang says owners who take a 'future view can ride through the market and hope for future capital appreciation rather than cash out at a particular price at this point in time'.
Although a collective exchange throws up contractual complexities, as owners and the developer have to be amenable to the terms, Ms Tang says she has received more requests for this option recently.
Developers, however, have a choice in the vicinity of Airview Towers. Also for sale in the same area is a warehouse at Martin, Narayanan Chetty and Muthuraman Chetty roads.
Opposite the former TradeMart site, which is now RiverGate condominium, the 44,477 sq ft redevelopment site, with a plot ratio of 2.8, is being marketed by Jones Lang LaSalle.
JLL's regional director and head of investments Lui Seng Fatt says the site will primarily be for residential use but will also have a commercial component on the first storey.
The maximum GFA is 124,500 sq ft and the land price is likely to be $750-$800 psf ppr including development charge.