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reporter2
03-04-14, 18:46
http://www.businesstimes.com.sg/specials/property/spring-grove-gets-owners-ok-go-en-bloc-20140403

Published April 03, 2014

Spring Grove gets owners' OK to go en bloc

Requisite 80% consensus reached after offer price raised to $2,600 psf

By lee meixian [email protected]


SPRING Grove in the prime Grange Road area has arrived at the requisite 80 per cent consensus from owners to put the condominium up for en bloc sale.

According to a notice emailed to residents obtained by The Business Times, owners of 264 out of 325 units have signed the collective sale agreement as at March 23, 2014 - representing 81 per cent of the condo's total share value and strata area.

A five-day cooling-off period, imposed after the approval was obtained, has since ended.

Unit owners will receive an average $2,600 per sq ft for their two- to four-bedroom apartments and penthouses, according to Ian Loh, director and head, investment & capital markets at Knight Frank, which is sales agent to the deal, as well as sales committee chairman Joseph Chia.

This was raised from the earlier reported $2,100 psf offered last March.

Asked for a reason to the increase, Mr Chia said: "People just basically don't sign until the price is right.

"When you think about it, with the additional buyer's stamp duties (ABSD) and so on in place, it's very difficult to find a replacement value if you only receive $2,100 per sq ft."

Given that the strata area of the condominium is about 438,576 sq ft, the condominium could hit the market at a reserve price of $1.14 billion, said Karamjit Singh, head of investments and residential at JLL.

The largest successful en bloc sale in Singapore to date is Farrer Court, which was sold for $1.34 billion in 2007.

"There have been other en bloc projects launched for sale in the market, some even bigger than Farrer Court, but all have failed to find buyers," said Christine Li, head of research and consultancy at OrangeTee.

Consultants reckon that pressures from the ABSD and other property cooling measures could affect developers' sentiment and make them hesitant about buying land.

"En blocs happen in cycles and are currently going through a low point. The market outlook needs to be positive before we start seeing more en blocs being successful," Mr Singh said.

OrangeTee's Ms Li thinks the current investment climate and stringent total debt servicing ratio framework, which lower the loan-to-value limits for buyers looking to buy additional residential properties, will make it "extremely challenging to find a buyer at this price level".

"There is still substantial supply along Grange Road in terms of new projects, some of which have not been launched. The number of unsold units in the vicinity is also a concern for potential buyers.

"On top of that, if the developer is not able to sell all the units in the development within five years, they will also be hit by ABSD. The risk will be too much to bear unless current cooling measures are relaxed."

She feels that the more palatable en bloc quantum currently is about $100 million.

Meanwhile, Knight Frank said it will soon begin discussions with the US government, to whom the site will revert back to as freehold land, after its 99-year lease, started in 1991, ends.

Knight Frank's Mr Loh declined to reveal further information, bound by non-disclosure agreements signed and the political sensitivity of the topic, he said.

The notice sent to residents said Knight Frank has up to one year (i.e. before March 22, 2015) to find a buyer and file an application to Strata Titles Board.

Before the site is launched for sale by tender, there will be an owners' meeting to provide information on the sale proposal and the sale process, it also said.

leesg123
04-04-14, 01:04
http://www.stproperty.sg/articles-property/singapore-property-news/spring-grove-may-hit-market-at-1b/a/110810

Wow 10% goes to the land owner to top up the lease. Guess FE learn from them.

All freehold condo and landed, hold on to your title. Sell lease 99 yrs for enbloc.

catsick
04-04-14, 11:35
This is not being sold at 2600 this is what they are offering for a 76 year lh with the lease negotiations still to be ascertained, it will cost a minimum of 10% to re pop to 99 years , a developer with an internal funding cost of 5% ( like wing tai ) would have a breakeven on buying this at 2600 and constructing at 4,000 psf after funding , lease extension and cheap construction at 300 psf , to turn a reasonable profit they would need to sell at 5k psf , meanwhile next door gramecy park is almost completed and the developers dare not even launch for sale , over the road clivenden the units are offered at 3100 psf and realistically I think you could buy at 2600 psf and this is FREEHOLD !!

If they want to en block this and for the developer to have a reasonable chance to make a profit they will need to offer this at 1300 psf , clearly this will never happen , this is why there are NO en blocks happening apart from very small buildings that can quickly be redeveloped into shoebox units

victorcpwong
07-04-14, 10:29
At $1.140b reserve price and an estimate of $121m to top up to 99 years lease, Spring Grove is asking for $1369 psf-ppr. This is equivalent to a freehold rate of $1426 psf-ppr. The land rate is reasonable. But the absolute sum is humongous.

hopeful
07-04-14, 10:48
is US govt also bound by the
http://www.sla.gov.sg/faq/differential_premium.pdf

at 76years remaining, it is 89% of FH.
so 10% topup is quite in the ballpark (just a little bit under 11% ).

catsick
07-04-14, 11:22
At $1.140b reserve price and an estimate of $121m to top up to 99 years lease, Spring Grove is asking for $1369 psf-ppr. This is equivalent to a freehold rate of $1426 psf-ppr. The land rate is reasonable. But the absolute sum is humongous.

This is not correct , the article states that they are trying to sell at 2600 psf , the other article from a year ago when they were trying to sell at a much lower price states that the psf-ppr at the lower price was 1,888 , so I dont see where your 1369 comes from ?

Either way with the other developers in the area too scared to even launch their developments yet who in their right mind is going to write a cheque for over 1 billion dollars to buy into an oversupplied market at a high price ...

gn108
07-04-14, 12:59
Precisely. Will be a non-event. Next!

Either way with the other developers in the area too scared to even launch their developments yet who in their right mind is going to write a cheque for over 1 billion dollars to buy into an oversupplied market at a high price ...[/QUOTE]

leesg123
08-04-14, 07:32
Actually the owners know the enbloc wont be successful. But that is not their aim if I guess correctly. This enbloc exercise will serve to increase the selling price and bargaining power of the owners who want to sell their unit in the market to buyers who are not so well informed and thought they are in for a windfall.

victorcpwong
29-04-14, 14:51
This is not correct , the article states that they are trying to sell at 2600 psf , the other article from a year ago when they were trying to sell at a much lower price states that the psf-ppr at the lower price was 1,888 , so I dont see where your 1369 comes from ?


Yes. I was wrong. My re-calculation is $2,183 psf-ppr based on:

Land area = 263,513 sq. ft.
Current strata area = 438,576 sq. ft.
Reserve Price = $1.140B
Premium to top up to 99 year lease: $121m
Development Charge Rate: $12,600 psm