Raintree Gardens sold en bloc for $334.2m

http://www.straitstimes.com/business...bloc-for-3342m

Raintree Gardens sold en bloc for $334.2m

Oct 7, 2016

Updated Oct 10, 2016

Former HUDC estate at Potong Pasir is third collective sale this year; tender was hotly contested

Lee Xin En


The modest comeback of collective sales has kept up with the sale of Raintree Gardens in Potong Pasir for $334.2 million, after more than five developers bid for the site.

Many unit owners of the 175-unit privatised HUDC estate will walk away with about $1.9 million per unit, which is a premium of almost 90 per cent over the last transaction price of about $1.1 million this year.

After years of relative stagnation in the market, this is the third collective sale this year, after the blockbuster $638 million sale of Shunfu Ville in May and the 14-unit sale of Harbour View Gardens in August for $33.25 million. The latest sale was brokered by real estate firm JLL.

The deal was struck yesterday, after the requisite more than 80 per cent of owners consented. The public tender was launched on Sept 1, with a reserve price of $315 million.

Mr Aaron Wan, a member of the collective sale committee and an associate director at ERA, said it was "phenomenal" there were so many bids. The committee had not expected such a good response. "For each of us to be getting about $1.9 million hits the sweet spot," he said. His parents bought the unit for about $600,000 in the late 90s, he added.

It was a case of beginner's luck for Raintree Gardens, as the collective sale is its first attempt. It was privatised in July 2014.

The Straits Times understands that the top three bidders had very competitive bids, with a margin of about 1 per cent among the trio. UVD (Projects), a joint venture of UOL Group and United Industrial Corporation, won the day as it had responded quickly and was open to favourable terms for the sellers.

Mr Liam Wee Sin, UOL deputy group chief executive, said the acquisition was part of its land-banking strategy. "The location also allows us to ride on the Bidadari story," he said, citing upcoming developments at nearby Bidadari estate.

UVD is looking to develop the 201,405 sq ft site to house about 750 units. Overall, it is paying about $797 per sq ft per plot ratio (psf ppr), including the premium paid to top up the lease to a fresh 99 years and for redevelopment of the site to a gross plot ratio of 2.8.

Mr Ong Kah Seng, director of R'ST Research, said he was not surprised by the keen interest, as developers are "running low in land inventory and thirsty for land". They are also keen on the Potong Pasir area, as new developments and retail are set to energise the area, he said. The price was slightly high but realistic, he said, calling it a "price bearing a little optimism".

"Collective sales are making a comeback," he said, adding that more contractor-developers will actively look for city fringe sites to acquire via collective sales.

Thong Sia Building, off Orchard Road, was the only development sold last year - for $380 million - while there were none in 2014.

Mr Desmond Sim, CBRE's head of research, said recent sales will encourage people to form collective sales committees. However, their success is not clear-cut, depending on whether the site is in a prime location, and whether sellers and buyers are realistic, he said. "If the Government starts to release more residential land, some developers prefer government land sales," he added.

Correction Note: An earlier version of this story indicated that all the sales have been brokered by JLL. Harbour View Gardens was not brokered by JLL. We are sorry for the error.

http://www.businesstimes.com.sg/real...site-for-s334m

UOL-UIC joint venture buys Potong Pasir site for S$334m

Latest deal catapults year-to-date en bloc sales to over S$1b, as analysts anticipate market upturn

By Lee Meixian

[email protected]

@LeeMeixianBT

Oct 7, 2016


THE en bloc purchase of Raintree Gardens in Potong Pasir by a joint venture (JV) of UOL Group and United Industrial Corporation (UIC) brings the total value of successful en bloc deals in Singapore so far this year to over S$1 billion. The latest deal follows similar successful attempts with Shunfu Ville and Harbour View Gardens in the past six months.

This is a huge improvement from the S$380 million worth of en bloc deals in 2015 and zilch in 2014 - although it definitely still pales in comparison to 2010-2013, when the average annual value of successful deals was S$1.87 billion.

In separate announcements on Thursday, the two JV partners said they have secured a privatised former HUDC estate in Potong Pasir Avenue 1 for S$334.2 million in a public tender. HUDC estates were initially built as more upmarket public housing for the sandwiched middle class, but the scheme came to an end when the response to its completed flats started to dwindle.

Each Raintree Gardens apartment owner will receive an average gross sale price of about S$1.9 million upon the success of the collective sale, which is subject to conditions. The site was launched for collective sale in September with a reserve price of S$315 million, after more than 80 per cent of the owners consented to the en bloc sale. Raintree Gardens has a 99-year tenure which started in 1987.

The sale price reflects a land cost of about S$797 per square foot (psf) per plot ratio on the potential gross floor area, inclusive of an estimated differential premium payable to the state to top up the lease to a fresh 99 years, and for redevelopment of the site to a gross plot ratio of 2.8. The property comprises two 12-storey masionette blocks and one seven-storey masionette block, with land area of about 201,405 square feet. It was privatised in 2014.

Karamjit Singh, international director and head of residential at JLL, which brokered the deal, said new developer sales in the Potong Pasir area are moving at about S$1,400 to S$1,500 psf.

Nicholas Ng, director of investments at JLL, said: "The result of the tender is a good reflection of the strong attributes of the site, which has a direct and broad frontage along the Kallang River. The park connector along the river was also a strong draw, as it allows residents of the new development to jog and cycle to many parts of the island, even to the central business district."

Mr Singh added the collective sale market is slowly turning a corner. He attributed the pick-up in the collective-sale activity to three factors: the switch in the outlook of the residential market from negative to neutral-positive, the shortage of development sites from the government and private sectors, and the strong attributes and realistic pricing of the developments sold this year.

"Over the last three years, there have been as many as 20 unsuccessful en bloc attempts. Whether a transaction goes through or not depends on the attributes of the property and owners' price expectations," he said.

BT understands some still-unsuccessful en blocs include Katong Shopping Centre and Normanton Park.

On the turn of market sentiment, he said: "We're not talking about where the market is right now but the developers' outlook, because when they buy land today, they're projecting where the market will be going forward. . . The general expectation is that there could be some stabilisation before recovery."

Last year, only one development, the mixed-use Thong Sia Building along Bideford Road, was sold for S$380 million. This year, the Shunfu Ville estate in Bishan was sold for S$638 million in May; that was also a privatised HUDC estate. In August, Roxy-Pacific Holdings agreed to buy the freehold Harbour View Gardens site on Pasir Panjang Road for S$33.25 million.

Asked what his plans are, Liam Wee Sin, deputy group CEO of UOL, said the JV will look at developing a project with about 750 units to attract homebuyers and upgraders. "The acquisition is part of our landbanking strategy, and the location allows us to ride on the Bidadari story. It is a very timely replenishment for us as there are less than 20 units left at Botanique at Bartley. The new site has a unique selling point of being close to nature with a riverfront view and a park connector, and yet is so near the city. There is a scarcity of sites with such rare attributes."

According to Bloomberg data, UOL currently owns 43.85 per cent of UIC, making this an interested person transaction. Both sides will be funding it with bank borrowings and internal resources.

UOL's shares on Thursday rose three cents to S$5.74, while UIC shares were up a cent to S$2.76.