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Thread: Four en bloc sites back on market with lower tags

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    Default Four en bloc sites back on market with lower tags

    [url]http://www.businesstimes.com.sg/sub/suite/story/0,4574,282285,00.html?[/url]

    Published June 5, 2008

    [B][SIZE="5"]Four en bloc sites back on market with lower tags[/SIZE][/B]

    [B]Cavenagh Gardens, Novena Hill, Seletar Garden, Hong Thye offered in Q4 2007[/B]

    By EMILYN YAP


    FOUR collective sale sites are back on the market, with price expectations much lower than when they were offered in Q4 last year. Cavenagh Gardens, Novena Hill, Seletar Garden and Hong Thye are for sale after attracting weak bids the last time round.

    The freehold Cavenagh Gardens near the Istana could fetch $450-$455 million or $1,671 to $1,689 per sq ft per plot ratio (psf ppr). This is 27 per cent lower than the expected price of $619 million or $2,308 psf ppr last October.

    The buyer may be able to alienate adjoining parcels of state land for a further $10 million. If approved, the combined site would have a potential gross floor area (GFA) of 310,649 sq ft, bringing the price down to $1,481 to $1,497 psf ppr.

    The site could yield 155 units with an expected breakeven cost of $1,915 psf and an expected selling price of $2,200 psf.

    If the authorities allow redevelopment with a plot ratio equivalent to the development baseline of 3.24, the site's potential GFA could increase to 479,287 sq ft.

    Riding on the back of redevelopment plans for Paya Lebar Central under Draft Master Plan 2008, Hong Thye at Lorong 39 Geylang is also up for sale again. The freehold site could fetch $12-$13 million, which translates to $359 to $385 psf ppr including an estimated $1.9 million development charge (DC).

    With a potential GFA of 38,702 sq ft, the site could house 40 units with an expected breakeven cost of $709 to $735 psf, and an expected selling price of $780 to $809 psf.

    Last October, the site was up for sale at $15-$17 million or $438 to $489 psf ppr including DC.

    The expected price for a freehold residential site at Novena Hill is $42-$45 million or $1,170 to $1,254 psf ppr. The site, with a potential GFA of 35,885 sq ft, could yield 40 boutique apartments. The site was up for sale last October at $56-$60 million.

    The last site, Seletar Garden in Yio Chu Kang Road, is an estate in perpetuity. Located near the Seletar Aerospace Park, the mixed-development site could fetch $50-$55 million or $488 to $537 psf ppr. The expected price was $70-$75 million last September.

    There is also the possibility of alienating three parcels of adjoining state land at an estimated additional cost of $7.9 million. The combined site would have a potential GFA of 132,219 sq ft, lowering the price to $438 to $476 psf ppr.

    Propnex is marketing the four sites. According to its head of investment sales Charles Chua, although the property market is relatively quiet, 'we do believe that there are pockets of pent-up demand'.

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    Default 4 sites relaunched for collective sale at lower prices

    [url]http://www.straitstimes.com/Money/Story/STIStory_244605.html[/url]

    June 5, 2008

    [B][SIZE="5"]4 sites relaunched for collective sale at lower prices[/SIZE][/B]

    [B]PropNex hopes 30% cut in asking price will attract buyers, as demand is 'still there'[/B]

    By Joyce Teo, Property Correspondent


    A BOLD property firm is defying market trends with a renewed bid to sell four housing sites en bloc, even though the market appears dead for now.

    PropNex Realty admits its move is 'contrarian' but hopes a hefty asking price cut of up to 30 per cent will attract buyers.

    Even then, developers may not bite, given market uncertainties, property consultants say.

    Some other sites were relaunched for collective sale this year, but none was sold. Any bids that did emerge were below the owners' expectations.

    PropNex is relaunching four sites: Cavenagh Gardens in Cavenagh Road, Novena Hill in the Novena area, Seletar Gardens along Yio Chu Kang Road and Hong Thye in Geylang.

    'We are trying to take a contrarian view,' said the firm's head of investment sales and commercial department, Mr Charles Chua. 'We believe the demand is still there. Someone has to take the lead and kick-start the market.'

    The four estates were first launched for sale around September and October last year. Their owners had since lowered their expectations, but not their reserve prices. This was the minimum sale price fixed when the owners first agreed to a collective sale.

    In the case of the 130,000 sq ft Cavenagh Gardens, the asking price is now $450 million to $455 million, well down from $619 million in October.

    Mr Chua hopes the prospect of combining the freehold site with an adjoining piece of state land will be an added attraction.

    That will lower the price to as little as $1,481 per sq ft per plot ratio (psf ppr). Last year, the price was $2,308 psf ppr, excluding the state land. A developer could then sell the new units at about $2,200 psf, said Mr Chua.

    Seletar Gardens is also heavily discounted now. The asking price is $50 million to $55 million from $75 million last year.

    The asking price at Novena Hill is now at $42 million to $45 million, down from up to $60 million last year.

    And the price tag on the Geylang plot has had about $3 million lopped off and is now going for up to $13 million.

    However, even if the sellers have lowered their pricing expectations, there are other issues to consider, observers say.

    'It depends on how reasonable the seller's price is. It is quite meaningless to lower just the asking prices and not the reserve,' said a market observer. 'If developers were interested in buying below the asking prices, they would already have asked for it.'

    Most developers already have some projects on their books, so they may not be keen, said Mr Colin Tan, Chesterton International's head of research and consultancy.

    'The issue is the construction bottleneck,' he said. 'For new sites, they have to consider rising construction costs, in addition to the risk of a declining market.'

    Mr Karamjit Singh, the managing director of Credo Real Estate, which has handled a significant amount of collective sales, said developers would need a greater profit margin in the event selling prices soften even further.

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