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Thread: Southbank (D7, Leasehold, UOL Group)

  1. #446
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    Default Southbank D7 former Eng Cheong Tower.





    UNITED Overseas Land and Low Keng Huat are planning to redevelop their Eng Cheong Tower site into a project with a mix of condominium and small office, home office (SoHo) units.

    The collective sale - the first for a 99-year leasehold property - was approved by the Strata Titles Board on Thursday.

    'We're planning a chic, inner-city development that will capitalise on views of the river and have seamless underground access to Kallang Riverside Park,' said UOL group general manager Liam Wee Sin. 'The project will be substantially for sale.'

    Eng Cheong Tower was sold through a tender exercise. The top bid of $47.5 million by UOL and Low Keng Huat works out to a land price of about $240 per square foot of potential gross floor area, inclusive of development charges (DC) and a premium to top up the site's lease to 99 years.

    What facilitated the collective sale of the first 99-year leasehold property in Singapore was an unprecedented decision by the Singapore Land Authority to grant in-principle approval to top up the lease of the site from the remaining 65 years to the original 99 years.

    In the past, SLA had processed requests for lease upgrading only on formal application, which requires more detailed submissions and takes a longer time.

    The in-principle lease upgrade nod from SLA was for a residential development with retail and commercial use on the lower storeys, subject to conditions.

    Prior to the launch of Eng Cheong Tower's tender, outline planning permission had also been obtained from the Urban Redevelopment Authority for a new 24-storey commercial and residential development with a 6.36 plot ratio (the ratio of allowed gross floor area to land area) to be built on the 40,377 sq ft site.

    Assuming an all-in land cost of about $240 psf per plot ratio, market watchers estimate that the breakeven cost for a new condo/SoHo project on the site could come in below $500 psf for the UOL and Low Keng Huat tie-up.

    The strategy adopted for the collective sale of Eng Cheong Tower is seen by property market watchers as setting a precedent for more such sales of strata titled properties with dwindling leases. This should facilitate redevelopment of ageing leasehold buildings and help fight urban blight.

    https://www.stproperty.sg/articles-p...eloped/a/57635

  2. #447
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    Default Re: Southbank D7 former Eng Cheong Tower.

    THE recent sale of Eng Cheong Tower, the first collective sale of a 99-year leasehold property, has not only set a precedent for more en bloc sales of such properties but can also be used as an urban redevelopment strategy, say market watchers.

    What facilitated the $47.5 million sale to United Overseas Land and Low Keng Huat was an unprecedented decision by the Singapore Land Authority to grant in-principle approval to top up the lease of the site from the remaining 65 years to the original 99 years. In the past, SLA had processed requests for lease upgrading only on formal application, which requires more detailed submissions and takes a longer time.

    'Developers would not take the risk of buying Eng Cheong Tower, which has 65 years unexpired in its lease, for redevelopment and sale,' said Foo Suan Peng, executive director of Knight Frank who was involved in brokering the deal.

    'If left alone, such buildings on sites with leases diminishing with each passing year, will depreciate in value, leaving their owners with little incentive for upgrading the properties. They may deteriorate into urban blight,' he added.

    One solution could be for the government to step in and acquire such sites. 'But then again, compensation is always a thorny issue and land acquisition by the state seldom leaves property owners happy,' he noted.

    By securing SLA's in-principle nod for a lease top-up, a developer can enter more confidently into a deal to buy such a site, although the land premium for the lease upgrade will still be finalised by SLA only later.

    'The precedent set by Eng Cheong Tower can be used as a template for a national urban planning policy to prevent urban deterioration as the lease nears expiry and, at the same time, help rejuvenate the city,' said Mr Foo.

    Such a strategy allows the market to decide when and how redevelopment should take place, with the state playing a supporting role, in terms of processing applications for upgrading the lease and redeveloping the site. Other examples of ageing leasehold properties are Golden Mile Tower and Golden Mile Complex along Beach Road, near Eng Cheong Tower, and Pearl Bank apartments in Chinatown.

    More choice sites facing similar circumstance that could potentially become collective sale candidates include Grangeford, Mount Elizabeth Medical Centre and Orchard Bel-Air in the prime districts 9,10 and 11, and Mandarin Gardens and Bayshore Park along the east coast.

    Like Eng Cheong Tower, all these properties were built on 99-year leasehold sites sold by the government starting from the late 1960s.

    SLA has also been studying for sometime the issue of what to do with properties with dwindling leases.

    Usually SLA processes requests for lease upgrading only on formal application based on the merits of each case and the government's long-term plans for the area, among other factors. And typically, market watchers note, SLA may approve applications to upgrade leases of sites slated for redevelopment.

    Property consultants say that provisional permission from the Urban Redevelopment Authority for a redevelopment would normally have to be backed up with supporting documents when making a formal application to SLA for a lease upgrade.

    In the case of Eng Cheong Tower, only an outline planning permission (a more preliminary approval) for a redevelopment of the property had to be submitted to SLA to support the in-principle application of the lease top-up.

    While the collective sale for Eng Cheong could in theory still have taken place had all the parties involved taken the normal route of a formal application, this would have complicated the sale process and taken a longer time, said S K Phang of Phang & Co.

    He submitted the application for in-principle approval of the lease upgrade to SLA on behalf of Eng Cheong Tower's collective sale committee.

    One scenario would be for property agents to get a collective sale agreement from owners controlling the requisite minimum 80 per cent of share values and then find a buyer for the site.

    A conditional sale and purchase agreement deal would then be entered into, hinging on formal application approval to top up the lease. 'If SLA gives the formal approval, then the deal goes ahead. If not, all the time and effort spent would have been wasted,' said Dr Phang.

    Of course, owners themselves can proceed to make a formal application to SLA to secure its approval for a lease top-up before they find a buyer. A seasoned property consultant said that making a formal application for a lease upgrade to SLA requires more details about the proposed development which can only be furnished by the actual developer of the site.

    Getting in-principle approval for a lease upgrade as in the case of Eng Cheong Tower is a much tidier process, said Dr Phang.

    'And this opens up a whole new avenue for collective sales of 99-year leasehold sites. Let's just say that some people are working very hard on potential deals.

    'Where properties have en bloc possibility - like redevelopment potential and an attractive enough premium to the owners in terms of what they can pocket for their properties through a collective sale versus selling them individually, the diminishing lease term is no longer a hindrance for a collective sale,' says Dr Phang.

    Knight Frank's Mr Foo says that one factor that could hold back collective sales of such properties would be loss cases, involving owners who bought their properties at toppish prices.

    All collective sales which don't have owners' unanimous approval are subject to the approval of the Strata Titles Board, and loss cases would be grounds for dissenting owners to block a sale, say market watchers.

    And the loss cases are more critical in the case of a 99-year leasehold property than a freehold one as in the former case, the value of the property depreciates with each passing year because of the dwindling remaining lease term. 'So even if there' s a substantial collective sale premium, it may not be enough to offset the loss cases,' says Mr Foo.

    'Perhaps one way for the authorities to take a more proactive approach to spur the redevelopment of ageing leasehold buildings would be for URA to give some incentive like a plot ratio enhancement or better still, bonus plot ratios exempt from payment of development charges, to help mitigate losses,' suggests Mr Foo.

    The approved maximum plot ratio for a site specifies the maximum gross floor area that can be developed on it.

    Jones Lang LaSalle and CB Richard Ellis were also involved in the sale of Eng Cheong Tower.

    https://www.stproperty.sg/articles-p...-model/a/58143

  3. #448
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    Default Re: Southbank (D7, Leasehold, UOL Group)


  4. #449
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    Default Re: Southbank (D7, Leasehold, UOL Group)


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