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Thread: Diamond Tower in Balestier sold in collective sale

  1. #1
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    Default Diamond Tower in Balestier sold in collective sale

    http://www.businesstimes.com.sg/sub/...02340,00.html?

    Published April 12, 2010

    Diamond Tower in Balestier sold in collective sale

    By KALPANA RASHIWALA


    (SINGAPORE) EL Development has inked a deal to buy the freehold Diamond Tower at Jalan Rajah in the Balestier area for $49.6 million through a collective sale.

    The price works out to a unit land price of about $652 per square foot of potential gross floor area inclusive of an estimated $300,000 development charge payable to the state.

    Diamond Tower has a land area of about 27,323 sq ft and is zoned for residential use with a 2.8 plot ratio (ratio of maximum potential gross floor area to land area).

    'We intend to build an 18-20 storey apartment block with about 100 units, mostly one and two bedroom units but we'll also have some three bedders,' EL Development managing director Lim Yew Soon said when contacted by BT.

    The breakeven cost for a new apartment development based on today's construction costs works out to about $1,200 psf.

    BT understands that EL Development may enter into a partnership with another party, said to be construction group Teambuild, for the site's acquisition.

    Diamond Tower's collective sale was marketed by Urban Front Real Estate. It was offered through a tender exercise which closed last month without a deal being sealed.

    'We submitted our offer after that and are buying under a private treaty deal,' Mr Lim said.

    The proposed collective sale of Diamond Tower will be subject to approval from Strata Titles Board as its owners have not unanimously consented to the sale.

    Developers have been hungry for land, following strong home sales over the past year.

    Property consultants say that while the bigger developers with deep pockets are focusing on the Government Land Sales Programme to replenish their landbank, smaller and mid-sized players on smaller budgets are aggressively looking for land through private sources.

    'They are interested in smaller collective sale sites as well as redevelopment plots comprising a few landed homes. There are also investors/developers who may have bought land in the past and who are willing to divest now,' says DTZ senior director, investment sales, Shaun Poh.

    EL Development's Mr Lim acknowledges that developers like him are 'not that choosy location wise' these days and that a more important criterion is to find sites with pricing that is 'more acceptable'.

    'Districts like 9, 10, 11 and 15 are very popular but sites in these areas command very high price premiums; so we'll consider even other districts.

    'For us, the site should be at least 20,000 sq ft and it should also be a regular shaped plot of land so we can build a project with a decent-sized swimming pool,' he said.

  2. #2
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    Quote Originally Posted by mr funny
    (SINGAPORE) EL Development has inked a deal to buy the freehold Diamond Tower at Jalan Rajah in the Balestier area for $49.6 million through a collective sale.
    Project Name: DIAMOND TOWER
    Tenure: Freehold
    Completion Date: 1977
    Total Units: 27

    $49.6 million / 27 = $1.84 million.

    There are those who laugh at people who buy en bloc properties, and there are those who laugh all the way to the bank.



    There are a few lessons that can be learned from the above story.

    1. The one who bought at $980,000 on 23 Sep 2009 has earned $860,000 in less than 7 months (or an annualised return of 200%) which is comparable to all those fictitious, hallucinatory returns that some people like to boast they can also achieve by investing in their leveraged inverse collateral backed Grade AAA+ ETFs issued by Bear Stearns and backed by Lehman Brothers. (LESSON: THE MONEY MADE IN PROPERTIES IS REAL).

    2. The one who bought at $600,000 in 2001 and sold out to the above guy at $980,000 must have thought that he had achieved a reasonable return of 63% in 8.5 years (or annualised 6% per year). Not knowing that he would be missing out on the last leg of the most spectacular run, which would have given him much much more. (LESSON: NEVER SELL AN ENBLOCABLE PROPERTY JUST BEFORE IT EN BLOCS, NO MATTER HOW MANY PERCENT YOU HAVE ALREADY EARNED SINCE YOU BOUGHT IT).

    3. The one who bought at $770,000 in 1999 and panicked in 2002 and sold at $520,000 when the market was bad must have learned an expensive lesson not to panic during bad times. (LESSON: NEVER PANIC DURING A DOWNTURN)

    OVERALL LESSON:

    PROPERTISM Rule No. 1: Property prices always go up in the long term hence properties should only be bought and not sold. Unless enblocked then either:
    a. Quickly buy a replacement property; or
    b. If you have the cash, buy a replacement property even before the en bloc.

  3. #3
    Senior

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    I think another important lesson is not to over stretch yourself when buying properties. Make sure u have enough cash and means to hold on to it during bad times.

    But how much reserves should we have at hand? Any ball park figures to share?

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