Meng Garden Apartments off Killiney Road has gone on collective sale for $137 million or approximately $1,380 psf ppr, including a development charge of about $681,000 – taking the year-to-date tally to 16 deals at approximately $786 million.
Boutique developer TG Development, which acquired Meng Garden, does not need to seek approval from the Strata Titles Board for the deal, as the sale’s broker, CB Richard Ellis, had secured 100 percent consent from its owners before the property was put up for tender in June.
The 35,639-sq-ft freehold site is zoned for residential use with a ten-storey height control and a plot ratio of 2.8. It can possibly house a new development with around 95 apartments averaging 1,000 sq ft each.
The tender for Meng Garden ended on July 7, attracting six bidders, including mid- and large-sized listed developers.
The 16 collective sales at $786 million to date marked an improvement from the solo deal last year at $100.8 million and the eight transactions in 2008 at $346 million.
“Whereas most of the deals so far this year have involved sums below $100 million and were primarily outside the prime districts, we could see bigger sites and a few more in the prime districts coming to the market in the current half,” said Jeremy Lake, executive director for investment properties at CB Richard Ellis. Mr. Lake expects that the full-year tally could exceed the $2 billion mark.
Karamjit Singh, managing director at Credo Real Estate, noted that the 13 collective sale deals in H1 2010 averaged $40 million per transaction, compared with the 55 transactions that averaged $170 million each during the peak of the collective sale fever in H1 2007.
“For H2 2010, we expect to see 20-40 successful deals, which would mean a doubling from the first-half performance. We also expect the average deal size to somewhat double to $80-100 million in H2 2010,” said Mr. Singh.
However, many market watchers are not expecting to see the peak volumes achieved in 2006 and 2007, when $7.8 billion and $11.6 billion were done, respectively.
Some en bloc sales are no longer viable because of the high cost of replacement properties, said Mr. Lake.
“The cost of the replacement property has moved up to an extent that the en bloc premium is no longer attractive to owners,” said Mr. Lake. “As a result, the number of viable collective sales that agents are working on has diminished.”