Riding the collective sale wave

SINGAPORE (EDGEPROP) - The collective sale momentum has recovered from the depths of Covid in the middle of last year. “While there were just a few developments where owners were exploring a collective sale last year, the number has picked up significantly this year,” says Jeremy Lake, Savills Singapore managing director of investment sales and capital markets.

Savills brokered the sale of Flynn Park, a condominium at Pasir Panjang that was sold en bloc to a joint venture between Hoi Hup Realty and Sunway Developments on Sept 10. The purchase price was $371 million, which was above the reserve price of $365 million when it was launched for tender towards the end of July. It was even higher than the reserve price of $363.8 million when it was last put up for collective sale in June 2018.

It took just two months to achieve the 80% consensus needed for the collective sale process to be activated. “Getting the prerequisite 80% consent seems to be easier and faster,” notes Lake. “It used to be slow-moving and hard work.”

Lake has been through at least three collective sale waves in the course of his 31 years in the real estate business in Singapore. The market is heading towards a fourth wave. “It’s a matter of supply and demand,” he says. “Owners are always ready to sell when they can get their asking price. It’s a function of whether developers are ready.”

Judging from Hoi Hup and Sunway Developments’ move, it seems that they are. The joint-venture partners’ 700-unit executive condo (EC) project, Parc Central, was launched in January this year, and is already 96% taken up. At the 496-unit Parc Canberra, another EC project launched in February 2020, only one unit is still available for sale. Their 660-unit, 999-leasehold Ki Residences at Brookvale Drive was launched last December and is already 71% sold. “We are certainly looking for more sites,” says Koon Wai Leong, general manager of Hoi.

After the property cooling measures in July 2018, which included a hike in the additional buyer’s stamp duty fr Hupom 15% to 30%, of which 5% had to be paid upfront and is non-remittable, developers’ appetite for collective sale sites abated. “Now that developers are running out of development land and there aren’t many government land sale (GLS) sites on the market, they are prepared to look at collective sale sites once again,” says Lake.

Many projects entering the collective sale market today are not first-timers. “Having had a number of unsuccessful attempts, the owners find restarting the collective sale process more straightforward,” adds Lake. “As long as they can sell their property at a 40%-50% premium, owners would consider a collective sale.”

Heading for 80% at Mount Elizabeth

At a cul-de-sac on Mount Elizabeth is the 59-unit HighPoint, where the owners have mounted a second collective sale attempt. The owners are close to getting the prerequisite 80% consensus for the go-ahead with Savills as the appointed property consultant.

Befitting its name, HighPoint is located “on the highest point of Mount Elizabeth”, says Lake. Built in 1974, HighPoint sits on a freehold, 47,606 sq ft site with a plot ratio of about 4.45. The property was last up for collective sale in January 2019 at $550 million with CBRE as the marketing agency. The guide price of $550 million back then translated to a land rate of about $2,595 psf per plot ratio (psf ppr). If a 7% bonus gross floor area (GFA) for balconies is included, the land price will be $2,509 psf ppr.

The asking price this time around is expected to remain unchanged at $550 million. Under the URA Master Plan 2014, the site is zoned for residential use and could be redeveloped into a 36-storey tower with GFA of 213,383 sq ft.

The site could potentially be redeveloped into a new luxury condominium project with 196 apartments, assuming an average size of about 100 sq m (1,076 sq ft). The orientation of HighPoint is towards the 121-year-old historic Goodwood Park Hotel. The property is close to the shopping malls on Orchard Road as well as the medical centres at Paragon and Mount Elizabeth Hospital.

HighPoint is now “neck and neck” with Elizabeth Towers at the other end of Mount Elizabeth, where the owners are also nearing the 80% threshold needed to proceed with a collective sale. Edmund Tie is handling the collective sale of Elizabeth Towers.

Last launched for sale in 2018 and relaunched in January 2019, the 80-unit Elizabeth Towers had an asking price of $610 million then. The price worked out to $2,416 psf ppr. Factoring in the 7% bonus GFA for balconies, the land rate would be pared down to $2,297 psf ppr.

“Both HighPoint and Elizabeth Towers will test developers’ appetite for land in the luxury segment,” says Savills’ Lake.

Nearby is Klimt Cairnhill, a redevelopment of the former 61-unit, freehold Cairnhill Mansions, which Singapore-listed construction and property development group, Low Keng Huat, purchased for $362 million or $2,311 psf ppr in February 2018. The developer purchased the neighbouring bungalow plot at 67 Cairnhill Road for $100 million and is restoring it to the “elevated Anglo-Malayan style”, and repurposing it for use as a residents’ clubhouse.

The 138-unit Klimt Cairnhill at 71 Cairnhill Road was launched at the end of August at prices starting from $3,532 psf. So far, one unit has been sold: a three-bedroom premium unit of 1,496 sq ft for $5.713 million ($3,818 psf), according to a caveat lodged on Aug 20.

Savills has been appointed marketing agency for Tanglin Shopping Centre, which is taking another stab at a collective sale. This will be its fourth attempt. Close to 75% of the owners have agreed to the collective sale so far, notes Lake.

A 12-storey mixed-use development with offices and a shopping complex, Tanglin Shopping Centre was built in 1992. It sits on a freehold site of 65,983.3 sq ft zoned for commercial use. It has the potential to be redeveloped into a new mixed-use development with GFA of over 300,000 sq ft of which 60% of the space has to be dedicated for commercial use. The remaining 40% for non-commercial use could include both residential and hospitality components. “We are seeking in excess of $800 million for the property,” says Lake. (See: Find Singapore commercial properties with our commercial directory)

Revitalisation is taking place at this end of Orchard Road and Tanglin Road, notes Lake. Word on the street is that Singapore-listed property and hotel group, Hotel Properties Ltd (HPL), is exploring a major redevelopment under URA’s Strategic Development Incentive (SDI) Scheme. HPL owns HPL House, Forum Galleria, Hilton Singapore (which will be rebranded Voco, a premium brand by InterContinental Hotels Group, when Hilton moves out at the end of December) and Four Seasons Hotel, as well as a significant stake of the strata-titled, commercial development, Ming Arcade.

Redevelopment plans under the SDI Scheme is said to include Forum Galleria, Far East Shopping Centre, Liat Towers and Wheelock Place which occupy prime frontage along Orchard Road. The owners of Far East Shopping Centnre are said to have appointed CBRE as the marketing agent for their collective sale.

Next door to Four Seasons Hotels is the upcoming 154-unit Boulevard 88 luxury apartments and the 204-room Singapore Edition Hotel. The mixed-use scheme, designed by acclaimed architect Moshe Safdie, is jointly developed by Hong Leong Holdings, City Developments and LEA Investments.

New record prices?

Hong Kong-listed Shun Tak Holdings’ new luxury, 142-room hotel, Artyzen Cuscaden Singapore, on Cuscaden Road, just off Tanglin Road, is targeted to open next year. The hotel is a redevelopment of a bungalow on Cuscaden Road which Shun Tak purchased for $145 million back in 2016.

Shun Tak is also the developer behind the 54-unit luxury condo Park Nova. A total of 17 units have been sold since the project was launched in May, with many of the buyers said to be China nationals. The biggest of three penthouses at Park Nova was sold for $34.438 million ($5,838 psf), while the smallest fetched $26.026 million ($5,784 psf). The other units in the development, which are a mix of two-, three- and four-bedroom apartments with sizes from 1,432 to 2,906 sq ft, achieved average prices of $4,925 psf, according to caveats lodged to date.

Park Nova is a redevelopment of the former Park House that was purchased en bloc by Shun Tak for $375.5 million or a record $2,910 psf ppr back in June 2018. “We won’t expect a repeat of the Park House price just yet,” says Lake, who brokered the sale. “That was an outlier.”

Prices are unlikely to revisit the highs of $2,526 psf ppr achieved for the en bloc sale of the former Hampton Court in 2012, nor the $2,525 psf ppr for the former Westwood Apartments at the end of 2007, reckons Lake. Hampton Court was sold to Hong Kong group Swire Properties and redeveloped into the luxury 20-unit Eden at Draycott Park. The entire tower was sold en bloc for $293 million ($4,827 psf) to the Tsai family which owns Hong Kong-listed snack food company Want Want China Holdings, in March this year. Westwood Apartments was redeveloped by Malaysian group YTL Land & Development into the 77-unit 3 Orchard By-The-Park, which was completed in 2017.

The owners at strata-titled, mixed-use development Orchard Towers are also attempting a collective sale. Edmund Tie is the appointed marketing agency.

At the corner of Orchard Boulevard, next to the upcoming MRT station of the same name, is Orchard Bel Air. Owners at the 71-unit, 28-storey residential tower have formed a collective sales committee (CSC) for a potential collective sale, and appointed Knight Frank as their property consultant. The property was developed by UOL Group and completed in 1984, with a 99-year lease from 1980. There is a remaining lease of 58 years on the site.

Elsewhere in the prime districts, the owners of the 211-unit Horizon Towers are making another attempt at a collective sale. The last attempt in 2018 closed without a bid, as the launch of the tender coincided with the announcement of the property cooling measures that July. It was relaunched for sale in January 2019 at the same price of $1.1 billion or $1,977 psf ppr. The lease top-up premium then was $228 million.

Located along Leonie Hill Road in prime District 9, Horizon Towers was built in 1984, with a 99-year lease from 1979, hence it has a remaining lease of 57 years. It sits on an elevated 204,516 sq ft site, with a plot ratio of 3.28228. It can be redeveloped into a new project of about 600 to 700 residential units, estimates Tan Hong Boon, JLL executive director, who is handling the collective sale. This time around, the asking price has been shaved down to $1 billion.

Launched for collective sale on Sept 15 is Watten Estate Condominium (WEC). Built around 1983, WEC comprises 104 units of townhouses and apartments on Shelford Road, off Bukit Tiimah in prime District 11. More than 80% of the owners consented to the collective sale. At the minimum price of $500 million, the unit land rate works out to $1,622 psf ppr. Factoring in an additional 8% bonus GFA and the corresponding development charge, the unit land rate will be reduced to $1,570 psf ppr. JLL is the appointed marketing agency.

WEC’s last collective sale attempt was in July 2019, at a higher price tag of $536 million, or about $1,738 psf ppr. “Sales of high-end condos in the prime districts have improved in recent months in spite of travel restrictions, which has limited the number of foreigners coming to Singapore,” says JLL’s Tan. “Yet, many foreign funds and high-net-worth individuals want to park their money here.”

Collective sale premium

One of the major considerations for owners deciding whether to go ahead with a collective sale is the premium: in order to achieve 80% consensus, the collective sale premium has to be at least 40% above the prevailing resale market price, says Tan.

For prime sites in the Orchard area or the CBD, the premium expectation could be much higher, as many of the units are owned by foreigners. “The concern is that replacement cost is much higher today. So these buyers need a bigger premium to be motivated to participate in a collective sale,” says Tan.

Properties that have been launched for collective sale in recent weeks include International Plaza ($2.7 billion price tag), Peace Centre/Mansions ($650 million), Verdun House ($55 million) and Watten Estate ($500 million).

Another 60 projects are at various stages of the collective sale process, and they include projects in the city fringe as well as suburbs. In the east, there is King’s Mansion, Laguna Park, The Meyer Place, La Ville and Peach Garden. In the neighbourhood of Upper Thomson Road, Faber Garden and Thomson View are also attempting a collective sale, respectively. Collective sales are also brewing in the neighbourhood of Serangoon Gardens, at Kensington Park Condominium, and Chuan Park condominium, which fronts the Lorong Chuan MRT Station.

The 64-unit The Beaumont at Devonshire Road and the 18-unit Trendale Tower on Cairnhill Road are both sitting on freehold sites located in prime District 9. The owners are in the process of securing the 80% consent towards a collective sale, and have appointed Savills as their marketing agent.

At the 146-unit The Claymore on Claymore Road, a collective sale is also underway. CBRE is said to be handling the sale.

According to JLL’s Tan, of the 60 projects in the collective sale pipeline, some may drop out along the way as they cannot get the necessary 80% consent. “Of those that succeed in securing it, about two-thirds will not get sold,” says Tan. Regardless of the odds, the procession of collective sale hopefuls is likely to continue.

Source: The Edgeprop 2021 August

PROPERTY LAUNCHES & INVESTMENTS

Property Launches & Investments

Riding the collective sale wave

Heading for 80% at Mount Elizabeth

New record prices?

Collective sale premium

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