Future potential

In recent years, real estate developers have been looking at the area for its potential, with a number of collective sales already taking place.

In 2009, Hong Fok Corporation launched Concourse Skyline, a 99-year leasehold residential project that now stands at a former wing of The Concourse, a commercial building. The launch of the project coincided with a market panicked by the Global Financial Crisis, and sale volumes were not as robust as expected.

At time of writing, primary sale caveats lodged for Concourse Skyline total 227 units, under two-thirds of the units in the project. More generous unit sizing and higher stack premiums for the view however, led to quantums that many buyers seem unwilling to commit to.

Subsequently, in 2012, Fragrance Group and World Class Land threw their cap into the Beach Road area, buying over the commercial building KeyPoint for a sum of $360 million. KeyPoint’s tenants have since vacated and the building demolished. In its place, the mixed development City Gate is rising. With quantums more in line with buyer price expectations, the residential component of the project is mostly sold out, while 92 caveats for their strata-titled commercial units have been lodged, as at time of writing.

There are a few projects in the area that many industry watchers speculate are ripe for en bloc purchasing soon, such as Textile Centre and Golden Mile Complex. However, there are a number of common difficulties these projects face when it comes to going on collective sale. These include shorter remaining leases, as these are 99-year leasehold buildings, and a difficulty in getting consensus on profit sharing agreements between residential and commercial unit owners.

Of the two however, Textile Centre is more likely to be put up for collective sale, simply because of the smaller site size. Golden Mile Complex sits on a three-acre site, and the fees that a collective buyer would need to pay to extend the lease, would be tremendously high. With each passing year, the amount to top up the lease is going to increase as well. Golden Mile Complex has seen two failed attempts at collective sales, the last time in 2006.

Another building in the area, The Plaza, is also an office, retail and residential tower, and has been eyeballed for its en bloc potential by several investors. While a strata-titled development as well, developer UOL maintains control over a number of units, making the threshold for collective sales a lot easier to achieve.