The remaining 16 unsold units in 111 Emerald Hill, a 40-unit completed condo project, are understood to have changed hands. The transaction was effected through a sale of shares in the company that developed the 12-storey freehold project.
The deal is understood to value the 16 units at a total of S$75 million to S$76 million, which translates to the low S$1,700 psf range based on the strata of around 44,000 sq ft. The units sold comprise three and four-bedroom apartments.
Under the deal inked last month, the shares in Emerald Land Pte Ltd were sold by a fund managed by LaSalle Investment Management to entities fully owned by Singapore citizens. The project received Temporary Occupation Permit in 2011.
The 24 units in the project that had been sold were transacted between November 2010 and January 2014 at prices ranging from S$2,214 psf (for a fourth floor unit in January 2014) to S$3,030 psf (for an 11th floor unit in January 2013).
Industry watchers note that the S$1,700-range psf pricing for the recent sale reflects the decline in luxury condos price as well as a discount for the bulk transaction.
Moreover, the 16 units that changed hands include the project’s four penthouses, which have roof terrace areas, and this would also have diluted the psf price.As Emerald Land is now fully owned by Singapore citizens and assuming it has been granted a clearance certificate from the Land Dealings (Approval) Unit as well as cancellation of its Qualifying Certificate (QC), it would not be under any restrictions on its options for the 16 units.
It would be free, for instance, to lease them out or hold them for as long as it wants.
Under the Residential Property Act, a foreign company, defined as one that has even a single non-Singaporean shareholder and/or director, has to get a QC from the LDAU before it may buy a private residential site.
The sale of the 16 units at 111 Emerald Hill is said to have been brokered by Savills, which last year also arranged the sale of 17 units at Paterson Suites for S$2,100 psf or close to S$80 million by a fund in the Real Estate Capital Asia Partners (Recap) series managed by SC Capital Partners.
The buyer was Blackstone, which in late-2014 also did an en bloc purchase of 21 Anderson Royal Oak Residence, a 10-storey property with 34 units.
The price was S$164 million, or S$1,917 psf. JLL brokered that deal. Both projects are completed freehold developments.
All eyes now are on 23 units at the Draycott Eight condo owned by a German core fund managed by Morgan Stanley.
CBRE and Savills have been appointed to find a buyer for the 22 four-bedders and a penthouse with a total strata area of 68,419 sq ft. Draycott Eight is on a site with a balance lease term of about 82 years. Based on market talk, the asking price is S$2,300 psf, which would amount to S$157.4 million.
Cushman & Wakefield executive director (capital markets) Shaun Poh said that going ahead, “I do not think we’ll see many more such bulk purchase deals of high-end condo units because of a lack of opportunities with a structure where the incoming buyer can take over shares in an existing company owning the units.
This potentially allows the buyer to take over the company’s loan.
“On the other hand, if a corporate buyer were to acquire the residential units on the asset level, it would be subject to the 20 per cent LTV (loan-to-value) limit.”
Another point, said Mr Poh, is that the sellers in all the recent bulk deals are funds, “which are more motivated sellers because of the fund life”.
“In contrast, local developers stuck with unsold units are mostly not prepared to give deep discounts even for bulk purchases because they can afford to wait.
An incoming investor may also not be willing to mop up the balance units in a newly completed residential project by taking over the development company, as that would mean assuming the liabilities of the developer.
This includes the defects liability period accorded to the earlier buyers of units in the project,” said Mr Poh.