En Bloc fever catches on (updated: Normanton Park sold at $830.1M on 5 Nov)

The collective sale fever in Singapore is gathering steam as the news of record enbloc deals and potential sites looms. Among the latest that are joining the fever are:

1. Pine Grove ($1.65B)
Owners of the 660-unit former HUDC estate are aiming to achieve the largest collective sale deal in Singapore. The price tag of $1.65B is much higher than the last record of $1.34B deal made in Farrer Court in 2007.

An extraordinary general meeting will be held on Oct 29 to get at least 80 per cent of owners to back the en-bloc sale. Based on the minimum reserve price, each owner is looking at receiving $2.08 million to $2.64 million per unit.

It will be the estate’s 3rd attempt for a collective sale after a no-bid attempt in 2011 following the owners raising the reserve price from $1.33 billion to $1.7 billion. Its first try was in 2008. The 99-year leasehold project has 66 years left on its tenure

2. Braddell View ($2B)
Braddell View, the largest of Singapore’s 18 HUDC estates and the last to be privatised in March this year, is planning to jump on the en bloc bandwagon.

The 918-unit estate is holding an extraordinary general meeting on Oct 10 to form a collective sales committee to kick-start the process.

The reserve price for the 1.124 million sq ft development is S$2 billion. If successful, this would easily eclipse Pine Grove’s S$1.65 billion en bloc attempt. The 99-year lease Braddell View development has 63years left on its lease.

3. Spring Grove ($1B)
Owners in the 325-unit estate are targeting at least $1 billion sales price. They had asked for $1.39 billion in 2014. A $1 billion price works out to about $1,807 per sq ft (psf), based on a maximum gross floor area of 553,377 sq ft. This is above the $1,285 psf to $1,438 psf that units in the estate have fetched so far this year.

There are quite a lot of sales en bloc going on now, but not that many are in the prime district, so that’s something going for this development.

4. Normanton Park ($0.8B) — updated: sold at $830.1M
It will be second-time lucky in its collective-sale bid at an $800 million reserve price for the hopeful owners at Normanton Park.

The Normanton Park owners are among those capitalising on the collective-sale fever. It failed in its previous bid in 2015. The tender will close today on Oct 5 at 3pm.

Based on the reserve price, each Normanton Park unit owner could get between $1.6 million and $1.8 million. This translates to a land rate of about $898 per sq ft per plot ratio (psf ppr), which includes a differential premium for intensification of the site of about $225.3 million, and a top-up premium of $220.6 million for a fresh 99-year lease.

Update: Normanton Park has been sold to Kingsford Huray Development for S$830.1 million — translating to a land price of approximately S$969 per square foot per plot ratio (psf ppr), is the highest land rate for a 99-year leasehold collective sale site this year.

Each home owner will stand to receive about S$1.68 million to S$1.86 million. Kingsford will have to fork out a premium of about S$231.1 million top up the lease to another 99 years, and top up about S$283.4 million to redevelop the site to a gross plot ratio of 2.1.

5. ICB Shopping Centre ($65m)
This is the first en bloc attempt by ICB Shopping Centre, a mixed-use development in Yio Chu Kang Roadwhich is more than 30 years old. It comprises six apartment units (of between 1,324 sq ft and 1,550 sq ft) and 13 retail units. The site about 1 km from Nex shopping mall and Serangoon MRT station, and is also near eateries and other small retail shopping areas.

The development’s residential and commercial owners are looking for a price of S$65 million to S$70 million. Based on its maximum potential gross floor area (GFA), the asking price range translates to a unit price of about S$1,390 per sq ft (psf) to S$1,500 psf.

The development sits on a freehold plot with a land area of 15,548 sq ft. It has a current GFA of 25,123 sq ft, but with a plot ratio of 3.0, it can be built to a maximum permissible GFA of 46,643 sq ft.
Concerns about current enbloc fever
Though the enbloc fever looks to getting even hotter, the concerns among the industry players are about the sustainability of the momentum over the long run. The market can only absorb one or two big sites. Some of the record-aiming enbloc sites have such huge sizes that the interested developers will need to factor in expected costs if they cannot finish selling the completed units.

Selling all the units within five years of buying the land to avoid additional buyer’s stamp duty (ABSD) will pose a challenge. This could affect the price developers are prepared to pay for the site.

Projects such as The Interlace and d’Leedon, which were built on large sites sold during the 2007 en-bloc boom, are still left with unsold units, together with the existing launches which have unsold inventory. New launches will face some fierce competition among the existing unsold units as well as among themselves.

To top it off, the property rental market has yet shown signs of shaking off its lull as well amidst the economic/employment uncertainty. Unless the authorities loose up the policy of workforce, and new jobs emerge from the current lacklustre market, it remains to be seen if new launches can provide good returns to prospective buyers.

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