Tag Archives: Hiap Hoe

Hiap Hoe snaps up unsold condo units

TWO bulk purchases of units on the top floors of Skyline 360° at St Thomas Walk and Signature at Lewis condominiums have raised eyebrows over the basement pricing – and the fact that the developer itself has bought them.

Listed developer Hiap Hoe swept up remaining units at both luxury developments through a wholly-owned company last month, disclosures filed with the Singapore Exchange showed.

Units on the highest floors of a project almost always command a premium, yet the pricing is lowest for any level in the projects.

HH Residences, a unit set up in April, had snapped up five units at the 61-unit Skyline 360º condo in River Valley for $35 million from Bukit Panjang Plaza, another Hiap Hoe subsidiary.

This works out to $1,574 per sq ft (psf) based on a total area of 22,238 sq ft – well below the low pricing of $1,630 psf for a 2,131 sq ft unit sold in August 2009, caveats lodged with the Urban Redevelopment Authority showed.

A 4,015 sq ft penthouse unit on the 35th floor had set a record high for the condo in April 2012 when it sold for $10.07 million – or $2,508 psf. The units in the bulk deal were a 6,523 sq ft “super penthouse” on the 36th floor and four other 3,929 sq ft penthouses on the 31st to 34th floors.

HH Residences also picked up two penthouses on the 12th and highest floors of a smaller freehold project, Signature at Lewis, in Lewis Road. The units were bought for $7 million – or $1,071 psf – from another Hiap Hoe unit, Guan Hoe Development. One unit is 3,444 sq ft while the other is 3,068 sq ft.

The pricing falls below the lowest price of $1,227 psf set in January 2010, for a 1,841 sq ft unit.

Hiap Hoe told SGX the acquisition was “in connection with an internal restructuring exercise” but declined to elaborate when contacted by The Straits Times.

Penthouse units, particularly those in the posh districts, have lost their shine.

Buyers have shied away from the sizeable price tags that come with the large units given stringent mortgage rules and the additional buyers’ stamp duty (ABSD).

Market watchers said that while such deals are not unprecedented among local developers, it is not a common practice either.

Developers that have made similar moves include City Developments, which bought 44 units at Cliveden at Grange from joint-venture partner Wachovia for $2,956 psf on average in December 2012 – a discount of about 20 per cent from what Wachovia paid in 2007.

A recent bulk deal for 12 apartments at Grange Infinite, another luxury condominium in the city centre, was made at an average of about $2,100 psf.

The sale included 11 four-bedders ranging from 2,560 sq ft to 2,700 sq ft and a penthouse of 6,039 sq ft.

An ABSD of 15 per cent was likely to be levied on the bulk deals, so experts said that could have resulted in a smaller net discount for Hiap Hoe. Also, the discounts might not lead to lower stamp duties, which are typically based on property valuations, but they would still lower the overall cost of buying the units.

Skyline 360º got its temporary occupation permit on Sept 28, 2012, while Signature at Lewis was completed on Oct 3, 2011, said Hiap Hoe. Fines are imposed if a developer fails to sell all the apartments in a project within two years of completion, under Qualifying Certificate rules.

However, Mr Donald Han, managing director of Chestertons, pointed out that it is within reason and a routine practice for developers to offer discounts for large units and bulk purchases, especially in a falling market where few are willing to stump up huge sums of cash.

“It makes sense to apply the same discount for bulk deals to a related party,” he said

A bargain sale too “big” to ignore? Balmoral Condo seeking single buyer


Got S$191m to spare? Here’s a rare deal for you

In a further sign that the high-end residential segment remains stuck in the doldrums, one developer is making the relatively bold move of offering all units in a District 10 condo in a bulk sale at a relatively cheap price, in an attempt to improve cash flow.

Developed by Hiap Hoe, the 48-unit Treasure on Balmoral is being offered at a guide price of S$191.4 million, or S$1,850 per square foot (psf), its marketing agent Savills said.

The project was first launched in January last year but managed to log only one sale, which was subsequently dropped, Urban Redevelopment Authority data showed.

“The buyer chose to give up the purchase as a result of the announcement of fresh market-cooling measures,” said Savills managing director Steven Ming, who added that Hiap Hoe is looking to monetise the project and explore other investment opportunities.

Analysts said while there have been several bulk sales in the past, developers usually resort to such a move only when sales are slow.

The high-end market has been the hardest hit by repeated rounds of cooling measures as well as the Total Debt Servicing Ratio framework. Between January and May, developers sold 203 new homes in this segment, one-fifth the 1,017 units sold in the same period last year.

“It is no secret that the high-end market is badly affected by the downturn, which is why we’re seeing developers working hard to offload their projects. And for this developer, (a bulk sale) is one way for them to exit this particular investment and move on,” said Mr Nicholas Mak, executive director of SLP International Property Consultants.

“It’s a sign of a challenging market conditions in the high-end segment. When the market is good, I don’t think developers would take this route because selling individual units is more lucrative. By selling in bulk, they have to offer some discounts.”

Mr Desmond Sim, CBRE’s head of research, said Hiap Hoe will be relieved of the risk and financial burden of holding onto unsold units if this strategy is successful.

“If there’s a buyer, Hiap Hoe can offload everything in one transaction even if the profit margin is smaller. If they sell the units individually, it’s very difficult to sell out quickly in the current soft market and, in the long run, the unsold units will put pressure on their balance sheets,” said Mr Sim.

“The location of the project is not bad and S$1,850 psf is quite a bargain, so if someone has the appetite for this, it’s good for the developer’s cash flow.”

He added it remains to be seen whether the sale would go through.

However, Mr Ming is optimistic that the pricing would attract some interest. “What we have here is a rare opportunity for private investors or ultra-high-net-worth individuals to acquire a well-located and high-quality product as an investment property or a strata sales exit in future.

“We believe this opportunity will attract wide-ranging investors, as many will see mid-to-long (term) value at this guide pricing.”