(D) The performance of Collective Sales
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All is quiet on the en bloc sale scene. Lately, all news regarding collective sales or collective sale sites were mostly negative. For example, some projects were being re-launched after many months of hiatus with markedly lower asking prices; many applications to the Strata Titles Board for sale orders were unsuccessful; and buyers of collective sale sites delaying the scheduled redevelopment works as well as postponing the marketing of the redeveloped sites. Below are some examples.
[D.1] En bloc site re-launched with 40% lower price tag
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A site at District 10 Robin Drive has been offered for a collective sale for the second time. This time though, the asking price is 40% lower than the previous price when it was first launched in December 2007. It is now priced at $956-$996 psf. This is indicative of the weak private residential market currently.
Meanwhile, Straits Trading is selling two blocks consisting of 38 large apartments in Gallop Gables. Situated off Farrer Road, Gallop Gables, which was completed in 1997, has seven low-rise blocks with 140 apartments in all.
[D.2] En bloc sites buyers leasing back the units – stabilizing rents in the process
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The move by developers to lease back en bloc units to existing occupiers in the en bloc sites instead of commencing construction has a calming effect to the existing tenants. At the very least, there is no urgency for the existing tenants to look for alternative accommodation amidst rising rents.
On the other hand, there will be more new condominium units receiving the Temporary Occupation Permit (TOP) from the final quarter of this year onwards. The twin developments will add further pressure on the downward trend of private home rents – and eventually the sale prices.
[D.3] En bloc sale of Tampines Court cancelled
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The Strata Titles Board (STB) has ruled against awarding an approval for the collective sale of Tampines Court citing the lack of good faith in view of the sale price and method of distributing the sales proceeds.
The minority owners who were against the sale had argued that the Sale Committee had not obtained an updated valuation when the deal was signed last year. The valuation used was dated from 2005.
Also they had argued that $405 million deal also involved an amount of $10 million called the beta sum that is meant to compensate owners for financial loss. This was unfairly distributed among owners at the discretion of the sales committee.
(E) Foreign Interest in Singapore Real Estate
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Despite the widespread turmoil in the financial markets all over the world which has seriously impacted the social-political situation in many regional countries, such as Malaysia, the pristine City-State of Singapore is a picture of calm, joy and positive vibes. Already touted as the safe haven for global funds, the aspiring international hub continues to draw scores of private bankser, wealth managers, fund managers and financial consultants to set up the vantage point here before venturing into the highly volatile regional market.
[E1] Private equity real estate funds in Asia still booming
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Continued to be spooked by the never ending revelations of bad news in the United States and Europe, private equity real estate funds are rushing to Asia with suitcases bulging with cash.
So far, a total of 13 new Asia-focused private equity property funds have been set up here in Singapore since March 2008, and they have raised a combined US$13 billion. It is estimated that a haul of 78 funds will be achieved by year end and the estimated combined funds to be raised will be in the neighbourhood of US$81 billion for Asian property investments.
[E2] Foreign interest in Singapore commercial properties
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Foreign funds continue to pick up good quality commercial properties in Singapore.
- A Hong Kong investor is believed to have bought Wisma Sugnomal at 75 High Street for $23.5 million or $1,349 psf. The seven-storey office block, which has shops at street level, is about 12 years old.
- Lum Chang Holdings announced that it has sold all 16 units of its refurbished 2 Belmont for a total sum of $65 million or $1,600 to $1,700 psf to 3 Singapore firms controlled by Indian investors.
The property, formerly known as Belmont Gardens, was bought for $22 million in 2006. Since the site is located in a designated Good Class Bungalow (GCB) Area, this means that if the property is completely torn down and the site redeveloped, it can be redeveloped only into GCBs, accommodating perhaps three bungalows at most given the minimum GCB plot size of 1,400 sq m (15,069 sq ft). So it made more sense for Lum Chang to refurbish the asset instead of redeveloping it.
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