More en bloc sales expected next year
This comes after three such deals that racked up over $1 billion in value this year
The success of three residential en bloc deals this year may be igniting the interest of more property owners to go down that route, considering the number of projects that have kick-started the collective sale process.
Among at least eight collective sale hopefuls, owners of Lakeside Towers in Jurong have set up a collective sale committee (CSC), which has invited 14 property consultancies and seven legal firms to submit their proposals for consultancy services to execute the collective sale process.
This came after three en bloc deals racked up over $1 billion in value this year, up from a $380 million deal last year and zero in 2014.
The average annual value of collective sales from 2010 to 2013, however, was $1.9 billion, made up of mainly small- and medium-sized deals.
JLL international director and head of residential Karamjit Singh noted that the pick-up this year was underpinned by a recovery of developers' residential outlook from negative to neutral-positive, a shortage of development sites and the strong attributes and realistic pricing of en bloc sites available this year.
For Lakeside Towers, the CSC is now going through the tender submissions from property and legal consultants, after which a collective sale agreement with a reserve price will be drafted.
It will require the signatures of owners holding at least 80 per cent of the development's share value and strata area for the property to be put up for public tender.
CSC chairman Simon Lee told BT: "We reckon $250 million to 300 million in tender price should be comfortable to a single developer."
The site at Yuan Ching Road, which houses 144 apartments, spans 153,237 sq ft with a plot ratio of 2.1 and has a balance lease of 58 years.
While it is still early days to determine how much each owner can receive from the sale, Mr Lee said he expects the site to receive a premium for its proximity to Jurong Gateway, Singapore's second Central Business District, and the future High Speed Rail station.
It is also near the Lakeside precinct where the Jurong Lake Gardens, the new Science Centre and Jurong Innovation District are located.
According to Cushman & Wakefield, premiums in en bloc deals generally range from 20 per cent to 30 per cent, and even 50 per cent or more if each unit were to be sold individually in the open market.
But it is estimated that four in five collective sale exercises conducted over the past five years have failed.
There were as many as 20 projects that tried to sell collectively over the last four years, but failed to find a buyer at the price they were seeking, Mr Singh of JLL estimated.
Developers are also mindful of the 15 per cent additional buyer's stamp duty (ABSD) they will incur if they are unable to develop and sell all the units in a project by the end of the five-year remission period.
The other project that could be ready around the same time is the 12-unit Villa D'Este on Dalvey Road in prime District 10 - its second attempt since 2010.
CBRE is the appointed marketing agent for Villa D'Este and Cairnhill Mansions.
Owners of 330-unit Eunosville near the Eunos MRT station are reviving their collective sale process and have appointed OrangeTee as the marketing agent.
- The Business Times
We reckon $250 million to 300 million in tender price should be comfortable to a single developer.
- Lakeside Towers' collective sale committee chairman Simon Lee
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