China's Logan Property buys Florence Regency for S$629m

Singapore

FLORENCE Regency, a privatised HUDC estate in Hougang, has finally found a buyer willing to match the independent valuation of S$629 million - Logan Property.

Florence Regency's sole marketing agent JLL said the Singapore-incorporated subsidiary of the Hong Kong-listed Chinese developer picked up the 336-unit development in Hougang Avenue 2 for S$629 million through a collective sale.

This marks the second land parcel in Singapore snapped up by Logan Property, which in May secured a site in Stirling Road with Nanshan Group under the government land sales (GLS) programme at a whopping S$1.003 billion or S$1,050.7 per square foot per plot ratio (psf ppr).

The public tender for the collective sale of Florence Regency closed on Sept 27 with three bidders but none agreed to raise their bid prices to match the independent valuation of S$629 million. The collective sale agreement drafted by law firm Lee & Lee required that the sale price be no lower than the valuation.

This prompted JLL to court other developers in the hope of closing a deal under private treaty within 10 weeks of the close of the public tender.

JLL said this is the first collective sale attempt by the owners of the development with 80 per cent approval attained in under three weeks.

Owners would expect to receive gross sale proceeds of S$1.84-$1.89 million per unit, said JLL regional director Tan Hong Boon.

After factoring in the current estimated differential premiums of S$288.6 million payable to the state to top up the lease to a fresh 99 years, and to develop the 389,236 sq ft site to a gross plot ratio (GPR) of 2.8, the land price works out to about S$842 psf ppr.

The site is near the Hougang MRT station, which will become an interchange station when the planned Cross Island Line is completed, and the bus interchange of Hougang Mall. It is also within walking distance to Kovan MRT Station in Upper Serangoon Road.

The collective sale of Florence Regency follows that of two other former HUDC estates in the area - Rio Casa in Hougang Avenue 7 and Serangoon Ville in Serangoon North Avenue 1 to an Oxley Holdings-led consortium for S$706 psf ppr and about S$860 psf ppr respectively. The government had also sold a site in Serangoon North Avenue 1 in July to Keppel Land and Wing Tai for S$965 psf ppr.

These three sites alone can generate more than 3,000 units. Logan Property expects to build some 1,400 units at the Florence Regency site, its investor relations director Derek Lee told The Business Times on Friday.

Some analysts have cited potential competition in the Hougang/Sengkang region as a potential deterrence for other developers to raise their bids for Florence Regency. JLL's Mr Tan told BT that there were other developers looking at the site who decided not to submit firm proposals. But the valuation represents a fair price for the site, and its location is more favourable than the other three sites due to its greater proximity to an MRT station, he said.

Logan Property's Mr Lee said the land price for Florence Regency is comparable to the average cost of nearby sites that were sold recently.

"We also see that residential sales momentum is good even though there is quite a lot of supply in the area," he said. The decline in property prices over the past three to four years also provided "an uptrend opportunity for us to tap".

Logan Property will continue to focus on residential sites in Singapore through both the GLS programme and the en bloc market, even as it remains focused on the Greater Bay area of Guangdong, Hong Kong and Macao, Mr Lee told BT.

On Logan Property's latest acquisition, ZACD Group executive director Nicholas Mak said game theory was at play.

"It is better for it to match the valuation and buy this site than to try in other en bloc sale or GLS tenders where it may not come close to winning the tender," he said. "Furthermore, the land price of S$842 psf ppr for this location is attractive in today's market."

Other Chinese players that have scooped up sites through the collective sales market this year include Kingsford Huray Development and a joint venture between Singhaiyi and Huajiang International Corporation.