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Normanton Park on sale with S$800m reserve price
THE tender for the collective sale of Normanton Park, near Science Park and Kent Ridge Park, has been launched with a reserve price of S$800 million, which translates to S$898 per square foot per plot ratio (psf ppr).
This is the eleventh tender for a collective sale to be launched this year.
Normanton Park's unit land price of S$898 psf ppr is inclusive of two payments that the developer of the 660,999 square foot site will have to make to the state.
One is an estimated differential premium of S$225.3 million for intensification of the site based on the maximum permissible gross floor area of 1,388,099 sq ft, based on the March 1 development charge rates. The other payment is an estimated S$220.6 million to top up the site's lease to 99 years, assuming the top-up is done late next year when the balance lease will be 58 years.
Under the Urban Redevelopment Authority's Master Plan 2014, the site is zoned for "residential" use with a gross plot ratio of 2.1.
A privatised housing estate originally built in 1977 for military personnel and their families, Normanton Park comprises 13 residential blocks of 488 units ranging from 1,270 sq ft to 1,550 sq ft.
Based on the reserve price, owners stand to receive between approximately S$1.6 million and S$1.8 million per unit - which is about 50 per cent more than if they were to sell their units individually in the current market, said Ian Loh, Knight Frank Singapore executive director and head of investment and capital markets.
The property consulting group is marketing the en bloc sale through a tender that closes on Oct 5, 2017.
"The new high-rise development on the site could potentially have close to 1,290 homes of an average size of 100 sq m (1,076 sq ft) gross floor area," said Mr Loh.
"Residents should be able to enjoy views of the lush greenery and unblocked views to the city and the sea. Thus, we expect the property to attract strong interest in view of its exclusive location and positive site attributes."
Normanton Park is near educational institutions including Anglo-Chinese School (Independent), Fairfield Methodist primary and secondary schools, National University of Singapore, Singapore Polytechnic and Insead.
The wave of collective sites is set to continue and will feed land-hungry developers that have been paying bullish prices for private residential sites at state tenders as well as private-sector collective sales.
Tan Hong Boon, JLL regional director for capital markets, commented that in addition to the 11 collective sale sites launched for tender year to date, "we believe there are another 60 or so collective sales, mostly residential at various stages of progress - in both small and large developments".
Some market watchers are concerned about a build-up in supply of units that will be launched in due course from new projects on collective-sale sites. Derek Tan, senior vice-president for group equity research at DBS, highlights that about 6,400 new private homes will be generated on collective sale sites sold last year and so far this year (up to Serangoon Ville).
"Launches of the new projects on these sites will straddle 2018 and 2019. Supply is certainly building up on the non-Government Land Sales (GLS) side. The key is whether new home buying demand can be sustained at current levels."
Mr Tan also noted that on the GLS front, some of the projects with high land prices such as Stirling Road and Toh Tuck Road are likely to be launched in H1 next year and they will "provide some indication as to whether the market is willing to accept a higher price".
However, Savills Singapore research head Alan Cheong argues that the collective sales since 2016 will cause some "displacement" in the "physical or spot property market" as the current residences on these sites are pulled out of the existing housing stock. According to JLL's analysis, the collective sale sites sold in 2016 and YTD 2017 (up to Serangoon Ville) have on them 1,438 residential units.
Explains Mr Cheong: "For instance, some of those who used to live in privatised HUDC estates that have been sold en bloc might move into a HDB resale flat; and the seller of the flat might perhaps upgrade to a private condo.
"This sort of displacement will create demand for private homes in the physical market. However, the new homes that will be come up on the projects sold through en bloc sales will be ready only in say, 2020.
"So there may be a shortage in the physical market until then; this, coupled with high land prices paid for both GLS and collective sale sites, points to higher private home prices."