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Normanton Park up for collective sale

But consultants note that investment quantum, size of site are too large for developers' current appetite
Friday, October 16, 2015 - 05:50
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Normanton Park to launch collective sale next week.

Singapore

NORMANTON Park condominium, located near Kent Ridge Park, will be put up for collective sale next Thursday after the requisite 80 per cent majority consent was secured from the owners.

But consultants were quick to rain on the parade, saying that the site may be too big for the current appetite of developers, whose risk of holding large sites is exacerbated by the additional buyers' stamp duty that applies to unsold units five years after the land purchase date.

The hefty reserve price of S$840 million may make it a tough sell, said SLP International executive director Nicholas Mak, who estimates that the differential premium for maximising gross floor area and a lease top-up to 99 years amount to an additional S$300 million.

According to marketing agent for the collective sale Mount Everest Properties, the reserve price translates to around S$800 per square foot per plot ratio (psf ppr), inclusive of the differential premium and the lease top-up. If an adjoining state land is included, the figure will drop to below S$800 psf ppr.

Normanton Park is a housing estate reserved for military personnel and their families built in 1977, which has been "demilitarised" and gained condominium status only in 2012. The estate is on a large site of about 661,000 sq ft with a balance lease term of about 61 years. It comprises 448 units (1,668-1,776 sq ft) in eight low-rise blocks and five 23-storey towers. Owners controlling at least 80 per cent of the development's share value and strata area have agreed to the en bloc sale.

The future development on the site can rise up to 24 storeys. Under the URA's Master Plan 2014, the site is zoned for residential use with a 2.1 plot ratio. This translates into a potential project of 1,388 units based on an average unit size of 1,000 sq ft.

"The current property measures has curbed housing demand and developers' appetite for large sites," Mr Mak said. He noted that the large size and investment quantum of the site means relatively higher risk for developers, who "may end up putting many eggs in one basket" when it's taking a long time now to sell all units in a mega project.

Elsewhere, Shunfu Ville, a 358-unit residential project in Upper Thomson, is also up for collective sale with a minimum price of S$688 million. The estate was built in the late 1980s by the former Housing & Urban Development Company (HUDC) and privatised in 2013.

Past mega projects built on en bloc sites include the 1,715-unit D'Leedon, which sits on the former Farrer Court estate which was acquired for a record S$1.3 billion in June 2007, and the 1,040-unit The Interlace, which sits on the former Gillman Heights that was bought for S$548 million in May 2009. Developer CapitaLand was seen cutting prices for some unsold stock in D'Leedon and The Interlace after the projects obtained their temporary occupation permits.

Chesterton Singapore managing director Donald Han noted that pure residential collective sale activity has been quiet in the last three years. "Big ticket ones in excess of S$300 million will have to compete with government sales of sites which offer fresh 99-year leases and is a more straightforward process," he said.

In June, a 99-year leasehold site at Dundee Road was sold to HY Realty in a government land sale for S$871 psf ppr, while a government site at Lorong 6/Lorong 4 Toa Payoh fetched S$755.30 psf ppr from a consortium led by Evia Real Estate.

Based on Normanton Park's estimated reserve price, the owners stand to receive over 50 per cent more of what they would have obtained from selling their units individually. The tender exercise for Normanton Park closes on Jan 19.

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