Shunfu Ville poised for en bloc sale launch

Singapore

A LARGE prime suburban condo redevelopment site could come on the market soon through a collective sale.

Word on the street is that the owners of Shunfu Ville at Marymount Road, a privatised former HUDC estate, have achieved the minimum consent level required for the site to be launched.

Located a stone's throw from Marymount MRT Station on the Circle Line, the estate is on a large site of about 409,000 square feet with a balance lease term of about 70 years.

The owners stand to receive more than S$700 million, which is expected to translate to a unit land price in the low-S$800 per square foot per plot ratio (psf ppr) range, inclusive of two payments that the buyer will have to make to the state. One is a differential premium for building a bigger project on the site; the other is lease upgrading premium to top up the site's lease to 99 years.

Under the Urban Redevelopment Authority's Master Plan 2014, the Shunfu Ville site is zoned for residential use with a 2.8 plot ratio (ratio of maximum gross floor area to land area) - which means a potential project of 1,280 units based on an average unit size of 850 sq ft.

The new project can rise up to 36 storeys. This will give the future condo project on the site nice views of MacRitchie Reservoir and the surrounding greenery.

For golf lovers, another attraction is that the site is a short drive from the Singapore Island Country Club; the club's Sime Course will become a public golf course after 2021.

In terms of MRT connectivity, Shunfu Ville is just one stop away from Bishan Station and the conveniences of Junction 8 mall.

Shunfu Ville comprises three low-rise blocks and three 16-storey towers. The 358 units in the development range from 1,668 sq ft to 1,776 sq ft. Based on Shunfu Ville's reserve price, the owners stand to receive slightly over 50 per cent more than what they would have obtained from selling their units individually.

JLL is marketing the collective sale. Owners controlling at least 80 per cent of the development's share value and strata area have agreed to the en bloc sale.

Based on the land price of say, S$820 psf ppr, the breakeven cost for a new condo project could be around S$1,300-1,400 psf for the winning bidder, according to market watchers.

A 15 per cent profit margin for the developer would imply an average selling price of S$1,500-1,600 psf - which may be challenging in the current environment for a big-scale project.

The all-in development cost - including the land, premiums payable to the state and construction - could be around S$1.5-1.6 billion.

This will limit interest in the site to big boys and consortiums, note industry players. "The developers will have to factor in the risks of undertaking such a big project," said a seasoned developer.

To qualify for upfront remission of the 15 per cent ABSD (additional buyer's stamp duty) on the site's purchase price, the developer will have to undertake to complete the development and sell off all its units within five years, he noted.

"On top of that, if the developer is not fully owned by Singaporeans, it will be subject to Qualifying Certificate rules, which come with a different set of penalties."

The most recent benchmark for Shunfu Ville that analysts pointed to was last month's state tender closing for a site in Toa Payoh, where the winning bid was S$755.30 psf ppr. That was for a much smaller development.

While that site is in a more central location, Shunfu Ville can be seen as part of the more upmarket Thomson location.

In Bishan, CapitaLand paid S$869 psf ppr for the Sky Habitat site in February 2011 and S$853 psf ppr for the Sky Vue plot in November 2012. Based on data on URA's website, 372 of Sky Habitat's 509 units were sold as at end-June 2015. For Sky Vue, which has smaller units, 511 of its 694 units have found buyers as at the same date.

Given the scaleback in state land sales, Shunfu Ville should whet the appetite of deep-pocketed developers that may be keen on replenishing landbanks. "Shunfu Ville has strong locational attributes but the question is what price developers are prepared to pay," said a market watcher.