En bloc hopes revive amid a risk-averse market

IS THE collective sale market stirring again? After months of no deals, two large plots of land are now on offer. Pine Grove upped the asking price for its huge 890,000 sq ft plot to S$1.95 billion, after several earlier attempts at a sale. 

On top of that, a land betterment charge, estimated at S$1 billion, would weigh heavily on the effective acquisition cost of about S$1,434 per square foot per plot ratio for the 99-year-leasehold parcel. The condominium houses 660 units.

Island View, meanwhile, is being offered at a reserve price of S$575 million, working out to a land rate of around S$1,623 psf ppr including an estimated LBC of S$178 million for the 72-unit condo. The freehold parcel in Pasir Panjang is about a third of the size of the Pine Grove plot. 

The two sites came onto the market within a week of each other, and on the heels of two state land tenders. 

By some estimates, more than 20 collective sale tenders have closed so far this year. Only two deals were done - for Meyer Park in the east at S$392.2 million or S$1,668 psf ppr, and Kew Lodge, a landed site in Bukit Timah, for S$66.8 million or S$1,940 psf.   

Developers have taken a distinctly more risk-averse stance in recent state land sales. Tenders for two sites in Woodlands and Lentor Hills drew cautious bids. Commentators pointed to growing macroeconomic weakness and waning demand for new homes in the shadow of several rounds of market cooling measures. CDL won the Champions Way plot in Woodlands plot for about S$295 million or $904 psf ppr. A Hong Leong-GuocoLand-CSC Land joint venture picked up the Lentor parcel for S$435 million or S$982 psf ppr. 

Latest data shows new private home sales fell in August, although that was not surprising as homebuyers and developers alike steer clear of launches during the Hungry Ghost Month. Sales in August were also 10 per cent lower year on year.

Developers have marketed some 17 private non-landed projects so far this year, totalling about 6,700 units (excluding ECs). That’s about 50 per cent more than the roughly 4,500 new units launched in the whole of 2022.

Another 3,000 or so units are in the pipeline to be launched in the last three months of this year. These include J’Den, the redevelopment of JCube mall, Hillhaven in Hillview, Hillock Green in Lentor, Marina View Residences, and Watten House. Take-up at new launches has slowed considerably from last year’s racy pace, but higher costs of land and financing have squeezed developers’ margins, so pricing will be key. 

On land use and deals

In land-scarce Singapore, better use of land is always on the mind of planners and developers. Labrador Tower, SP Group’s integrated development sitting on top of an underground electrical substation in Pasir Panjang, is a first in many respects. Could the pilot project spark a new wave of land optimisation? Kalpana Rashiwala dug deep in her Brunch feature to find out more about powering up land use. 

And in The Level Ground, Leslie Yee looks into Frasers Centrepoint Trust’s proposed divestment of Changi City Point. At S$338 million, the sale would value the property at a yield which may be below current borrowing costs. There are sound reasons, he argues, for lowly-geared long-term focused buyers to pick up quality commercial assets at skinny entry yields. 

Up for sale is a Good Class Bungalow on Third Avenue belonging to Hin Leong founder OK Lim, whose family assets were seized in a criminal trial involving cheating and forgery charges. The GCB is on the market for S$30 million, or about S$2,058 psf. This is the second GCB owned by Lim to be put up in the prime Bukit Timah neighbourhood. His Second Avenue property down the road was sold in 2021 for nearly S$33.4 million or almost S$1,671 psf.

China watch

News coming out of China is gloomy, though some investors are holding out for confidence boosters. 

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