Chancery Court brings YTD tally to S$8.8b, topping 2017 figure

Singapore

IT is barely halfway through the year, but with the sale of ex-HUDC Chancery Court on May 17, the collective sales market has busted the total collective sale figure for the whole of 2017.

The total collective sales transaction value so far this year for 27 residential sites and one industrial site is now at S$8.81 billion, higher than the S$8.7 billion seen for 30 residential and non-residential sites brokered in 2017. And the figure is set to surge further with several large sites still on the market.

Including the S$401.78 million tab for Chancery Court - which The Business Times understands was bought by Far East Organization - residential collective sales year to date total S$8.736 billion, surpassing 2017's S$8.13 billion.

Analysts said the large collective sales transactions seen this year, with six going for north of S$500 million, helped bulk up the total.

"This is not surprising as the en bloc momentum experienced in 2017 has snowballed to this year where we saw larger deals like Pacific Mansion (S$980 million), Tulip Garden (S$906.9 million) and Park West (S$840.89 million) transacted," said head of Singapore and South-east Asia at CBRE Research Desmond Sim.

JLL's national director of research and consultancy Ong Teck Hui expects total residential collective sales value for the full year to reach a new record, surpassing 2007's S$11.4 billion, assuming that the current demand for residential sites continues.

Analysts share the view that there's no stopping the en bloc train.

"We expect collective sale activities to spill over into 2019 in view of the upturn in the property market, healthy pipeline of collective sale candidates, and sustained interest among developers to replenish their land banks," said Tricia Song, head of research for Singapore at Colliers International.

"The large number of en bloc sales being offered and coming into the market means we will see some room to grow," said Nicholas Mak, executive director of ZACD Group. "The en bloc sale momentum will likely continue for the better part of this year."

Christine Li, senior director of research at Cushman & Wakefield, said the market continues to be flush with liquidity with developers being aggressive on sites with good locations, such as Chancery Court, which is across the road from Anglo-Chinese School (Barker Road).

The prime Bukit Timah location of the 99-year leasehold site would have played a part in it securing a price that topped the asking amount. Marketing agent OrangeTee Advisory said it was a 6 per cent premium to the reserve price of S$380 million.

Owners of the 136 residential units and eight commercial units will net gross proceeds of S$1.8 million to S$3.5 million and S$934,000 to S$4.7 million respectively.

The winning bid translates to a land price of about S$1,610 per square foot per plot ratio (psf ppr).

This is factoring in a differential premium and lease upgrading premium of about S$182.4 million to redevelop the site to a gross plot ratio (GPR) of 1.4 based on the maximum permissible gross floor area (GFA) of 362,788 sq ft, and to top up the lease to a fresh 99 years.

The 259,134 sq ft estate comprises a 16-storey tower block and seven blocks of four-storey walk-up maisonettes. It can be redeveloped into a five-storey residential development with a maximum of 481 units based on an average size of 70 sq m, if authorities approve.

A pre-application feasibility study (PAFS) commissioned by OrangeTee Advisory has "provided certainty to developers during the bidding process," it said.

"The recent collective sale sites sold along Bukit Timah Road, Dunearn Road and Balmoral Road have exhibited developers' confidence in the locality and the rarity would enhance its desirability to the end users and investors," OrangeTee Advisory added. "We are certain that the redevelopment of Chancery Court will value add to the impending rejuvenation of the area and the rarity would enhance its desirability to the end users and investors."

Mr Mak of ZACD Group noted that the differential premium and lease upgrading premium disclosed by OrangeTee Advisory amount to nearly half of the site's asking price of S$390 million when the tender was launched.

"On the bright side, this means there is a mechanism for 99-year condos to take part in the collective sale market," Mr Mak said.

With the sale of Chancery Court, only five of 12 former HUDC estates remain for now - Ivory Heights, Pine Grove, Laguna Park, Braddell View and Lakeview. All five are in various stages of the collective sale process.