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En bloc hopefuls extend tender closing dates
WITH no successful collective sale deals since the latest cooling measures took effect on July 6, some projects that have already launched their tenders are extending their deadlines.
The tender for Horizon Towers, launched on July 5 at a reserve price of S$1.1 billion, will now close on Sept 12 instead of the previously announced Aug 7.
Marketing agent JLL said in a statement on Tuesday: "The decision was made following feedback from developers that they remain interested in the prime site, but would now require more time to observe and re-assess the market going forward, re-evaluate the project in the light of these new measures and monitor the sales of new projects."
Including an estimated lease top-up premium of around S$220 million for the 99-year leasehold site, the land rate works out to S$1,786 psf ppr inclusive of the 10 per cent bonus balcony space.
The cooling measures include 5 per cent non-remissible additional buyers' stamp duty (ABSD) for developers when they buy residential properties for development, a 10 percentage point increase in the remissible ABSD to 25 per cent for entities, as well as tightened loan-to-value (LTV) limits.
Tan Hong Boon, regional director of capital markets at JLL, said it is still "cautiously optimistic." "Even if we take the impact into account, we think our pricing is still reasonable." He believes a developer can still sell out the estimated 500 to 600 units that could be built within the five year deadline.
Lakeside Apartments, with a S$240 million reserve price, has also extended its tender closing date to Aug 21, from July 24 previously.
"Everyone is trying to rework their numbers and seeing how things go in the government land sales (GLS) market or new launches market," said SLP International's division director Kevin Lim. "Once the tender closes, you'll hit the 10 week private treaty period, so there's no need to rush into it," he added.
Dalvey Court, with a reserve price of S$160 million, has also extended its tender closing from Aug 2 to Aug 30, to "allow potential purchasers sufficient time to conduct their due diligence in light of the latest property measures," said Christina Sim, director of capital markets at Cushman & Wakefield.
Huttons Asia's head of investment sales Terence Lian said it might also consider extending the deadline of some other ongoing tenders, such as that of Fortune Park. Casa Sophia's marketing agent ERA Realty said that "our response is healthy, so we will not be extending" the deadline.
Meanwhile, various billion-dollar en bloc hopefuls - like Ivory Heights and Pine Grove - continue to collect signatures, inching closer to the 80 per cent mandate as they approach the 12-month deadline.
SLP's Mr Lim said that while some are concerned about both cooling measures and questions about the fallout from any delay in the High Speed Rail, other owners still want a shot at selling their homes "since they have come so far" in the collective sale process. SLP is the marketing agent for Ivory Heights. The project in Jurong East has attained approvals from 74 per cent of owners.
Pine Grove is at 77 per cent, and Huttons' Mr Lian said a circular was recently sent out to ask for more signatures. Kensington Park is at 70 per cent.
"(Developers) are still enquiring about sites, but they are very mindful of land rates and if it is too large a site, it may not be appealing to them," he said. "For billion-dollar sites, I believe that developers will be more likely to just take on one or two."
He expects to launch Pine Grove for sale, should it reach its required mandate, with a longer tender period, and after the development charge (DC) rate review is announced in September to give more certainty for developers.
Over 50 per cent of owners at Mandarin Gardens have signed the collective sale agreement. C&H Properties key executive officer Nelson Lim said: "The en bloc seems to be still alive, but... the momentum is a bit weaker."
He said that while owners are still expressing interest and signing up, some are worried about the cost of replacement homes.
Meanwhile, Laguna Park is at 76 per cent signatures, while Braddell View, marketed by Colliers International, has achieved over 75 per cent signatures.
"The signing of the CSA (collective sale agreement) continues, albeit at a slower pace as is the case with most collective sales which are in the process of garnering the last 5 per cent of consensus," said Tang Wei Leng, Colliers' managing director.
According to Norman Ho, partner at Rajah & Tann, a hypothetical site sold at S$1 billion would come with a non-remissible upfront ABSD of S$50 million, buyer's stamp duty of about 4 per cent to be paid within 14 days from the date of the award, and S$250 million remissible ABSD.
"The developer purchaser will definitely be extremely cautious in their bids for large sites as failure to sell all units (even a few units left unsold) within the 5 years would require them to pay the 25 per cent ABSD together with the interest," he said. "This will further "eat up" their profitability when there is now another 5 per cent upfront payment of the non-remissible ABSD."
Tricia Song, head of research for Singapore for Colliers, said: "It will become more challenging to market mega sites valued over S$1 billion after the new cooling measures kicked in on July 06... We do not think it is necessarily 'game over' for billion-dollar sites - much will depend on the locational attributes and the supply pipeline within their immediate surroundings."
Nicholas Mak, executive director of ZACD Group, said that when DC rates are reviewed, a potential increase in such rates could be "a bit of a double whammy" for "a certain number of sites," but not those that do not have any development charges payable to begin with.