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Horizon Towers back on collective sale market with S$1.1b reserve price
IN 2009, the S$500 million collective sale bid of Horizon Towers fell apart following a rancorous dispute among the owners, and the Court of Appeal's finding that the sales process was improperly handled.
Now, the 211-unit development in prime district 9 is back on the market - this time, asking for more than twice that price.
This could well be the first billion-dollar deal in the current en bloc upcycle if the sale goes through, and the largest high-rise residential redevelopment offering in the Orchard Road area in at least two decades.
A public tender was launched on Wednesday for the Leonie Hill development by marketing agent JLL, with a reserve price of S$1.1 billion. More than 80 per cent consensus among the owners has been achieved.
Owners of the 200 apartments could receive between S$4.7 million and $5.2 million each; the owners of the 11 penthouses could each bag S$9.2 million to S$10 million.
These numbers are markedly higher than the estimated gains they would have pocketed through the previous sale attempt 10 years ago, had it gone through. Back then, the unit owners were to get S$2.3 million, and the penthouse owners, between S$4 million and S$6.28 million.
A few other developments are also aiming to pull off Singapore's largest collective sale in quantum dollar terms. These include Pine Grove, a former HUDC estate off Ulu Pandan Road, where owners are asking for at least S$1.65 billion. The estate is just 4 per cent shy of the requisite approval rate to launch a tender.
Also in the process of getting signatures from owners is former HUDC estate Braddell View, which is said to be asking for S$2.08 billion, as well as Mandarin Gardens in Siglap, which has an asking price of S$2.48 billion; owners of Kensington Park condominium in Serangoon Gardens are looking at S$1.05 billion.
The biggest collective sale since 2016 in total value terms was recorded for Pacific Mansion, which was acquired for S$980 million by Singapore-listed GuocoLand, Intrepid Investments and Hong Realty.
Huttons Asia's head of investment sales Terence Lian, who is marketing Pine Grove, said that when the first billion-dollar collective sale is closed, other mega sites in the pipeline will feel the pressure.
"I don't think there is so much appetite for billion-dollar deals, so location and timing of launch will play a part," he said.
Savills Singapore senior director Alan Cheong said most developers who have already obtained the relevant planning approvals for acquired sites are now wary of committing to collective sales for which the completion date can be long drawn, exposing them to greater market risks.
And then there is also the fear of failing to finish selling the project within five years, in which case the additional buyer's stamp duty on land cost will apply.
These are just two factors stymieing mega-sized deals.
The strength of demand for Horizon Towers will depend on the estimated pricing for residential units in District 9 when the new project is launched, Mr Cheong added.
"If prime freehold condominiums are going at more than S$4,000 psf, then this project will find traction among buyers. The developer buying this will have to make a judgement call on where the market is by the time he starts selling."
This year, the nearby freehold project New Futura by City Developments Ltd achieved a median price of S$3,365 psf for units sold.
Market watchers thus deem the estimated land rate for Horizon Towers to be attractive. 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$1,964 per square foot per plot ratio (psf ppr), or S$1,786 psf ppr inclusive of the 10 per cent bonus balcony space.
No development charge or differential premium is payable for intensified use of the 1.9-hectare site, which has an "as-built" gross plot ratio of around 3.28.
Consultants estimate the breakeven pricing for the Horizon Towers site to be between S$2,700 and S$2,800 psf, and the average selling price of the new project to be S$3,000 to S$3,200 psf. Some 560 units can be built on the site, based on an average size of 1,200 sq ft.
Tan Hong Boon, regional director of capital markets at JLL, which is marketing Horizon Towers, said: "The property has all the ingredients needed for branded residences with unparalleled services, comfort and convenience."
He noted that its land rate compares favourably with the recent 99-year government land sale site at Cuscaden Road, sold for S$2,377 psf ppr, as well as the collective sales of freehold Park House at a record-breaking rate of S$2,910 psf ppr, Pacific Mansions site in River Valley Close at S$1,987 psf ppr, and Cairnhill Mansions at S$2,311 psf ppr.
Other consultants agree that the land rate for Horizon Towers looks reasonable for its prime location, but said the large quantum will limit the bidders to the big boys and consortiums. The Horizon Towers site is 150 m from the upcoming Great World MRT station and 600m to the Orchard MRT station. The tender closes on Aug 7.
Mr Tan of JLL noted that since the epic legal tussle surrounding Horizon Towers 10 years ago, the Court has made amendments to the Land Titles (Strata) Act to enhance procedural clarity, transparency and accountability. "Since the changes to the laws, collective sale committees are now more diligent about observing the required procedures and processes to avoid pitfalls," he said.
In recent weeks, the Strata Titles Board (STB) has issued separate stop orders on the back of owner objections for two en bloc sale attempts - one at Goodluck Garden and the other, Cairnhill Mansions. The orders put an end to STB's mediation and give the two collective sales committees two weeks to apply to the High Court to approve the sale.
Earlier, the sale of Shunfu Ville to Qingjian Realty was also brought to the High Court. In that case, however, the appeal from the objectors was dismissed. The sale was approved last year.