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Pine Grove a litmus test for developers' en bloc appetite
AFTER an arduous en bloc journey lasting years, Pine Grove is finally up for collective sale - with an asking price of S$1.86 billion.
Given the size of the price tag and scale of the redevelopment - possibly yielding more than 2,000 units - the former HUDC project along Ulu Pandan Road will be a litmus test for developers' appetite for billion-dollar deals.
Despite the more cautious mood in the en bloc market following last July's cooling measures, the reserve price for the 660-unit privatised condo was actually bumped up from an earlier S$1.72 billion to S$1.86 billion in order to entice at least 80 per cent of its homeowners to sign up.
It was reported in October that the en bloc deal at the earlier proposed S$1.72 billion was stuck as a small group of owners held out for a higher price.
Last year was a gangbuster year for collective transactions until the government introduced property cooling measures in July to pre-empt property prices from overheating. The Urban Redevelopment Authority later also tightened its rules on the maximum number of units in non-landed residential developments outside the central area.
With the tender launch of Pine Grove, the project in the Holland Road area now marks the first billion-dollar fresh tender in the en bloc market this year.
At S$1.86 billion, the per square foot (sq ft) per plot ratio price works out to S$1,307, after factoring in differential and lease upgrade premiums payable on a maximum permissible gross floor area of about 1,875,760 sq ft.
The 893,219 sq ft site has 64 years left on a 99-year leasehold. It has a gross plot ratio of 2.1 and can be redeveloped into a residential landmark of up to 24 storeys, with 2,050 maximum allowable dwelling units with an average size of 85 sq m, subject to planning approval.
Along with Grange Heights in District 9 - launched in January with a reserve price of S$820 million - Pine Grove's tender will be closely watched by the market to see if en bloc demand still has legs.
Grange Heights relaunched its en-bloc bid last month at a reserve price unchanged from that in its second tender exercise that closed without a deal on Oct 29, 2018. The price translates to S$1,948 per sq ft per plot ratio, including bonus balcony gross floor area.
In recent times, more than 30 collective sales sites have failed to find successful bidders at the close of their tenders.
These include the en bloc attempt for the Spanish Village condominium at Farrer Road. Its homeowners failed for the second time to secure a buyer at a price tag of S$882 million.
For oversized en bloc candidates, success may sometimes come to the patient. A case in point is Tulip Garden, which was sold last year for S$906.9 million - on its fourth attempt - a process the chairman of its collective sale committee described as a "nerve-wrecking journey". What is left to soothe nerves is knowing each residential unit owner there will receive between S$4.3 million and S$7.6 million.
Another mega deal to watch is the possible en bloc sale for the Dairy Farm estate, which raised its reserve price from S$1.688 billion to S$1.84 billion as a sweetener to lure owners to give their consent before its April 2019 deadline. Homeowners have 12 months from the first signature on their Collective Sales Agreement to get the mandate to launch a public en bloc tender.
Overall, CBRE expects en-bloc sales volume in 2019 to drop to 10 to 20 per cent of last year's value.
Pine Grove's marketing agent C&H Group said in a press statement on Monday that the tender will close on April 23 at 3 pm. Grange Heights' latest tender exercise closes on March 11.