Changi Garden Condo has impressively scooped S$248.8 million in its en bloc sale, whose tender closed on 16th October 2017. This is significant considering the asking price for this property was S$196 million.
That massive price that was paid by Chip Eng Seng Corporation Ltd (CES), the property group that acquired Changi Garden through its investment arm, CEL Real Estate Development (CEL), resulted in per square foot per plot ratio (psf ppr) price of S$888, and that, according to consultants, is tantamount to raising the psf ppr bar in the region to an entirely new level.
This has been Changi Garden’s 6th attempt at selling en bloc, and the process, which began in March 2016, was assisted by Dentons Rodyk & Davidson solicitors.
Changi Garden, sits on 200,093 sq. ft, and is located at the interception of Upper Changi Road North and Jalan Mariam Road. It’s official plot ratio is 1.4; hence its gross floor area allowable for development can go up to 280,130 sq. ft.
CES ended up paying 27% above the property asking price, which is understandable considering there were nine bidders in total. Still, Nicholas Mak, the executive director of ZACD Group sees CES’ high bid as quite bullish.
In his view, the developer must be anticipating a sharp rise in property prices within the region. So far this year, the number of properties sold en bloc, inclusive of Changi Garden Condo, has reached 17, their cumulative sales proceeds totalling S$6.1 billion.
By Mak’s estimate, taking the prevailing market conditions into account, CES will break even at a price between S$1,350 psf and S$1,400 psf.
Then after factoring in a profit margin of 10%, the sale of this freehold property is bound to set a new price range for the region at roughly between S$1,500 psf and S$1,600 psf.
Before now, the average price of land in the area has lain between S$929 psf and S$999 psf, even for newly constructed condominiums like Palm Isles, The Inflora and Parc Olympia.
As for the break-even price, Mak says Changi Garden’s is between 40% and 60% above the norm. This sale is, therefore, bound to escalate the selling price benchmark for properties in the region, something he feels should excite any property owners hoping to sell their condominiums in the foreseeable future.
Owners of this ‘70s and ‘80s property are now about to enjoy a windfall. According to Edmund Tie & Company, the consultant firm that handled the sale, each of the owners of the apartments totalling 60 will pocket between S$2.14 million and S$2.27 million.
For penthouses, numbering 12, each owner will get between S$4.03 million and S$4.74 million.
The owners of the 12 shops within the property will receive the highest pay, theirs being between S$4.7 million and S$7.08 million each.
Some commentators view the bullish attitude by CES and other developers as a massive gamble, fearing that property prices might shoot to a level that overshadows home buyers’ purchasing power.
The Urban Redevelopment Authority (URA) released data on 16th October indicating that a paltry 73 private homes were launched by developers in September. Some see this as developers’ deliberate move to withhold release until next year, in anticipation for much higher prices.
CEL intends to put up residential condominiums that are structurally low-rise, but with comprehensive condominium facilities. It is clear in CEL’s documentation to the Singapore Exchange that they intend to construct around 320 residential units, with the possibility of eventually adding some retail shops.
Mr. Tay Siong Siew, Changi Garden’s sales committee chairman, notes that a retail component would be wholly embraced, just as the current shops enjoy plenty of goodwill from residents within and outside the property; if only CEL can obtain the necessary approval for its inclusion.
CES has disclosed that costs for acquisition and redevelopment of Changi Garden are being financed from within the group, supplemented by bank loans. Meanwhile, the stock market appears to be responding positively to the bullish actions of property developers.
For instance, CES’ share price has risen by half a cent to reach S$0.905, which is its highest over a 2yr period, while stock has increased by 44% since the beginning of the year.
- This is the freehold sitewhich the developers are looking for
- The area has good infrastructure and public amenities.
- The buyer of the property will not be obliged to pay any development charge
- The area is set to be a vibrant commercial center with high level of employment opportunities. The signs for this are clear from the many businesses already being established.
- The area where Changi Garden is has clusters of industries and other commercial interests, and these usually have benefits that spill over to the communities living around. This makes it attractive for developers to invest in the area.
- The area is fast modernizing as exemplified by the presence of the Changi Business Park, the industrial estates of Changi North, Changi South as well as Loyang, the Singapore Expo, and other establishments.
- The property is in close proximity to the Singapore University of Technology and Design
- The Singapore Changi Airport is also close by and is easily accessible from Changi Garden.
- The development of Jewel Changi Airport as well as Terminal 4 is about to begin. Once these are complete, there is potential of property value in the area to rise very fast.
- The area has room for expansion as a developer can easily acquire more land from local residents who have freehold ownership of the surrounding properties.