Leonie Hill Condo Horizon Towers En Bloc Sale

Leonie Hill Condo Horizon Towers Launch for En Bloc Sale at S$1.1 billion

After having seen a setback with en bloc sale back in 2009, Horizon Towers has been re-launched for collective sale.

Back then the sale bid fell apart as there was serious disputes and disagreements between the owners and finally Court of Appeal stopped the sale citing irregularities in the process.

The development was launched on Wednesday at a reserve price of S$1.1 billion which is more than double of S$500 million owners were asking for back in 2009.

The 211-unit project which is located in posh District 9 Leonie Hill is on the right track to be the 2nd billion-dollar collective sale since the en bloc sale fervour caught people in Singapore in the recent times. (The first to launch billion-dollar en bloc sale was Faber Garden S$1.18b).

Interestingly it is the tallest high-rise in Orchard Road area that is up for grabs in the last two decades. JLL Singapore has been hired as the marketing agents for this sale and the Collective Sales Committee has already achieved 80% consensus among site’s present owners.

Going by the reserve price the 200 apartment owners are expected to pocket S$4.7 million to $5.2 million each for their units while the 11 penthouse owners are expected to receive between S$9.2 million and S$10 million.

This is surely an impressive price for the owners who would have received S$2.3 million for the apartments and S$4 million to S$6.28 million for the penthouses had the sale gone through nine years ago.

Horizon Towers En Bloc Billion Dollar Club

Other Billion Dollar En Bloc Sites

It is to be noted that there are many other developments which are eying to be Singapore’s largest en bloc sales in terms of dollar figure.

Pine Grove the erstwhile HUDC estate located at Ulu Pandan Road has been in the news for quite some time. The owners are eyeing at a reserve price of S$1.65 billion and they are close to making a deal with only 4% short of the minimum consent to launch tender for sale.

Other sites that are eying the top dollar deals in Singapore are HUDC estate Braddell View where the sales committee is collecting signatures and the owners expect to pocket S$2.08 billion.

Also, in the fray are Siglap located Mandarin Gardens and Serangoon Gardens located Kensington Park where the owners are planning to set a reserve price of S$2.48 billion and S$1.05 billion respectively.

Pacific Mansion that was picked up by a consortium of Singapore-listed GuocoLand, Hong Realty and Intrepid Investments has been the biggest en bloc sale since 2016 and it clocked S$980 million.

It remains to be seen which one among the above breaks the psychological S$1 billion-dollar mark.

Terence Lian who heads Investment Sales at Huttons Asia the marketing agents for Pine Grove believes as soon as the first billion- dollar en bloc sale closes down it would immediately put pressure on others that are in the pipeline.

According to him there isn’t too much of appetite in the market for billion-dollar en bloc sales and hence the site’s location and timing of the deal would have a major bearing on their success.

Bigger Sites Always have Bigger Risks

Alan Cheong, Senior Director at Savills Singapore echoed similar sentiments saying that majority of developers are now focussed on obtaining necessary planning approvals for sites that they have acquired in the recent months and would be wary of bidding on large en bloc sales as this can expose them to higher risks with the tight completion date deadline that they would have to meet.

In fact, there is also some fear among developers if they fail to sell off units within the stipulated five years of completion can burden them with over the top additional buyer’s stamp duty which is applicable on the cost of land.

These two factors taken into account can hurt the prospects of mega-sized en bloc sales.

Mr Cheong added that Horizon Towers’ en bloc sale success would solely be based on the potential pricing of other residential projects in District 9.

According to him what can work to Horizon Towers’ favour is if any new launch freehold condos sell at S$4,000 psf and above as any developer would invest in the site taken into account the projected price of apartments when they would launch new developments for sale.

City Developments Ltd.’s New Futura, a freehold site that is located nearby has sold its units at an average price of S$3,365 psf.

Realty watchers thus believe that the 99-year leasehold estate Horizon Towers has been priced attractively.

Taking into account its reserve price and another S$220 million as to-up premium the land rate for the buyer would work out to be S$1,964 psf ppr for the site. This would come down to S$1,786 if the 10% balcony bonus is factored in.

Also, there is no differential premium or development charges payable on the 1.9-hectare estate for intensification of land use. It has an attractive 3.28 plot ratio.

According to market experts, the break-even price of Horizon Towers would be around S$2,700 – S$2,800 psf and the developers would need to price their units between S$3,000 and S$3,200 psf when the new project is launched for sale.

There is a potential yield of 560 units of 1,200 sq ft. average size.

Horizon Towers Land Rate is More Attractive than Other Prime Sites

JLL’s Regional Director of Capital Markets, Tan Hong Boon believes the site has all the required ingredients to be redeveloped into an upscale residential development that offers convenience and comfort to the residents.

He also stressed on the fact that land rate for Horizon Towers works out much cheaper than a recent government land sale in Cuscaden Road where the rate stood at S$2,377 psf ppr.

Even compared to collective sales such as Park House a freehold site (S$2,910 psf ppr), River Valley Close located Pacific Mansions (S$1,987 psf ppr) as well as Cairnhill Mansions (S$2,311 psf ppr) it works out better.

Other consultants acknowledge that Horizon Towers is reasonably priced and given its location which is 150 meters from the future Great World MRT station at the same time 600 meters from Orchard MRT station it would be a great asset to the developer but given the scale of the deal the market is limited only to a few developers or consortiums.

Mr Tan said that Horizon Towers’ legal battle a decade back led the Court to make amendments to Land Titles (Strata) Act. It has lent more transparency and accountability to the process and sales committees are now follow the procedures by the book to avoid disputes.

Strata Titles Board in the recent weeks issued stop orders to collective sale attempts for Cairnhill Mansions and Goodluck Garden based on objection by some owners.

The Collective Sales Committees are left with no option but to approach the High Court.

Also, Shunfu Ville’ sale to Qingjian Realty invited a stop order by the STB last year but the sale committee received relief at the High Court which dismissed the objections and approved its Sale.

Horizon Towers’ tender shall close on August 7, 2018.

 Horizon Towers En Bloc Details

Marketing Agent: JLL Singapore

Tenure: 99-yr Leasehold

Status: For Sale

Asking Price: S$1.1 billion

Tender Close:  August 7
Tender Extend to Sept 12

Land Size: 204,514 Sq.Ft.

Total Units: 211

Plot Ratio: 3.28

Prime Zone: District 9

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