Another Massive Site Joining Billion Dollar Club
Residents of Laguna Park would hope to be 3rd time lucky with an en bloc sale. The East Coast property has set $1.48 billion as reserve price and joins the list of billion-dollar sites that remain unfazed by recently announced new cooling measures.
The owners of the property that has 528 units have reached the minimum 80% consent required for the sale almost two months prior to the 30th September deadline.
Tony Sum, Chairman of the Collective Sale Committee informed that the tender would be launched on 18th September. Laguna Park is an ex- HUDC estate and it has 58 years lease tenure out of 99 years left.
Laguna Park residents were unlucky twice in the past and the dream of monetizing their asset remained unfulfilled.
They tried en bloc sale in 2007 and 2010 but remained unsuccessful due recession and poor conditions in the market.
Even this time around the new cooling measures came into effect only two months prior to their third attempt at sale.
65-year-old Mr Sum said that the residents have some disappointment with respect to the cooling measures as it certainly has affected sentiments in the market but since they had done all the groundwork for the sale and even achieved 80% consent, there was no going back on the tender.
He was hopeful of attracting a developer as the East Coast area has been kept out of the purview of the latest land rate increase in development charges which will lure developers as they won’t have to bear additional cost for the land.
It must be mentioned that developers need to bear charges for intensification of land use and these rates are assessed once every six months.
The estate that covers an area of 669,484 sq ft has been classified for residential use as per the 2014 Master Plan and has 2.8 plot ratio.
It is estimated that once redeveloped the property would have 1,700 units which are 100 sq m in average size. The average price works out to be $1,253 psf ppr going by the reserve price.
This rate has been arrived at after considering $453.5 million differential premium as well as $416.1 million top-up premium for a fresh 99-year lease.
68-year-old John Yap who is the Chairman of Laguna Park Management Corporation and has lived in this property for the last 21 years said he enjoys the view of the sea but ageing lease of the property is something that residents can’t ignore.
He added that when the idea of en bloc sale was mooted twice earlier he wasn’t among the signatories as he was fond of this place.
With East Coast Parkway and Jumbo Seafood just a stone throws away from the site and the upcoming Siglap MRT just at the doorstep, there were many plusses in this property.
Beside all these, there are many schools nearby such as Rosemount Kindergarten, CHIJ Katong Convent, St. Stephen’s School, St Patrick’s School, Ngee Ann Primary and Victoria School being the nearest.
Much anticipated Jewel @ Changi will be completed soon which is just few mins drive away from the condo. With MCE Expressway close by, one can reach Central Business District and Marina Bay in no time.
However, Laguna Park residents can’t hold on to it as only lease 58 years remaining in the lease tenure and it doesn’t look favourable.
Under this deal the 516 residential apartment owners shall receive between $2.6 million and $5 million for their individual units. As for the owners of the 12 shops they are slated to get between $2.53 million and $2.66 million for their property.
The tender for this estate closes on the 1st of November.
While the sale committee may have managed to gather 80% consent from the residents, the tough task of finding an interested developer begins now.
Colliers International in a recently published report stated that 21 en bloc sale tenders that were valued approximately $5.6 billion closed in the months of May and June without attracting any developer.
This was even before the cooling measures were announced. This was then attributed to developers assessing their land banks, studying the mood in the market and also evaluating all the risks of acquiring new sites.
Along with Laguna Park another property that seems to be upbeat about collective sale is Pandan Valley.
They are hoping to get $2.6 billion from the planned en bloc sale.
This is a new record in terms of asking price. Pine Grove which is close to acquiring 80% signatures shall launch at an asking price of $1.72 billion.
Mr Sum wasn’t willing to reveal any plans of lowering the asking price given the market situation and said that if the need arises they would take a call and even in such a case they would need to again get 80% consent which isn’t going to be easy.
Market analysts are apprehensive about billion-dollar collective sales and cite the example of Horizon Towers which was launched for $1.1 billion reserve and were forced to extent their tender deadline and this could well be the template for such large sized en bloc sales.