In a move to match the demand of a small group of owners and secure the 80% mandate, the collective sales committee (CSC) of Pine Grove raised its reserve price to $1.86 billion.
The original reserve price, based on the advice of the marketing agent Huttons Asia, was $1.72 billion.
The change was done in the last-minute bid to gain an approval of launching a public tender. It is to be noted that the developers are taking cautious steps after the recent cooling measures.
Though the move was against the advice of the marketing agent, it was done to remove the pressure from the owners who believed that the reserve price can be higher than the original price, according to Terence Lian, the head of investment sales of the company.
Mr. Lian added that while 78% of the owners were ready to go with $1.72 billion, 2% did not agree to it and wanted a raise to $1.86 billion.
The 80% mandate is required and should be achieved by Oct 28, failing to reach 80% is not the owners want.
CSC refused to comment anything when asked.
In a letter to Pine Grove owners from Huttons, dated Oct 11, the agent said that the base of S$1.72 billion value was the market sentiment and residual land value method and was explained several times on various occasions.
Additionally, the importance of a realistic price set based on an independent valuation report and how can it safeguard the owners was also explained in the closing part of the tender.
The letter further mentioned that the tenders of more than 50 sites were closed since January and could not find any buyer. The closing dates of more than 25 of these sites were beyond July 6, the date when cooling measures came to effect.
A rival agent had claimed in a meeting with some owners that it is possible to raise the reserve price to $1.86 billion according to Huttons in the letter.
According to the letter, the rival agent and the owners were in contact with some developers who can have a budget of $2 billion and more. Further, the rival agent suggested that Huttons should voluntarily resign by Oct 10 and make a way for another agency to take over the process.
The owners requesting $1.86 billion were asked to provide a written proof that a buyer is committed to bidding at $1.86 for Pine Grove in justification of their claim. As per the letter, nothing is provided by them yet.
CSC mentioned in an open later of Oct 5 that the owners had pressured the committee to raise the price to $1.7 billion during the last collective sale bid in 2011.
It was far more than $1.25 billion price of Pine Grove as valued in an independent valuation report when tender closed. No surprise that the efforts failed in achieving desired results, CSC further stated.
While sites like Windy Heights reduced their price and Faber Garden chose to stay with the same price, the 660-unit mega site located near Ulu Pandan Road preferred to raise its price after the cooling measures.