Government’s recently announced new property cooling measures on July 5 have started showing early signs of impact.
Developer Tee Land has decided to call quits on its recent purchase of Teck Guan Ville exercising its option to walk out from the $60 million en bloc sale.
In an announcement made yesterday to the Singapore Exchange the developer said that the decision is based on the current market sentiment and decline in buyers’ interest. They will have to forfeit 1% security deposit for the sale.
An official spokesperson for the company said that they will adopt practical and cautious approach for new sites considering the confusion in the market outlook.
The developers had signed option-to-purchase agreement with the owners of Teck Guan Ville on June 28.
The freehold site that sits on a 3,928.8 sq m plot is located at District 16, 338 – 364 Upper East Coast Road. As per the announcement made on June 28, the developers would have used their own funds and raise capital through bank borrowings.
They were confident that this deal wouldn’t have major impact on their earning per share or assets for the FY ending 31st of May 2019.
Tee Land has been adding to its land bank off late. It has picked up Casa Contendere a freehold site located at 35 Gilstead Road in an en bloc sale valued at $72 million last year.
It had also bought six townhouse strata development near Upper Thomson Road at $25.74 million in 2017.
Tee Land’s pull-out isn’t isolated as new property cooling measures have dampened interest among developers to pick up new sites.
This was announced yesterday by Huttons Asia which is the marketing agents for both these freehold sites.
The agents informed that these decisions were arrived at after consultation with the sales committees for both these sites.
The increase in additional buyer’s stamp duty (ABSD) and tightening of loan-to-value limits has dented the prospects of the realty market which was going through a dream run.
Angela Lim, Deputy Head of Investment Sales at Huttons Asia believes that developers are showing interest in commercial properties after the cooling measures were announced as isn’t affected by ABSD.
Lim added that commercial properties are also more welcoming towards overseas investors and foreigners where the loan-to-value limits haven’t been changed as in the case of residential development.
The Collective Sales Committee had collected 90% consent for the en bloc sale of Katong Plaza. The site has been zoned for commercial-cum-residential use under the 2014 URA Master Plan and has launched for a reserve price of $188 million which translated to $1,969 psf ppr.
Katong Plaza’s tender was launched on the 7th of June.
Ms Lim is hopeful about Katong Plaza and said that being a mixed-development it would allow developers diversification of their risk.
A developer can retain part of the commercial space tying up with an anchor tenant and put the rest of the commercial units to sale for retail investors.
The residential component of the development is expected to yield 80 units with average side of 70 sq m and this will be a low risk to the developer.