The Mega Site attracts No Buyer and is planning to Relaunch in near future
There seem to be no end of woes in the en bloc sale market in Singapore as it seems to have run out of steam. As for now, no residential project has seen a successful transaction in 2019.
Braddell View the mega estate is the latest to join the club of properties that have seen their tender fail to invite any bids.
Market experts aren’t surprised with ‘zero takers’ for the S$2 billion estate which went into the market being the largest private residential site in Singapore.
According to them the muted mood in the market in view of the new cooling measures coupled with the huge price tag of the estate have been the factors behind its failures.
Managing Director of Marketing at Colliers International the agent for this sale Tang Wei Leng said that they have been instructed by the Collective Sale Committee to look for a private treaty negotiation with the option of the tender’s re-launch also in the realm of possibilities.
Lee Nai Jia, Head of Research at Knight Frank said that with developers having created enough land bank in the past couple of years, it is also making them apprehensive about new acquisitions.
According to him the size of this site doesn’t make it easily palatable for the developers as they may prefer to use funds for other opportunities instead of locking themselves into such a big project.
He added that Government Land Sales (GLS) such as one that is up for taking at Tan Quee Lan Street close to the Bugis MRT Station offers more incentives.
It must be mentioned that in the month of April, two GLS sites were picked up. Wing Tai Holdings bought the site at Middle Road for close to S$492 million while City Developments Ltd and Hong Leong Holdings picked up one at in Sims Drive for S$383.5 million.
While the demand for residential properties hasn’t fallen, there is good volume of supply which is discouraging further land acquisitions.
Edmund Tie & Company in a recent report highlighted that since the new cooling measures were announced in July last year, the market has been stagnant and no sales have so far been recorded in Q1, 2019.
The only residential and mixed sites that have been sold in the first quarter were Kampong Java Road (residential site) and one in Pasir Ris Central (integrated mixed-use site) under the GLS Programme
Braddell View the 918-unit estate had launched on March 2017 and the owners had set a reserve price of S$2.08 billion.
Going by the price the land rate translated to S$1,199 psf ppr. This included the estimated S$795.1 million differential premium required for intensification of land use and lease top up for 99-year lease tenure.
The former HUDC (Housing and Urban Development Company) estate encompasses 1.14 million sq ft land and has 2.1 gross plot ratio and has a 102 years lease tenure that started back in 1978.
The story has been quite the same for other billion-dollar en bloc sites which were expecting to find a buyer.
Horizon Towers which launched for collective sale in January also without inviting any bids. On the other hand, the commercial sector en blocs have been doing well this year.
According to Cushman & Wakefield’s Head of Research for Singapore and Southeast Asia Christine Li, the uptrend in rents for commercial properties has been driving the enthusiasm in the commercial en bloc sector.
She added that landlords and investors are very bullish about this sector and are not willing to let the window of opportunity slip from their hands.
Recent announcements of the Strategic Development Initiative (SDI) and the CBD Incentive Scheme might propel the commercial property market to greater heights.
Christine believes that older commercial properties might see increase in demands as the value of aging properties could go up and open up favourable opportunities for the owners.
CBD Incentive Scheme is being aimed at rejuvenation of the Central Business District and encourages owners to convert their office-only properties to mixed-use development.
Strategic Development Initiative on the other hand is meant to encourage old commercial property owners to redevelop their properties.
However, all hopes in the residential property markets shouldn’t be lost according to JLL’s Executive Director for Capital Markets Tan Hong Boon.
He believes that if the prices are reasonable there might be takers for the property although he agrees to the fact that developers are approaching new acquisitions with a sense of caution and when the risk isn’t too high as is the case with smaller properties which may be easy sell within five years there are good chances of finding a bidder.
Big sites have turned riskier for the developers as the cooling measures have announced such a 5-year deadline for development and sale of all unit for remission of the 25% ABSD (Additional Buyer’s Stamp Duty) based on the price of the land.
JLL Singapore has launched two new properties to the en bloc market this week.
The 16-unit Newton Lodge, a freehold site is going for S$44 million while 134-unit Cascadale another freehold property in Upper Changi has been launched with a reserve price of S$270 million reserve price.
Mr Tan is hopeful about these properties based on their price and size.