En Bloc Singapore 2019 February Summary Report

February En Bloc Summary Report – Singapore 2019

En Bloc Singapore 2019 Tender Close in February

February too flew away with no trace of takers for half a dozen En Bloc launches. As the winter prolongs for another month, these six launches now have been left for Private Treaty Sales just as the 11 sites that went without bidders in January.

The relaunch strategies did not seem to attract the investors or developers enough to bid, though owners have still hope left for another ten weeks through Private Treaty Sale.

The next in row that are ready to march into the market are Grange Heights, Spanish Village, Margate Point, St Thomas Ville, Kentish Green and Sultan Plaza with their tender closing dates in March, and Pine Grove and Peace Centre/Peace Mansion with closing date in April.

Apart from these, about half a dozen billion-dollar launches are underway ranging from S$1.84 (Dairy Farm) Billion to S$2.79 Billion (Mandarin Gardens).

The market is fully aware that developers and investors possess the potential to invest in these properties.

But as they profess caution during this stabilizing period, Private Treaty Sale option seems to be the side door for entry into collective sales for the desperate owners.

District 9 En Bloc Wars

The choice available for investors and developers in District 9 is overwhelming. The Central location makes it possible to escape the new rule that restricts maximum number of units allowed, thereby allowing the freedom for developers to quick sell their smaller units easily to home buyers.

The wide range of size and price of properties offer convenience for investors and developers to choose from plenty.

The 138 owners of Leonie Gardens at Leonie Hill relaunched the tender in January without lowering their asking price at S$800 million (S$2,104 psf ppr).

The CSC Chairman, Mr. Vijay Chopra expressed their steadfastness to complete the sale by tendering process, failing which through private treaty sale.

In the same month, Horizon Towers in the same locality with similar constraints like Leonie Gardens with their CSC agreement expiring in May relaunched the tender retaining their reserve price at S$1.1 billion (S$1,977 psf ppr).

The 221 owners met with the same results without a single bidder to take things forward.

Again, in January, the Cavenagh Gardens, a rare site that attracts no development charges, was relaunched with the same asking price at S$480 million, without success.

February saw the relaunch of Elizabeth Towers at S$610 million (S$2,416 psf ppr) and HighPoint Condo at S$550 million (S$2,595 psf ppr) both freehold properties marketed by Knight Frank and CBRE respectively, again without any bid.

This March, freehold sites with nil development charges, Grange Heights at S$820 million (S$1,948 psf ppr) and St Thomas Ville at S$58 million (S$1,816 psf ppr) are being launched.

And the next in line is Peace Centre / Peace Mansion at S$688 million (S$ 1,474 psf ppr) with its tender closing date in April.

While the Peace Centre / Peace Mansion offers an attractive psf ppr rate, sites with freehold tenure, nil development charges, quick access to MRT Stations, grand lifestyle amenities are salient features available in these District 9 properties for the investors and developers to take advantage of.

En Bloc Killer – Government Land Sales (GLS)

En Bloc Sales Singapore Enter Winter Season
Winter Season May Prolongs Even Further with the Release of Government Land Sales (GLS). Developers Usually Prefer GLS over En Bloc Sales

The Government Land Sales (GLS) with URA as Sales Agent released during December 2018 had seven residential sites and one hotel site in the confirmed list for 1st Half 2019.

One each in residential site (Kampong Java Road) and hotel site (Club Street) have already been awarded in the last two months, playing spoilsport to the already staggering En Bloc market.

The six other residential sites are Sims Drive, Middle Road, Clementi Avenue 1, Tan Quee Lan Street, One North Gateway and Bernam Street.

While the first three of these six sites are open for tender, the other three await launch dates.

The Sims Drive in Geylang with short driving distance from Paya Lebar Central is a 99-year leasehold, residential (non-landed) offering 16,225.2 sqm site area and a maximum GFA of 48,676 sqm.

With GPR 3.0, it has potential to yield 570 units.

Within walking distances from Bugis MRT Station and surrounded by great lifestyle amenities is the 99-year leasehold Middle Road GLS Site zoned for Residential with Commercial at 1st Storey with a site area of 7,462.6 sqm and a maximum GFA of 31,343 sqm.

With GPR at 4.2, it has an estimated 1500 sqm commercial space along with 375 housing units.

The Clementi Avenue 1 offering the mature Clementi neighbourhood amenities with great connectivity to City Centre is yet another 99-year leasehold with site area 16,542.7 sqm and GFA about 57,900 sqm. With 3.5 GPR, this Residential (non-landed) site could potentially yield 640 housing units.

1st Half 2019 GLS programme is also loaded with a reserved list of five Residential sites, two White sites and a Hotel site.

These ready to use land parcels relieve the developer from all the formalities and processes associated with En Bloc sites and help to jump start their project at an early date.

Moreover, they burn the pocket less with relatively lower prices compared to En Bloc reserved prices.

The residential site at Kampong Java Road that has been awarded in January, for example, sold at S$418.38 million ($1,192 psf ppr).

Compared to En Bloc transactions that took place in 2018 like Makeway View ($1,626 psf ppr), Dunearn Gardens ($1,914 psf ppr) and Chancery Court ($1,610 psf ppr), the pricing is highly competitive, leave alone the complex procedures involved in collective sales.

Development Charges (DC) for Commercial and Hotel Use Jump

The arrival of international tourists in great numbers along with locals on staycations witnessed an astounding 87% occupancy rates with 4% increase in RevPAR in 2018.

It also saw S$3,667 million in revenues at a RevPAR of S$189.3 and a mind-boggling year-over-year increase in revenues at 7.5% from hotel rooms.

Promptly passing on the benefits and bestowing its blessings on the hotel assets investment sector, 2018 recorded a four-year high investment in hotel assets to the tune of S$13.6 billion.

A scurry of activity in the hotel market has been the proof with groups like Worldwide Hotels and Fragrance investing high on hotel assets.

Others like Ascott REIT (subsidiary of CapitaLand) and Oxley’s Holdings had unbelievable transactions that fetched hefty returns from liquidating their hotel assets.

Market leaders in residential segment like Hoi Hup Realty turned to investing in hotel site by offering highest bid for GLS site Club Street tender.

The Development Charges in this juncture is a way the Government shares the success of thriving businesses. It could also be considered an agreement with the trend that is expected to prevail for quite a while.

The DC rates released by the Ministry of National Development every six months in consultation with the Chief Valuer clubs with the permission awarded to carry out developments that enhance the value of the property through rezoning upgrades, larger plot ratio or similar measures.

The DC rate revision for hospitality sites rose sharply at an average 45.6% for the period effective March 1, 2019 to August 31, 2019, recording a historical high since 2000.

Market experts view the drastic hike an indication of the strong growth in hotel investment segment and a stamp of approval of its performance.

Out of the 118 sectors, the increase in DC rates in 116 sectors varies in range between 7% to 73.9% with Sectors 25, 26, 28, 29, 30, 32, 33 and 34 experiencing the peak 73.9% each.

Similarly, the DC rate for commercial use has seen an average 9.8% increase while the rate for non-landed residential use has seen an average 5.5% decrease, all echoing the performance of these segments in the previous period.

With a conducive environment for setting up international and local businesses in Singapore, the office rental rates had increased 20.8% in 2018 with an average rate at S$10.16 psf.

To balance the entire shift of focus to hotel and commercial, a cut in DC rates for non-landed residential use has been awarded as an attractive incentive, though it is ineffective to counteract the ABSD charges levied during the cooling measures in July 2018.

On the whole, the second month of the New Year 2019 had been quite sober. It was felt to pump more confidence on to the trending hotel assets investment ventures.

Though the En Bloc site owners might feel dismayed over GLS site tenders, it is expected to urge them to strongly consider the feelings that experts have been echoing for long – to put forward realistic asking prices for their properties.

With more En Bloc site tenders closing without bids and Private Treaty Sale becoming the norm, the owners seem to get ready to keep their options open, being keen to conclude the sale.

Would March add more mirch? Need to wait and watch!

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