TSky Development, a joint venture company formed by Tiong Seng Holdings and Ocean Sky International, has acquired the Cairnhill Heights condominium for S$72.6 million.
However, in December 2017 when the property owners launched a public tender, they had fixed their reserve price at S$80 million.
Tiong Seng Holdings, a construction and engineering company, is the bigger shareholder in TSky with 60% stake, while the remaining 40% stake belongs to Ocean Sky International, which is a civil engineering company.
Although Cairnhill Heights is in District 9, one of Singapore’s prime districts, Nicholas Mak, ZACD Group executive director says buying the property at S$80 million resulting in a break-even rate of over S$2,800 per sq ft would have been too risky for any developer.
The land rate would have been S$2,045 per sq ft per plot ratio (psf ppr) with the development charge included, but the actual land rate now that the price is lower has not been disclosed.
Mak says at the current price, the break-even rate is roughly between S$2,680 and S$2,760 per sq ft., and views that as a fair price, being currently the going rate for prime sites like this one in the Core Central Region.
Only in February this year, Low Keng Huat, a company listed on the Singapore Stock Exchange bought Cairnhill Mansions in a collective sale at a land rate of S$2,311 psf ppr.
It has remained the highest land rate of this en bloc cycle for sites that are exclusively residential.
Still, Tiong Seng Holdings and Ocean Sky International, the two Singapore listed companies that joined to form TSky, are lucky to have acquired the site that is within the Orchard Road shopping belt, not just because it under freehold ownership, but also because it has a high gross plot ratio – 2.8.
As such, the 15,407.5 sq ft site currently holding a 20-unit condo can be redeveloped to hold 42 units of 1,022.6 sq ft on average.
Cairnhill Heights is not the first development property the joint venture company, TSky is acquiring. Last year, it bought Sloane Court Hotel together with a small adjoining parcel at S$80.5 million.
That combined site now has a 12-storey development with 80 units under construction.