Cairnhill Mansions, a freehold property on 69 Cairnhill Road, has gone to Low Keng Huat, a Singapore Developer at S$362m, in a private deal entered into after the most recent public tender closed without success.
The tender was the property’s 5th overall, and like the previous attempts, this most recent tender expired without a developer offering the property’s reserve price.
Only private negotiations between CBRE, the property marketing agent and Low Keng Huat has salvaged the en bloc sales attempt.
This is the 6th properties sold in 2018 and more to come
Freehold Properties in Core Central Region is no doubt the Top target by Developers
According to the developer, the intention is to construct a high rise residential condominium on the 43,103 sq ft site, which will comprise around 200 housing units.
The company also disclosed it is in the process of replenishing its land bank in Singapore, in readiness for future residential developments.
To manage the transaction and anticipated site development, Low Keng Huat has had to involve its subsidiary, Glopeak Development Pte Ltd.
Cairnhill Mansions a freehold 61-unit condominium site. Located in the ever-popular prime district 9, the majority of owners want to put the building up for collective sale in hopes of achieving maximum returns.
Over 80% of owners have so far signed a collective sales agreement, (this was as of last week) and it does look set to attract many hopeful bidders.
Should Cairnhill Mansions receive the asking price of S$362 million, it would mean the PSF PPR (per square foot per plot ratio) would work itself out to be a whopping S$2,311 which is very impressive to say the least.
CBRE, the marketing agent for Cairnhill confirmed the numbers today. Its thought there will be no development charge unless otherwise confirmed from URA (the Urban Development Authority).
Cairnhill Mansions En Bloc Potential Site
Currently, en bloc sales are highly popular at the moment and it does look as though more and more will seek out site such as this.
However, Cairnhill Mansions aren’t just located nicely but offer good development potential in both the selling and rental markets. That will of course attract potential buyers from Singapore and potentially around the world.
Developers will love the fact Cairnhill Mansions are close to Orchard Road, the main shopping district within the local area. It’s also one of the most popular areas to be in too with the main shopping and business districts being short walks from the property.
There are lots of amenities close (in Orchard Road) such as entertainment outlets, retail shops and grocery markets. The Newton MRT Station can be found just 400 meters away from Cairnhill Mansions too.
The building is also a sizable freehold and within the local area, there haven’t been any similar plots for sale in a number of years.
It was almost 10 years ago when the last residential plot of land was sold in Orchard so these properties are few and far between. The last site to be sold was the Westwood Apartments purchased by YTL for S$2,525 psf ppr.
Right now, there is a strong market for residential buys such as Cairnhill Mansions and most developers love these lands simply because of how easy it can be to attract people to them.
This is now the fifth collective sale bid for Cairnhill Mansions with four others (2005, 2007, 2011 and 2014) all failing. However, it does look as though now might be the right time for success.
Why now? Well, there’s real demand for residential properties such as Cairnhill and developers are more than willing to pay a higher price for these development sites too.
It’s not just an aggressive tactic on the developer’s part to get a property but rather making a great profit later on.
Cairnhill Mansions aren’t just good for current owners but potential future owners too. It’s said the 61 owners of the current units will receive potentially 70 or 80% more with a collective sale which spells good news as prices are rising.
‘While selling units singularly mightn’t bring as much returns, a collective sale is more appealing to developers.’ Galven Tan, CBRE director of Capital Markets said.
‘Developers know they can potentially make a good return, even with such a bullish and high price tag.’ Mr. Galven added.
Timing and prices are right currently and that’s a major influence when it comes to developers and why they’re so happy to pay more.
Property experts have also said that achieving S$3,000 per sq ft is very much possible which is remarkable. If it weren’t for previous sites like Normanton and Amber Park receiving high bids, maybe Cairnhill Mansions would be a different story but their reserves were well overtaken.
Some property brokers have said however, Cairnhill Mansions estimated prices are optimistic although, a breakeven price could be between S$2,700 to S$2,800 PSF. It can be possible and it might sell even higher than S$3,100 PSF.
Prices are rising and for the year ahead it’s looking fairly decent.
Nicholas Mak, of ZACD Group, said, ‘if Cairnhill Mansions netted the S$362 million price, it would make the site the most costly land rate. Of all the collective sales within the last three years, Cairnhill would be the costliest.’
He also added, ‘the lucky developer is going to have to approach this site with a very careful plan in mind. It might take a strong and possibly a luxury brand to get back such high PSF prices in the future when the condominium is complete.’
Mr. Tan from CBRE also noted that since Cairnhill Mansions were a freehold site, combined with its size, it is a favourable option for any developer.
The GFA works out to be 43,103 square ft which can be maximise to 172,239 square ft.
With this size, it’s even possible to create addition new 140 units within the Cairnhill Mansions site which would create around 1,200 square ft in each.
Over the last year or so, there has been a real shift in the market and how developers have responded for residential development sites. Right now, the residential market is strong so seeing Cairnhill Mansions for sale is a tempting prospect for many.
‘The Jiak Kim Street site looks favourable and there has been a lot of response too which shows developers are clearly looking to this site.’ Mr. Tan from CBRE said.
‘It’s even possible to create a high-end residential site which would generate interest from business professionals and families alike.’ Mr Tan added.
Alice Tan, Knight Frank’s head of research and consultancy department said, ‘the risk with Cairnhill Mansions is not too great which offers developers a little bit of reassurance.’
She also commented, ‘future projects of this nature should bring around a PSF of S$3,200 or S$3,400.’ The figures given are based on the land rate asking price.
There has apparently been a lot of interest over the site by local and foreign developers who are well established and known. The impending public tender might just bring about a frenzy storm from developers who want to get their hands on the site.
Over S$5 billion dollars have been spent recently on en bloc sales (which has increased from S$1 billion last year) so the prospects of this site selling now is high. Interest over en bloc sales are increasing by the day with more sites becoming of greater value and not just because of the profit potential but also because of how rare these sites are. Freehold sites are not often seen.
Collective or en bloc sales have really taken off in recent times and it’s thought more of these sales will hit the market this year.
There’s talk that Spring Grove found in Grange Road will be put up for S$1,807 per square ft. Mr Mak noted there was collective interest for a range of properties and that, ‘it’ll be very interesting to see where this surge of en bloc sales will lead to.
As prices reach unbelievable heights, it’s going to be interesting whether or not home-buyers can keep up with these sales.’
En bloc sales have really jumped up in recent times and there is no sign they are slowing down. However, prices need to remain fairly decent so that developers make a profit and in turn, new buyers can actually afford the units. No buyer will want to get less value for money so developers need to bid wisely.