Aim to Smash Farrer Court Record Sale
A billion dollar plus collective sale doesn’t happen every day and the fate of Dairy Farm Estate the 750,019 sq ft the freehold development property is being watched closely.
The fate would be sealed coming Saturday as the owners vote for the terms of its collective sale. The property with 1.58 million sq ft GFA potential could smash the collective sale record currently held by Farrer Court which had sold for a record S$1.34 billion back in 2007 and was later redeveloped into the iconic d’Leedon where the 1715 units became one of the most prized addresses in the city.
Back then a consortium led by CapitaLand had acquired Farrer Court. Pacific Mansion located in River Valley holds the record for second highest en bloc sale and was acquired for S$980 million by GuocoLand in partnership with Hong Realty and Intrepid Investments.
The Dairy Farm currently houses 10 retail shops apart from 477 residential units. The upcoming extraordinary general meeting would see votes by the residents to approve the terms of the en bloc sale agreement and also decide the distribution of the sales proceeds.
There has been intense campaigning from those in favour of the sale in the recent weeks and it has grabbed the eyes of all realty watchers given the fact that the sales committee expects the property to fetch a price in upward of S$1.68 billion for the 750,019 sq ft freehold development.
If successful this sale would leave behind Farrer Court but quite a large value.
However Dairy Farm Estate isn’t the only property which is looking for a billion dollar plus cheque in this collective sale frenzy as there are many others that could soon go under the hammer.
It has been reported that Ulu Pandan Road’s Pine Grove which is a former HUDC property is expecting to pocket minimum S$1.65 billion in collective sale. 73% of the owners by strata area and share value have already given their approval for the sale.
Braddell View another former HUDC property has already started collecting signatures from the owners and they expect to get a price of S$2.08 billion.
Also, on the list is Mandarin Gardens where residents are asking for a whopping S$2.48 billion which will make the realty market interesting in the next few months.
As far as The Dairy Farm Estate is concerned this isn’t its first attempt at collective sale as some residents had unsuccessfully attempted at one back in 2007. Tay Tiong Choon Chairman of the CSC (Collective Sales Committee) has said that this time around they expect to get 80% approval from the owners in a matter of six weeks and expect to see the sale through.
Sieow Teak Hwa, MD of Teakhwa Real Estate which is the marketing agent for this sale believes this time around the owners of The Dairy Farm would be more welcoming towards the en bloc sale.
He feels the price which would fetch owners nearly double of resale value in the current market would be a major incentive.
Also, the residents would keep the higher maintenance costs for individual areas as well as common areas at present which is substantially higher compared to that in 2007 when the property was 10 years younger and it would only go up from hereon.
The Dairy Farm Estate fall in ‘residential’ zone and has 2.1 plot ratio with potential GFA of 1.58 million square feet. This would allow the developers to develop it onto a 1500-unit property with the average unit size at 1000 square feet.
The newly opened Hillview MRT station which is only 3-minute walk from the property would make it convenient for the residents.
There would be S$61 million development charge for intensifying land use in this site based on the present rates which would put the rate for the site at S$1,100 psf. However, property consultants have already signed a note of caution and say that the scale of the project poses huge risk to a developer although its location serves as an incentive.
Developers may rather form consortiums to share the risk involved.
Savills Singapore’s Alan Cheong believes developers would have to make S$1,550 psf to break even considering the present rate of land. He cautioned that delay in the collective sale process may make it difficult for the developers as there isn’t any assurance that 1500 properties would be in demand in two years’ time.
He added that development charges can also go up for the property in case of any delay.
Nicholas Mak, Executive Director of ZACD Group has put an even higher figure for breakeven and estimated it to be between S$1,600 and 1,700 psf and this may be even higher than existing inventory that is available in the vicinity.
But given that there aren’t many collective sales in the area the competition may not be as intensive as many fear. He said that developers are likely to go for family sized units given their higher demand.