The public tender for Pacific Mansion closed on Mar 16, 2018, with the property going to two tycoons from the same family but who reside in different countries.
Singaporean, Kwek Leng Beng joined hands with his Malaysian cousin, Quek Leng Chan, to bid for the prime property at a determined S$980 million.
Their bid, which proved to be the highest among the local and international bidders, was a whole S$42 million above the property’s reserve price of S$938 million; a good 4.5% more.
Pacific Mansion is on freehold ownership and is located in the country’s core central region (CCR), right within District 9.
According to CBRE, the firm that brokered the sales deal, the sale is the biggest of the decade, and it comes second among all the collective sales the country has seen so far.
The record price of S$1.34 billion set by Farrer Court back in 2007 is yet to be broken.
Considering the current gross floor area (GFA) is 493,222 sq ft, which effectively puts the land rate at S$1,987 per sq ft per plot ratio (psf ppr), once the new developers take advantage of the 10% bonus balcony area, the GFA is bound to drop to S$1,806 psf ppr.
Luckily, there will be no development charge to eat into the developer’s profits.
Nevertheless, the break-even land rate of the new development will be slightly higher at between S$2,530 and S$2,800 per sq ft, by the estimation of professional consultants.
Obviously, development costs have to be factored in. Still, according to the consultants, the unit selling price can still be manageable at between S$3,000 and S$3,200 per sq ft.
According to Dr. Lee Nai Jia, Edmund Tie & Company’s head of research, there is a high chance land rates are going to stabilise, considering developers have a myriad of factors to consider, including construction costs, development charge, interest rates and cost of assessing the prospective development’s traffic impact.
However, for now, as noted by Ong Teck Hui, JLL’s national director of research, the prospects for collective sales are looking up as developers maintain their appetite for new residential sites to beef up their land banks.
Still, Mr. Ong says this scenario could be a result of a favourable outlook towards the property market, which may just be medium-term, considering each of the most recent two positive recovery cycles went on for four years.
The cumulative collective sales deals sealed in 2018 have reached 20, and they are worth S$6.2 billion.
That is already around 71% of S$8.7 billion, 2017’s total proceeds from the year’s thirty collective sales deals.
According to Jia, if nothing extraordinary happens within the year, developers will be able to dispose of their new units at the anticipated rate.
In the meantime, it is a happy day for the property owners who have just sold their 42-yr old units at Pacific Mansion.
For each of the 288 residential units, yields are expected to range from S$3.26 – 3.48 million, while for the two commercial ones, the range is from S$2.2 – S$4.5 million.
Quek’s company that won the Pacific Mansion tender is GuocoLand, a company listed on the Singapore Stock Exchange.
The company announced news of their successful bid on Monday, Mar 18, and disclosed they had entered the bid in partnership with two other companies, Intrepid Investments and Hong Realty.
Hong Leong Investment Holdings, a company under the control of Kwek, Quek’s cousin, has majority shareholding in the latter two.
The minority shareholders in the holding company are also related to the family in one way or another.
For the three business entities involved in acquiring Pacific Mansion, it is a 40:40:20 ratio for GuocoLand, Intrepid and Hong Realty respectively. Quek gets the entire 40% share through GuocoLand, while Kwek gets his share through his majority shareholding in Intrepid Investment and Hong Realty.
The uniqueness of this liaison has not escaped the observers’ notice, as bigwigs are known to compete stiffly against one another, yet these two have collaborated to clinch this deal of a historic magnitude.
Although Kwek is one among other shareholders at Hong Leong Investment Holdings, he is the one who chairs meetings of all the subsidiaries, including City Development Ltd, a company listed on the Singapore Stock Exchange.
On the other hand, Quek controls Hong Leong Co. Malaysia Bhd and all its subsidiaries, which incidentally, includes Guocoland.
Kwek Leng Beng’s brother, Kwek Leng Hai, is also a director and shareholder in GuocoLand. He is a shareholder in Hong Leong Holdings too as well as in Hong Realty.
As per now, it is not clear which entity will take the lead in the actual development of the property.
One market observer has noted the importance of the two big developers working together rather than competing against each other, noting there is the added advantage of sharing the risks involved in a heavy investment.
GuocoLand is not new to Singapore’s Central Region. Last year, July, the company launched its completed development project within River Valley known as Martin Modern, and they were able to sell more than half of their units which were 450 in total at an average rate of about S$2,300 per sq ft.
The Market Might Calm Down In the Second Half Of 2018
Karamjit Singh, senior consultant at JLL, who noted the fast pace at which properties have been selling since the year began, says he sees the likelihood of the market slowing down in the second half of 2018. His concern is that activity has been very high, yet pricing has remained consistent.
The Singapore property market might soon see another mega collective sale succeed, after Park West was just recently sold at $840.9 million in January 2018.
Pacific Mansion owners have set the reserve price at S$938 million and the public tender closes on March 16.
This is another Blockbuster En Bloc Sale every Singaporean and whole real estate industry are excited about.
All eyes are now on Pacific Mansion, to see if developers will give it a clean bill of health and match the impressive price the owners have set.
Why Pacific Mansion Will Draw Strong Interest?
Pacific Mansion is within a prime area, District 9, which is within the central area of Singapore. Although its construction was completed long ago, specifically 1976, the fact it is within a residential area puts it at an advantage in a period when developers are out to acquire prime residential sites for redevelopment.
CBRE’s capital markets director, Mr. Galven Tan, says they expect developers to show great interest in this site that is situated at River Valley Close, not only because it is in a prime district, but also because the property is freehold.
He points out how rare it is to find a development property that has many of the attributes developers seek, and yet Pacific Mansion has them. To his initial list of Pacific Mansion’s advantages, he adds the massive size of the site and closeness to the main shopping belt along Orchard Road.
Mr. Tan also says Pacific Mansion will draw interest from foreigners and locals alike as they assess the site’s potential, which is unique in terms of the opportunity it provides to construct an iconic landmark to join the list of Singapore’s skyscrapers.
It is also a big advantage having the development close to the anticipated Great World MRT station set to be opened in 2021.
The Chances are High and Real. With Superior location, numerous amenities and wonderful attractions, it is easy to see why Pacific Mansion Owners are feeling confident right now.
Developers are hungry and busy looking for good potential freehold sites in Core Central Region (CCR). There are already 11 en bloc properties sold in this hot zone in the year 2017/2018.
Compound with the recent news of residential property market strong sales and huge demand of housing units particularly in this CCR zone.
Pacific Mansion will most likely be their next target as it has everything the developers wants. All-important amenities and wonderful attractions are either few mins drive or walking distance away.
Pacific Mansion Land size and Gross Plot Ratio
The Freehold site size at around 128,352 sq ft (11,924 sq m) and the property’s gross floor area (GFA) at around 493,222 sq ft (45,822 sq m).
The current gross plot ratio is, therefore 3.84. This is despite the fact the 2014 Master Plan allows the property 2.8 plot ratio and a height limit of 36 storeys.
CBRE explains further that if the new developer includes 10% bonus balcony area and utilizes the site to the maximum allowed, the new development will have 542,544 sq ft GFA.
Luckily, according to the Urban Redevelopment Authority’s (URA) regulations, this property does not attract any development charge.
Because of “Central Area” which Pacific Mansion located, the “70 square metres” rule does not apply in the calculation of the maximum number of housing units per development
This is according to the data provided by CBRE Singapore, the property agent appointed by Pacific Mansion.
Pacific Mansion owners were optimistic they could ride the 2007 en bloc wave and find a developer to buy the condo at S$1.18 billion, which was their reserve price during their first en bloc sales attempt.
If the sale had succeeded, the land rate would have been a record S$2,400 per sq ft per plot ratio (psf ppr), and individual property owners would have taken to the bank around S$4 million each.
The second attempt to sell Pacific Mansion came in 2011, and it was ambitious too. The reserve price was S$990 million, which would have resulted to a land rate of S$2,008 psf ppr.
Pacific Mansion owners realized their last 2 high asking price is not going to attract any buyer so this time round, they lower down their expectation to S$1,728 psf ppr.
This kind of price is within developers “Acceptable Range”
All these freehold sites are located within Core Central Region.
Pacific Mansion location clearly stands out from all the en bloc sites in the collective sale market together with good price offer, owners might taste success this time in 2018.
The site is freehold and is well served by public transport. The rail and road transport systems around Pacific Mansions are represented by:
- TE 15 Great World MRT, which is due to be opened in 2021. This will make the freehold site even more attractive as well as property value
- NS 23 Somerset MRT, presently the nearest of all is only 10 mins walk away
- TE 16 Havelock MRT, which is due to be opened in 2021
- The Morningside Bus Stop, which is served by Bus Numbers 32, 54, 195, NR6, 139
There are popular schools within a walking distance of less than 20 minutes. They include:
- Primary Schools such as River Valley Primary, which is only 110m away; St. Margaret’s Primary, which is 1.45km away; and Alexandra Primary School, which is 1.48km away.
- Secondary Schools such as Outram Secondary, which is 940m away; School of Arts, Singapore, which is 1.42km away; and Gan Eng Seng, which is 1.58km away.
- School of the Arts, Singapore, which is an integrated school, and which is only 1.42km away.
There are popular shopping malls less than a kilometer away. They include:
- Great World City, only 550m away
- Robertson Walk, only 620m away
- Orchard Gateway, only 700m away
There are also groceries and supermarts within a distance of less than 10min walk. They include:
- NTUC FairPrice, which is located within Orchard Grand Court, 340m away
- Cold Storage Great World City, which is 550m away
- Cold Storage Ue Square, which is 720m away
Pacific Mansion is very near to Top Attractions in Singapore which is very important. Developer will find it easy to sell once their new launch project is ready as there are many foreigners and rich owners prefer to live in this area.
- Marina Bay Sands
- Fort Canning Park
- Gardens by the Bay
- Nightlife of Clarke Quay
- Mohamed Sultan entertainment belt