$100m for first collective sale this year

Source : Straits Times – 2 Dec 2009

OWNERS at the Dragon Mansion have completed the first collective sale of the year with a $100.8 million deal to sell their 72-unit condominium.

The price for the Spottiswoode Park estate near Outram was below the reserve price but the deal with boutique developer Roxy-Pacific was sealed anyway yesterday.

Owners of each of the 1,399 sq ft units will pick up $1.4 million – well above the estate’s highest transacted price of $880,000 achieved in May last year, according to the deal’s broker.

The sale of the freehold estate is a ‘positive sign’, said Credo Real Estate managing director Karamjit Singh.

‘The market has quietened down quite a bit recently but this shows there is still confidence in the market.’

Dragon Mansion owners initially wanted $120 million, or $1,020 per sq ft (psf) per plot ratio, which is significantly above collective sale prices racked up in the recent boom.

Their sale tender closed on Aug 11 with no firm bids. There were a few expressions of interest from developers keen to buy the land but clearly not prepared to pay the asking price.

Roxy’s offer came in at the end of October, when it entered into a conditional agreement to acquire the site. Its offer of $100.8 million works out to $863 per sq ft per plot ratio and includes a development charge.

Because its offer was below the owners’ reserve, a fresh set of signatures was needed. CKS Property Consultants, which brokered the deal, said it took five weeks to get just over 80 per cent of the owners to agree to the new price.

Ms Chia Mein Mein, CKS’ investment manager, said some of those who opposed the sale did not want to sell for sentimental reasons.

Dragon Mansion has a land area of 41,874 sq ft. A new development on the site could potentially yield a maximum gross floor area of about 117,000 sq ft – or about 120 apartments of 1,000 sq ft each.

Its sale price, said CKS in a statement, ’sets a new benchmark for the Spottiswoode Park area and reflects the limited availability of such freehold residential land near the central business district’.

Mr Singh said: ‘This is a vote of confidence in the mid-tier of the market’, as most of the activities in the private homes market this year have been in the mass market.

Roxy-Pacific would likely need to sell the new homes on the Dragon Mansion site for $1,400 psf to $1,500 psf.

The collective sale market, will see more activity next year with experts expecting a number of launches from as early as the first quarter.

DTZ’s senior director for investment advisory services, Mr Shaun Poh, said many estates are now keen to start the sale process.

‘We are starting some new ones and restarting some of the old ones which did not take off,’ he added.

Experts said that while some estates are keen to restart their sale at the same 2007 boom prices or higher, others may be more realistic.

Mr Singh said the collective sale sites hitting the market next year will be those that started the process recently and are priced more realistically, unlike those that were launched for sale in the third quarter.

Those estates had prices that were decided during the previous boom so price expectations were much higher, he said.

For instance, owners at the 528-unit Laguna Park in Marine Parade failed to conclude their collective sale at the price they wanted and chose to let their collective sale agreement lapse.

Later this month, CKS will launch the 124-unit Mayfair Gardens in the Bukit Timah area for collective sale.

The estate started the process early last year and obtained 80 per cent approval in March.

‘Recently, we have been getting a lot of inquiries from owners. There may be some short-term uncertainty in the property market, but owners are looking further ahead,’ said Ms Chia.

Under the new – and stricter – rules that came into force in late 2007, it will take quite some time, possibly at least nine to 12 months, to prepare a collective sale. This includes appointing the marketing agent and gathering enough signatures in order to launch the sale, she said.

Bedok Court, Pine Grove and Tulip Garden are some of the other estates that have a group of pro-collective sale owners looking to restart the process.