More than 85 per cent of the en bloc transactions for 2005 and 2006 were located in district 1 (Marina Bay), the prime districts of 9,10 and 11, as well as district 15 (Katong), according to a report by Savills.
Experts agree as property developers continue to build and sell projects, they need to acquire new land to continue the business cycle. With land being a premium in the prime districts, the Savills report comes as no surprise.
“Given the current strong demand for the high-end segment, developers will continue to acquire sites in these prime areas, compared to sites further away. Of course that is “provided that prices remain reasonable and if they are able to make a profit from the sale of the new development there”, said Mr Ku Swee Yong, director, marketing and business development, Savills Singapore.
The consensus is prime areas will continue to attract the attention of developers and investors, as high land acquisition prices guarantee the development of luxury projects with large price tags and even larger interest levels.
But once that supply in the prime area is exhausted, the focus will then shift to larger condominiums that are located in other “desirable” locations.
Although some distance away from the integrated resorts and prime areas, the East Coast is largely seen as the second choice for developers looking to acquire sites en bloc.
There is also talk in the market that the older, mid-tier large developments along the East Coast like Bayshore Park, Mandarin Gardens, and Laguna Park would soon be put up for collective sale.
Some experts say these large-scale properties could be sold collectively once the economy and market conditions are strong enough to justify the sale.
“We believe it is just a matter of time before we see large developments like Mandarin Gardens and Bayshore Park being put up for collective sale. These large developments are worth at least $1 billion or more each, inclusive of development charges and charges for topping up the lease,” said Mr Ku.
With such a large outlay involved, it seems likely that a consortium, rather than a single developer, will put down that kind of money, especially for a 99-year leasehold site.
And being located away from the prime areas, it is a safe bet that the new project will not be for the high-end market.
Experts believe that a demand for mid-tier and mass market developments has been building up over the past couple of years because of the limited new supply of such projects.
“There will always be a market for large condominiums with wide open spaces, even though land here is at a premium. Not everyone wants to live in tightly-packed apartments like those in Hong Kong,” said Mr Ku.
“We are bound to see the mega en bloc sale within the next six months,” said Mr Ku.
Several weeks ago, Today reported that the Gillman Heights condominium sales committee was in advanced talks with four parties keen on acquiring the 836,424.7sq ft, 99-year leasehold estate. Could this be the mega en bloc sale the market has been waiting for?
Mr Donald Han, managing director of Cushman and Wakefield, believes a billion-dollar collective sale is possible.
But it need not be a single development.
“There is a possibility that two or three small developments may conduct a collective sale together to yield that bigger plot land,” he said.
Source : TODAY – 20 Jan 2007