Bulk sale: Treasure on Balmoral

In a further sign that the high-end residential segment remains stuck in the doldrums, one developer is making the relatively bold move of offering all units in a District 10 condo in a bulk sale at a relatively cheap price, in an attempt to improve cash flow.

Developed by Hiap Hoe, the 48-unit Treasure on Balmoral is being offered at a guide price of S$191.4 million, or S$1,850 per square foot (psf), its marketing agent Savills said.

The project was first launched in January last year but managed to log only one sale, which was subsequently dropped, Urban Redevelopment Authority data showed.

“The buyer chose to give up the purchase as a result of the announcement of fresh market-cooling measures,” said Savills managing director Steven Ming, who added that Hiap Hoe is looking to monetise the project and explore other investment opportunities.

Analysts said while there have been several bulk sales in the past, developers usually resort to such a move only when sales are slow.

The high-end market has been the hardest hit by repeated rounds of cooling measures as well as the Total Debt Servicing Ratio framework. Between January and May, developers sold 203 new homes in this segment, one-fifth the 1,017 units sold in the same period last year.

“It is no secret that the high-end market is badly affected by the downturn, which is why we’re seeing developers working hard to offload their projects. And for this developer, (a bulk sale) is one way for them to exit this particular investment and move on,” said Mr Nicholas Mak, executive director of SLP International Property Consultants.

“It’s a sign of a challenging market conditions in the high-end segment. When the market is good, I don’t think developers would take this route because selling individual units is more lucrative. By selling in bulk, they have to offer some discounts.”

Mr Desmond Sim, CBRE’s head of research, said Hiap Hoe will be relieved of the risk and financial burden of holding onto unsold units if this strategy is successful.

“If there’s a buyer, Hiap Hoe can offload everything in one transaction even if the profit margin is smaller. If they sell the units individually, it’s very difficult to sell out quickly in the current soft market and, in the long run, the unsold units will put pressure on their balance sheets,” said Mr Sim.

“The location of the project is not bad and S$1,850 psf is quite a bargain, so if someone has the appetite for this, it’s good for the developer’s cash flow.”

He added it remains to be seen whether the sale would go through.

However, Mr Ming is optimistic that the pricing would attract some interest. “What we have here is a rare opportunity for private investors or ultra-high-net-worth individuals to acquire a well-located and high-quality product as an investment property or a strata sales exit in future.

“We believe this opportunity will attract wide-ranging investors, as many will see mid-to-long (term) value at this guide pricing.”

Source : Today – 10 Jul 2014

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