Dairy Farm hikes price to S$1.84b in push for 80% owner sign-up

The New Year’s Eve countdown is done, but the clock continues to tick for en bloc candidates as they race against a cooling market and various deadlines governing collective sales.

The pressure has even led some projects to raise their asking price to persuade owners to come on board – which fly in the face of potential buyers’ increasing aversion to mega tabs.

Among them is the Dairy Farm estate, which just raised its reserve price from S$1.688 billion to S$1.84 billion as a sweetener to lure owners, ahead of an April 2019 deadline. According to the law, homeowners have 12 months from the first signature on their Collective Sales Agreement (CSA) to get the mandate to launch a public en bloc tender.

Collective sale committee (CSC) chairman Tay Tiong Choon told The Business Times the collection of signatures started in April 2018 and the current count is at 68 per cent. In the last two months, only two signatures were added.

He said: “We respect the decision of all subsidiary proprietors, but the only way now is to increase the reserve price and put more on the table for subsidiary proprietors to consider.”

Another mega site, Pine Grove, raised its reserve price to S$1.86 billion from S$1.72 billion at the last minute, which helped clinched the 80 per cent mandate, though that also led to the resignation of previous marketing agent Huttons Asia.

Nelson Lim, key executive officer of its current marketing agent C&H Properties, told BT that owners have secured their 80 per cent mandate and they expect to launch their tender in February or March, ahead of an October 2019 deadline.

The 99-year leasehold Mandarin Gardens also upped its asking price by close to 12.5 per cent to S$2.79 billion in November, though that was after owners discovered that the land parcel it sits on was undervalued.

Signatures are at 62 per cent now.

Mr Lim, whose firm is also marketing this property, said: “Resident sentiment, their love for Mandarin Gardens is a bit stronger, plus it’s a premium site by the sea… inevitably a lot of residents will not want to move.”

In the case of Dairy Farm, the higher reserve price also comes with a higher development charge (DC) of about S$75 million for the 750,019 sq ft site after the DC rate was increased in September. The figure in April was estimated at S$61 million.

But Mr Tay believes that the per square foot per plot ratio (psf ppr) price of about S$1,216 is still reasonable, compared to Goodluck Garden in Toh Tuck Road which sold for S$1,210. The Goodluck deal however, closed in March last year before July’s property cooling measures, which altered the en bloc scene in a major way.

On developers’ aversion to projects with a huge price tag amid the cooling measures, Mr Tay said: “There’s always a risk for any business. We hope that some consortiums will get together to share the risk…. We’ll just give it a go because without increasing the reserve price it will just be a slow death.”

As for Pine Grove, C&H’s Mr Lim expects “some bids” from consortiums due to its location in a mature estate and “a doable reserve price” based on its potential new launch price. The firm was made marketing agent after Pine Grove’s reserve price was increased.

He said: “If you don’t increase the reserve price, you don’t get to tender stage and you don’t get to do anything at all… and these estates are often aging and time is working against them.”

Sites which have crossed the 80 per cent mark also have another deadline to beat, as owners have 12 months to find a buyer and apply to the Strata Titles Board (STB).

Some projects have relaunched their tenders in the new year.

They include Horizon Towers, which relaunched its collective sale tender at an unchanged S$1.1 billion reserve price.

The Business Times reported in September that Horizon Towers owners have until May 21 to conclude a sale contract and apply to the Strata Titles Board for a sale order, and two to three months are needed by lawyers to make an application to the board.

Cavenagh Gardens on Thursday relaunched its collective sale as well, also at an unchanged S$480 million, as it seeks to find a buyer and apply to STB by mid-April 2019.

Both sites are marketed by JLL. The two sites received no bids for their first launches and treaty period.

Echoing a widely-held view, JLL regional director Tan Hong Boon said: “The July market cooling measures have caused developers to hold back.”

Following July’s cooling measures, just a handful of en blocs have been transacted. Golden Wall was sold for S$276.2 million to City View Holdings and Waterloo Apartments was sold for S$131.1 million to Fragrance Group.

In August, an associate of OKP Holdings won the tender for the collective sale of the 32-unit Phoenix Heights for S$33.1 million.

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