En bloc market stirs, two tenders launched

The en bloc property market is stirring again with the launch of two collective sale tenders yesterday — one at the former Housing and Urban Development Company (HUDC) development Eunosville and a smaller one in the affluent postcode of Jervois Road.

Eunosville, a 330-unit housing project opposite Eunos MRT Station, has been re-launched at an unchanged reserve price of S$688 million after its maiden attempt at a collective sale in June was stymied by the introduction of the Total Debt Servicing Ratio (TDSR) framework later in the same month, sole marketing agent Jones Lang LaSalle said.

Mr Karamjit Singh, Head of Investments and Residential at Jones Lang LaSalle, said: “When the (first) tender closed in August, we received written expressions of interest from three large developers … But as this was shortly after the introduction of TDSR, they asked for more time to assess the market.”

Eunosville was built in the 1980s by the former HUDC and privatised in 2011. With a land area of 376,712 sq ft and a gross plot ratio of 2.8, the site can yield 1,000 units with an average size of 1,100 sq ft each, Jones Lang LaSalle said.

The reserve price translates to about S$806 per square foot per plot ratio (psf ppr) on the potential gross floor area, including estimated differential premiums of S$163 million to top up the lease to 99 years and for intensification of use, subject to approval from the relevant authorities.

Mr Ku Swee Yong, Chief Executive of real estate agency Century 21, said that despite its attractive location, Eunosville would be a “very tough” sale with the owners not lowering the reserve price.

“COVs (cash-over-valuation premiums) for HDB resale flats are fast dropping in the current environment and this does not bode well for the mass-market project, whose target group consists of the upgrading segment of buyers,” he said.

Mr Singh remained optimistic, saying: “The market is adjusting to life post-TDSR. We see it beginning to find its footing at a price point that is a notch below pre-TDSR levels, with the likelihood of stability thereafter, especially in the premium mass-market sector.

“This is backed by high liquidity and savings, continued increase in population, albeit at a slower pace, and a lack of alternative attractive investments for many households.”

He added: “The number of bidders in the latest tenders for Government Land Sales (GLS) sites have also been healthy, with eight to nine bidders vying for adjoining residential sites at Upper Serangoon View and Mount Sophia. Even the top bid prices displayed confidence in the broader residential market.”

But Mr Ku said “unlike a GLS site where developers can build immediately, an en bloc deal is not so straightforward. And even if the dollar psf price is attractive, the quantum is huge. It is not just the appetite of the developers but also the banks to support a deal of this size under these conditions.”

In a separate announcement yesterday, property consultant Colliers International put up Jervois Gardens for collective sale at an asking price “in the region of S$72 million”.

The freehold site, which sits on 34,038 sq ft with a plot ratio of 1.4, can be developed into 65 apartment units of 800 sq ft each, subject to regulatory approval, the marketing agent said.

Ms Tang Wei Leng, Executive Director of Investment Services at Colliers, said: “Assuming no development charge payable and subject to baseline confirmation, the price works out to be S$1,510 psf ppr.

“If the developer chooses to include the additional 10 per cent gross floor area allowed for balcony space, then the land cost is about S$1,374 psf ppr.”

“The site is nestled in the exclusive District 10, which houses predominantly low-rise private residential developments and good class bungalows that have always been highly sought after by well-to-do individuals,” she added.

Mr Ku called the Jervois project “very attractive because freehold is in short supply and because the quantum allows many developers to take part.”

The Eunosville tender closes on Jan 14 while the Jervois Gardens tender closes on Jan 22.

Source : Today – 10 Dec 2013

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