Eleven years after its failed attempt at a collective sale, condominium development Horizon Towers is on the market again at a reserve price of S$1.1 billion.
The reserve price translates to S$1,964 per sq ft per plot ratio, and is more than double the S$500 million deal in 2007 with a consortium led by Hotel Properties that eventually fell through.
The 99-year leasehold condominium at Leonie Hill was built in the 1970s and comprises 211 units. The 1.9 ha site in the prime district of Orchard Road, with an allowable height of up to 36 storeys, is probably the largest high-rise residential development in the Orchard Road area in at least two decades, according to marketing agent JLL.
Property analysts said the S$1.1 billion reserve price is reasonable and in line with recent en bloc sale launches as well as bids for government land sales sites.
For example, the record-smashing S$410 million winning bid in April for a residential government land sale site along Cuscaden Road, which is also in the Orchard Road area, translated to S$2,377 per sq ft per plot ratio.
Horizon Towers’ attractive location and plot size lends the project a “certain wow factor”, said Knight Frank senior director Lee Nai Jia.
There will be developers interested in Horizon Towers, said Mr Ku Swee Yong, chief executive of International Property Advisor.
Given its previous legal battles, however, some developers will be cautious and on the lookout for any unresolved issues that could complicate the collective sale, he said. “This time round, developers interested to bid … would scrutinise the entire deal.”
Horizon Towers’ price of S$500 million in the unsuccessful sale in 2007 was, at the time, the highest price ever offered for an en bloc sale in Singapore. However, a group of minority owners contested the sale, saying the price was too low. The case went to the Strata Titles Board, the High Court and, eventually, the Court of Appeal.
The apex court overturned the sale in 2009 on the basis that the sales committee had not fulfilled its duty in securing the best price obtainable for the property.
The minority owners then filed a claim against former members of the sales committee, seeking S$1 million in legal and administrative costs, but this was dismissed in 2013 by the High Court.
The latest attempt to go en bloc began with the process of gathering signatures from owners last November. TODAY reported that the sales committee was giving itself until June to garner the requisite 80 per cent approval.
The condominium’s history notwithstanding, Dr Lee said developers are generally more cautious when bidding for new projects now.
“They only go into projects (where they feel more confident of) creating a unique product that can command high prices,” he said.
Developers have to consider the timing of the launch of their new projects when placing their bids, he added. With a fresh supply of private residential units in the pipeline, developers will face more competition.
“There is no urgent need to replenish their land bank. Most (developers) have substantial amounts of land parcels,” said Dr Lee.
Mr Ku said that developers that have been active in the en bloc market or government land sales may have already used up the bulk of their reserves.
Developers do not have the capacity to keep borrowing, and it is only a matter of time before banks hit their lending limit for real estate, he said.
The tender for Horizon Towers closes on August 7 at 3pm.
Source: Today – 4 Jul 2018