Laguna Park’s 2nd en bloc sale offer closes

The tender for the collective sale of Laguna Park has closed with no confirmation of a buyer.

Its marketing agent Knight Frank declined to elaborate if any bids were received in the tender, or if the bids matched its reserve price.

But Mr Nicholas Wong, executive director of Investment at Knight Frank said that it is, “in the process of negotiating with an interested party”.

The marketing agent has another 10 weeks to finalise a sale or negotiate a private treaty with interested parties, before the en bloc process collapses.

Experts speculate that Knight Frank’s reluctance to reveal more details could mean a lack of strong interest for the site.

“It doesn’t sound very good because from experience when the agents are very confident, they will say they have received six bids, and they may say things like the bids have mostly exceeded the reserve price,” added a property analyst who declined to be named.

“Off course, they have an agenda when they say something like that because if that gets published, the potential bargaining power of the developers is not so strong.

“But if the agent does not want to say anything, it may not be a good sign, it may mean that, for an example, all the bids are below the reserve price,” the analyst added.

This is the second time the 33-year-old condominium has been put up for sale.

The asking price this time is S$1.33 billion, about 11 per cent higher than the S$1.2 billion price tag in an earlier attempt in October 2009.

If the sale goes through this time, Laguna Park residents could pocket about S$2.2 million each from the successful sale of the property.

Observers said the timing of the tender closure could go against the sellers.

“The market sentiment has been quite weak lately. Right now, there’s a debt crisis in Greece and a possibility of a default. It would have been better if it closed a bit later,” said Mr Colin Tan, head of research and consultancy at Suntec Chesterton International.

“Some recent en bloc sales have also lowered their asking prices from previous attempts,” he added.

Based on the potential gross floor area of about 1.9 million square feet, the land price on a per square foot per plot ratio basis works out to be about S$975.

This suggests a breakeven price of S$1,400 to S$1,500 per square foot, which according to some experts is slightly too pricey, compared to similar projects in the area.

“The asking price is a bit too high, a more realistic figure is about 20 per cent lower,” said Mr Nicholas Mak, executive director of research and consultancy at SLP International.

“For such a massive land size, I don’t think there will be more than five bids. The bids may also come with conditions attached such as a clause to hedge the amount of development charge it is liable for,” he added.

Laguna Park is located along Marine Parade Road and has a land area of around 678,000 square feet.

It is zoned for residential use at a plot ratio of 2.8, potentially able to yield about 1,600 units at 1,200 square feet each.

Laguna Park currently comprises 516 residential apartments and 12 commercial units, ranging from 1,453 square feet to 3,390 square feet.

Knight Frank believes the site is attractive because it has unblocked sea views spanning 300 metres and a clear city skyline.

It is also the only seafront land parcel available at the moment, and its rectangle-shaped plot allows for a consortium of developers to divide up the land among themselves.

Source : Channel NewsAsia – 5 Jul 2011

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