Pine Grove’s high price tag may deter property developers: analysts

Pine Grove residents may be sitting on an enbloc gold mine, but analysts have said realising the dream of a collective sale may be fraught with hurdles.

With a hefty asking price of S$1.7 billion and with more land sites launching soon, developers may pass on the 660-unit property.

Situated along Ulu Pandan Road, Pine Grove has an 80 per cent approval for its third enbloc tender.

And with its location in the prestigious district 21, analysts said an iconic mid-tier to luxury residence complex is an obvious choice.

But creating opulent luxury in a sprawling 890,000-square foot property may be too costly for investors.

Colin Tan, Head of Research and Consultancy at Chesterton Suntec International, said: “If I am the developer, I would be going for big units. The problem is not the dollar per square foot, it is the quantum. The absolute amount may go into millions, so how many individuals can really afford that amount or are willing to risk it just on one project?”

Analysts said Pine Grove’s gross plot ratio of 2.1 will yield too few units for developers to maximise their returns.

By comparison, Laguna Park, with an enbloc reserve price of S$1.14 billion, offers a plot ratio of 2.8.

But despite the red flags, analysts said developers with a longer-term view could look favourably at Pine Grove.

Christina Sim, Director of Investment Capital Markets at Cushman & Wakefield, said: “Our Singapore market is so small and so responsive to external stimulus. And there is also a huge foreign demand out there. It is ideal if a developer buys this maybe for land banking, because the truth is if you take a mid- to long-term view of the real estate market in Singapore, nothing is really very expensive now.”

However, with more land being released under the Government Land Sales (GLS) programme, developers are currently spoilt for choice.

The tendering for such land sites is also more straightforward, compared with enbloc tenders.

Ms Sim said: “Certainly for collective sales, the gestation period and the time to have 100 per cent ownership is certainly very long, unlike those developers going for GLS sites; they bid for the site, prepare for it and sell.”

However, analysts said Government land sites no longer offer the prime location and massive size that Pine Grove has.

Source : Channel NewsAsia – 19 Nov 2010

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