Grange Road condo tests market with record en bloc price

SINGAPORE — Amid the current cautious property environment, sentiment towards the luxury housing sector is set to be tested following the launch of an en bloc sale of Spring Grove, a condo situated along Grange Road.

The owners of the District 10 complex are hoping for offers in excess of S$1.39 billion, which, if successful, would be the largest en bloc deal here.

But potential buyers are expected to tread with caution, analysts said, as the health of the high-end property market looks uncertain, with many unsold units proving hard to shift.

The price tag is inclusive of a premium to top up Spring Grove’s remaining lease of 75 years to 103 years. If successful, the deal will beat Farrer Court’s record S$1.34 billion en bloc in 2007.

The Core Central Region (CCR) has been the worst hit by the curbs, with new private home sales falling to a mere 46 transactions last month, compared with 119 deals a year ago, according to latest figures released by the Urban Redevelopment Authority (URA) on Tuesday.

Mr Ku Swee Yong, CEO of Century 21, said: “Developers may pay attention due to the unique size and the conservation house within the site, but going by current market conditions, developers may not have a large appetite.”

The 325-unit development, comprising three 20-storey blocks and the conserved Spring Grove House, sits on a land area of around 263,513sqf. With a gross plot ratio of 2.1, the site can be developed up to a maximum permissible gross floor area of around 553,377sqf.

“Being the largest residential plot along Grange Road, the site offers an exceptional redevelopment opportunity for developers … It is also one of the few residential plots remaining in the Orchard area to be made available for redevelopment,” said Mr Ian Loh, director and head of investment and capital markets at Knight Frank, the marketing agent of the sale.

Analysts TODAY spoke to acknowledged the attractiveness of the site, but noted that it may be challenging to find a buyer in the current market conditions where demand for high-end homes has waned due to the cooling measures and loan restrictions.

Mr Nicholas Mak, executive director at SLP International, said the softening private housing market may prove too risky for developers to jump on the opportunity. “Location-wise, this is very unique and it’s not often that we see a large plot on Grange Road for sale. But the price is the sticking point. The absolute price is a large sum and I think very few developers will be willing to come in,” he said.

“Given the land size, this could be a 300- to 400-unit project, probably priced at S$4-5 million a unit, which is quite challenging to sell in the current market because the average Singaporean will find it difficult to afford and foreign demand has gone down because of the measures.”

High asking prices amid an increasingly cautious sentiment have resulted in a muted en bloc segment with no successful deal so far this year. Last year, the value of en bloc deals fell to S$574 million from S$1.37 billion in 2012 and S$2.8 billion in 2011, based on by Square Foot Research.

But Mr Loh said the limited supply of land for development in the city centre should draw some interest. He added that URA data showed the number of upcoming residential units in the region is expected to fall by about 19.8 per cent from 4,565 homes this year to 3,660 next year.