Amber Park sale sets freehold enbloc record but Redas president says surging land bids not sustainable

SINGAPORE— In a sign developers are increasingly bullish about the private residential property market, two local developers have jointly snapped up the 200-unit Amber Park in Katong, marking the Republic’s largest freehold collective sale by dollar value.

The S$906.7 million deal went to City Developments’ (CDL) wholly owned subsidiary Cityzens Development and Hong Leong Group’s private real-estate arm Hong Realty, announced marketing agent JLL on Wednesday (Oct 4).

The price reflects a land rate of about S$1,515 psf per plot ratio, based on the allowable gross plot ratio of 2.8. Development charges are not payable for the proposed redevelopment, which can accommodate around 24 to 26 storeys, said JLL. Amber Park owners can expect gross sale proceeds of between S$4.3 million and S$8.3 million, said JLL regional director Tan Hong Boon.

The news comes days after private home prices posted their first increase in about four years, and on the back of other recent enbloc sales.

In August, it was announced that Tampines Court had been sold for S$970 million, the largest enbloc deal in a decade. Earlier this year, Eunosville, a complex of 10 residential blocks with 330 apartments, was sold to Hongkong Land Holdings’ MCL Land for S$765.8 million.

Several other developments, such as Spring Grove in Grange Road and Braddell View, have their eye on breaching the S$1 billion threshold in the coming months.

CDL said it saw “tremendous potential” in the Amber Park site, given its location in the Katong and East Coast area that is “in the beginning stages of transformation and gentrification”. The Thomson-East Coast MRT line is coming up and nearby East Coast Park is set for rejuvenation, said a spokesperson.

Analysts, who were not surprised by the price it fetched, expect new units to be launched at S$2,300 to S$2,400 psf between next year and 2019.

Noting its freehold status and strategic location, Mr Chris Koh of Chris International said: “Developers are likely to capitalise on its unobstructed sea view and should be able to sell the units quite easily.”

The Amber Park deal is “in line with rising sentiments in the enbloc market in recent months”, said Mr Wong Xian Yang, assistant director at OrangeTee’s research and consultancy team.

“An active enbloc market shows that developers are very positive. We can expect property prices to rise in the future,” he said, adding that there is a relatively smaller supply from the Government Land Sales programme in the east.

Other analysts and the Real Estate Developers’ Association of Singapore (Redas) struck a more cautious note.

Redas president Augustine Tan said surging bids for land are not sustainable in a market constrained by slow population growth and manpower curbs. “Private housing rents are still falling and vacancies remain high even as new completions are adding to current inventory at a time when multinational companies are either downsizing or recruiting headcount at a cautionary pace,” said Mr Tan at Redas’ mid-autumn festival lunch on Wednesday.

While the residential property market appears to be on the mend, with developers “aggressively replenishing their land bank”, the length and amplitude of this new cycle is uncertain, he said.

SLP International’s head of research and consultancy Nicholas Mak said enbloc sales are not a primary indicator of how the market is doing. “We need to see what price indices are showing and they seem to show that the market is bottoming out,” said Mr Mak.

The Urban Redevelopment Authority’s flash estimates show the private residential property index climbed 0.5 per cent in the three months ending September 30 after 15 quarters of decline.

“The market is in a very odd position now and I think we are still trying to find our feet. There have been many successful enbloc sales, but the resale and rental markets continue to be weak,” said International Property Advisor chief executive Ku Swee Yong.

“If the market is indeed so strong, why do developers need to (offer) discounts to clear their stock?” he questioned. The industrial and retail market appeared to be bullish in 2013 but landlords are now finding it a challenge to lease out units, he pointed out.

CDL said it would “continue to bid strategically for sites while remaining disciplined to core fundamentals. We remain highly selective and value-oriented in our investments to expand our landbank and stand ready to capitalise on attractive opportunities”.