Mandarin Gardens revives en bloc bid, could fetch over S$2 billion

SINGAPORE — After an aborted attempt 10 years ago following the Lehman Brothers crisis, owners of the 1,006-unit Mandarin Gardens are reviving their bid for a collective sale.

The asking price has not been determined but analysts said the sale of the sprawling 1.07million sq ft development with a sea view in the east could fetch more than S$2 billion – netting each owner about S$2 million – and set a new record.

The record is currently held by 618-unit Farrer Court, which sold for S$1.34 billion in 2007 and led to a windfall of about S$2.17 million for each owner.

Last August, the 560-unit Tampines Court fetched S$970 million – the closest that an en bloc deal has come to the record so far.

More than 90 per cent of about 400 Mandarin Gardens owners who attended an extraordinary general meeting on Sunday (Jan 21) voted in favour of forming of an 11-member collective sale committee.

The team held its first meeting on Tuesday (Jan 23) and appointed three office bearers – a chairman, secretary and a treasurer. Its first task is to engage a marketing agent, which will have to seek the consent of a requisite 80 per cent of owners.

Analysts are optimistic that more residents will be keen to get behind the fresh en bloc attempt. The 99-year leasehold development, built in 1986, is getting older and maintenance costs are creeping up, they noted.

But the committee may find it difficult to snag a buyer due to its sheer size, and faces competition from a number of smaller en bloc hopefuls nearby, they said. Due to the large number of owners involved, the committee could also have its work cut out trying to convince enough owners to support the sale.

Analysts said the project will most likely be tackled by a consortium, and may not draw many bids as a result. It joins other large en bloc sites like the 660-unit Pine Grove near Ulu Pandan Road, which has set a price of at least S$1.65 billion, and the 918-unit Braddell View that is reportedly going for at least S$2 billion.

International Property Advisor chief executive Ku Swee Yong said a developer would have to be willing to cough up between S$2.5 billion and S$3 billion, including upgrading premium and development charges, for Mandarin Gardens.

The risks of buying such a large site are compounded by banks becoming “more conservative”, Mr Ku added.

Meanwhile, developers with foreign holdings will have to build properties within five years of buying the land and sell the units within two years thereafter to avoid paying hefty Qualifying Certificate (QC) extension charges.

The Interlace and D’Leedon, built from the collective sale of Gillman Heights and Farrer Court in 2007, are still unable to offload some units, he noted.

Mr Nicholas Mak, executive director of real estate investment firm ZACD Group, said the site “is really too huge for (most developers) to take on themselves”.

“Even the big boys may want to form a joint venture to share or lower the risk, simply because it is just too big,” he said.

There are two plots of land (Laguna Park and Lagoon View) nearby gunning for an en bloc sale that may be more attractive than Mandarin Gardens as they are each about half its size, said C&H Properties Key Executive Officer Nelson Lim.

Nonetheless, Mr Mak said Mandarin Gardens may have picked a more opportune time to attempt a collective sale – unlike its last attempt in 2008, which came at the tail-end of a three-year en bloc fever.

It threw in the towel in 2009, disbanding the collective sale committee that only went as far as appointing a marketing agent.

Recent resale transactions in Mandarin Gardens, which has a plot ratio of 2.8, have averaged about S$1,000 per sq ft.

In contrast, the 841-unit Seaside Residences across the road, launched last year by Frasers Centrepoint, sold for about S$1,700 per square foot.

Besides residential units, Mandarin Gardens also has 10 shop units, a minimart, a kindergarten and a restaurant space taken up by the popular Thai Pan Restaurant.

C&H Properties’ Mr Lim foresees more en bloc sales this year, with an increase in prices that developers are willing to pay.

The Urban Redevelopment Authority’s Private Residential Property Price Index recorded a slight increase in the last two quarters of 2017, which showed “prices have turned positive after 15 quarters of price weakness”, he said.