Pandan Valley's asking price of S$2.6 billion hits new collective sale record

SINGAPORE — In what is a record for asking price of collective sale sites, residents at the Pandan Valley condominium have agreed on a reserve price of S$2.6 billion in another collective sale attempt.

Analysts said the 623-unit development’s price tag — set during Saturday’s (Sept 8) second Extraordinary General Meeting (EOGM) which TODAY attended — sets a “new benchmark” in the asking price of collective sale sites.

Each owner would be able to get close to S$4.2 million on average from the sale of the site, which has a land area of about 865,000 sq ft.

The previous record was held by Mandarin Gardens with a reserve price of S$2.48 billion. The 1,006-unit development at East Coast is in the midst of gathering a minimum of 80 per cent of owners to agree to the sale.

Another en bloc site that crossed the S$2 billion-mark is ex-HUDC estate Braddell View. The Straits Times reported in September last year that the 918-unit estate is looking to sell its 1.124 million sq ft site for at least S$2 billion.

Other billion-dollar en bloc projects include Pine Grove — located in the Holland-Bukit Timah area just a stone’s throw away from Pandan Valley — which is selling at S$1.72 billion; and The Dairy Farm, which is in Hillview and has an asking price of S$1.68 billion.

The purchase of the former Farrer Court at S$1.34 billion by a Capitaland-led consortium in 2007 still holds the record for a successful en bloc tender. The site has been redeveloped into the 1,715-unit d’Leedon condominium.

Over 300 residents, making up 40 per cent of Pandan Valley’s total share value, attended Saturday’s meeting. Over 66 per cent of those who attended voted for the reserve price of S$ 2.6 billion, while 11 per cent voted for a selling price of S$2.86 billion, and 8 per cent wanted a S$3 billion asking price.

More than 84 per cent also accepted the terms and conditions of the collective sale agreement, notwithstanding that clauses on how the sale proceeds would be apportioned and distributed among the different owners have not been finalised.

Pandan Valley’s collective sale committee will hold a third EOGM in November to settle the details on apportionment before they start collecting signatures from the owners.

With the majority agreeing for a reserve price of S$2.6 billion, Mr Colin Tan, director of research and consultancy at real estate firm Suntec Real Estate Consultants, said that owners at Pandan Valley are probably aware of the market demand for en bloc sites despite the property cooling measures which were imposed two months ago.

“After cooling measures, everybody thought it was the end. But there is life in the sense that sellers understand the situation and want to go ahead. I would think that they are more reasonable,” he added.

However, Mr Alan Cheong, head of research at property consultancy Savills Singapore, felt that the reserve price was set at a high level to entice owners to agree to the sale.

While analysts are divided on whether the asking price is reasonable for Pandan Valley's attributes — such as its large freehold site and location — they agree that it is still a very high amount for developers to commit to, especially given the cooling measures.

With developers now more cautious and taking a wait-and-see approach, Mr Chris Koh, director of property firm Chris International, said Pandan Valley residents have to be ready for offers to come in below their reserve price. They may also have to extend their tender closing dates assuming they are able to get 80 per cent of owners to agree to the sale.

“Developers are being picky… They will consider several sites before going for the kill,” Mr Koh added.

With a value of S$1,430 per sq ft per plot ratio estimated by the project’s marketing agent ERA, real estate consultancy ZACD Group executive director Nicholas Mak said, while the value may sound reasonable, the sheer size of the site “makes it daunting”.

Besides the challenge in coming up with the cash upfront, there is also a concern whether developers would be able to sell all the units of the redeveloped site within the required timeframe of five years before they can claw back the Additional Buyers’ Stamp Duty (ABSD) from the government.  

Under the new cooling measures, developers would have to pay a higher ABSD rate of 25 per cent, which would be forfeited if they are unable to sell all units of their new launched within five years, and also another 5 per cent non-remissable ABSD.

Mr Mak said Pandan Valley is “not alone” as other large developments also face similar challenges due to its size.

Developers who are interested in the site would probably join hands and come together as a consortium to bid for the project, according to analysts.

“At S$2.6 billion, I don’t think one single developer will bid for something so big… In a way, it’s putting a lot of eggs in one basket,” Mr Mak said.