Developer Sim Lian has snapped up sprawling Tampines Court for a cool $970 million as the collective sale market here continues to sizzle.
It is the largest such deal for a former Housing and Urban Development Company property in a decade since Farrer Court changed hands for $1.34 billion in 2007.
The 560-unit development, in Tampines Street 11, went on the market last month after two previous failed attempts at a collective sale.
The price for the privatised property works out to about $676 per sq ft (psf) per plot ratio, said Mr Terence Lian, head of investment sales at marketing agent Huttons Asia. Each owner stands to get about $1.71 million to $1.75 million.
The developer will need to make two payments to the state – one for enhancing the intensity of the site to a gross plot ratio of 2.8, representing the maximum gross floor area to land area ratio, and another to top up the lease to 99 years, from the leftover tenure of 69 years.
The value of the premiums is about $359 million – on top of the sale price.
Mr Lian told The Straits Times: “After one week of rigorous negotiations, we have reached a satisfactory resolution on the conditions to the sale of Tampines Court.”
Property industry watchers believe the 702,164 sq ft site could be turned into a project of about 2,000 to 2,100 new units – or as many as 2,600 units, if the site is stretched to its limits.
This could be both a boon and bane for Sim Lian, the watchers said.
Mr Galven Tan, CBRE director of capital markets, told The Straits Times: “It was mentioned in the media that there was only one bidder for the tender. It was the size of the development that really deterred participation.”
Sim Lian will have a window of just five years to develop and sell all the units, if it is to avoid paying additional buyer’s stamp duty on the land price, analysts cautioned.
Mr Nicholas Mak, executive director of ZACD Group, said: “Presently, there is no new condo project scheduled to be launched in the vicinity of Tampines Court. Hence, there would be few competitors for the new condo project on this site.”
He estimated that the break-even price for the project would be between $1,050 psf and $1,150 psf.
CBRE’s Mr Tan also noted that the land’s cost to developers could be passed on to buyers in terms of slightly higher home prices.
There has been a bumper crop of collective sales here this year, with more potentially on the way.
Former HUDC estate Florence Regency went up for sale on Tuesday, with an asking price of at least $600 million, just a day after Normanton Park condominium residents launched a fresh tender.
Mr Tan said that more home owners could jump on the collective sale bandwagon in the next three to six months, which will appeal to developers looking to replenish their land banks.
This could reflect an expectation of stronger market sentiment over the coming year or so.
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