Mega sites raising stakes in collective sale craze

Home owners are taking Singapore’s latest collective sale craze to a new level, with mega developments – sitting on sites close to or over one million sq ft each – jumping onto the bandwagon.

Owners of Mandarin Gardens, a 99-year condominium on a one million sq ft plot off East Coast Park, have given the green light to kick-start its collective sale process.

It formed its sales committee over the weekend, and the committee is contacting marketing agents.

While it is still early days, Mr Alan Cheong, Savills Singapore’s research head, said the deal, if it goes through, could go for “way past a billion” and “will definitely be another major landmark in the history of en bloc sales”.

ZACD Group executive director Nicholas Mak estimates a redevelopment of Mandarin Gardens could yield almost 3,000 new housing units.

In the same league, late last year, the 1.1 million sq ft Braddell View estate voted to form its collective sale committee after the 918-unit development was privatised last March.

Over in Upper Bukit Timah, the 999-year leasehold Cashew Heights also formed its committee last year. The project, which occupies a 953,000 sq ft parcel, is on its third attempt to sell en bloc.

In the Holland area, Pine Grove, a former HUDC estate like Braddell View, is collecting signatures for the 80 per cent mandate. Its owners have a reserve price of $1.65 billion for the over 893,000 sq ft site. It is also the estate’s third try.

Price-wise, the biggest successful collective sale to date is Farrer Court, which went for $1.34 billion when a consortium bought the 838,488 sq ft estate and redeveloped it into the D’Leedon condo.

The successful collective sale of sites such as Mandarin Gardens will give a big boost to Singapore’s residential investment sales this year. Last year, over 30 collective sale sites were sold for close to $8.7 billion. Another six tenders have closed but sales have not been concluded.

Mandarin Gardens, built in 1986, has 1,006 units, along with 10 shoplots, a minimart, a restaurant and a kindergarten. It is near other collective sale hopefuls such as Lagoon View and Laguna Park, and is close to Victoria School.

Mr Cheong said a developer who pays an all-in price, including a land lease topping-up premium and other charges, would likely “set a base price of $1,300 to $1,400 psf ppr”.

While these big projects are in attractive locations, they face the same hurdle to a successful deal – their size, which was a major factor in the failure of previous sale attempts.

Mandarin Gardens’ sheer land size – at 1.07 million sq ft – could make it a “tough sell”, said Mr Mak. “I have never seen a sale of anything so big… in the East Coast,” he added. “It’s so big that even the big boys may want to go in as a joint venture to basically share the risk.”

He said if a deal is clinched, close to 3,000 units could be developed on the existing area, and it could also be split into two developments.

Mr Cheong said: “With the current regulations in place, such as the additional buyer’s stamp duty and qualifying certificate, and with land prices getting to a multiple of what Mandarin Gardens was sold at in the 1980s – the risk to the potential buyer is much higher.”

But size is a problem not just for potential buyers, but also for residents keen to take the collective sale route. With so many owners involved, the process gets more complicated and often turns ugly.

In Mandarin Gardens’ previous attempt at a collective sale, residents against the sale claimed the sales committee had collected proxy votes to control the outcome of the annual general meetings.

Over at Pine Grove, it was recently reported that the process had led to residents forming factions and a lawsuit pitting the chairman of the management committee against the chairman of the collective sale committee.