Joint venture acquiring Cairnhill Heights for $72.6m

A joint venture between construction and engineering firm Tiong Seng Holdings and civil engineering company Ocean Sky International has agreed to acquire Cairnhill Heights condominium for $72.6 million, less than the sellers’ initial asking price of more than $80 million.

Tiong Seng holds a 60 per cent stake in the joint venture company TSky Development, while Ocean Sky holds the remainder.

TSky had earlier acquired Sloane Court Hotel and a small adjoining parcel in Balmoral Road last year for $80.5 million. It is developing a 12-storey, 80-unit condominium on the land.

Tiong Seng and Ocean Sky, both Singapore-listed companies, said in separate regulatory filings yesterday that they will, through TSky, set up a project company to undertake the redevelopment of the Cairnhill Heights site.

Located in the prime District 9 next to the Orchard Road shopping belt, the freehold site of Cairnhill Heights spans 1,431.4 sq m, with a gross plot ratio of 2.8. It may be redeveloped into a residential development of about 42 units based on an average size of 95 sq m.

Owners of the condominium had last December agreed to put the project up for collective sale, and had asked for over $80 million. This was estimated to result in a land rate of $2,045 per sq ft per plot ratio (psf ppr), inclusive of a development charge payable at that time.

Tiong Seng and Ocean Sky did not provide an estimate on the land rate based on their purchase price.

ZACD Group executive director Nicholas Mak estimated that the purchase price of $72.6 million would translate to a break-even price of $2,680 psf to $2,760 psf.

Should Cairnhill Heights be sold at its initial asking price of more than $80 million, the break-even level for the incoming developer would exceed $2,800 psf – “a risky proposition” for the densely built-up location, Mr Mak said.

“The joint venture got Cairnhill Heights at a fair price. In today’s market, this is the going rate for prime land sites,” he added.

In the vicinity, Singapore-listed Low Keng Huat (Singapore) in February acquired Cairnhill Mansions in a collective sale deal for $2,311 psf ppr – the highest land rate for a pure residential site in this collective sale cycle.