Raintree Gardens

The modest comeback of collective sales has kept up with the sale of Raintree Gardens in Potong Pasir for $334.2 million, after more than five developers bid for the site.

Many unit owners of the 175-unit privatised HUDC estate will walk away with about $1.9 million per unit, which is a premium of almost 90 per cent over the last transaction price of about $1.1 million this year.

After years of relative stagnation in the market, this is the third collective sale this year, after the blockbuster $638 million sale of Shunfu Ville in May and the 14-unit sale of Harbour View Gardens in August for $33.25 million. The latest sale was brokered by real estate firm JLL.

The deal was struck yesterday, after the requisite more than 80 per cent of owners consented. The public tender was launched on Sept 1, with a reserve price of $315 million.

Mr Aaron Wan, a member of the collective sale committee and an associate director at ERA, said it was “phenomenal” there were so many bids. The committee had not expected such a good response. “For each of us to be getting about $1.9 million hits the sweet spot,” he said. His parents bought the unit for about $600,000 in the late 90s, he added.

It was a case of beginner’s luck for Raintree Gardens, as the collective sale is its first attempt. It was privatised in July 2014.

The Straits Times understands that the top three bidders had very competitive bids, with a margin of about 1 per cent among the trio. UVD (Projects), a joint venture of UOL Group and United Industrial Corporation, won the day as it had responded quickly and was open to favourable terms for the sellers.

Mr Liam Wee Sin, UOL deputy group chief executive, said the acquisition was part of its land-banking strategy. “The location also allows us to ride on the Bidadari story,” he said, citing upcoming developments at nearby Bidadari estate.

UVD is looking to develop the 201,405 sq ft site to house about 750 units. Overall, it is paying about $797 per sq ft per plot ratio (psf ppr), including the premium paid to top up the lease to a fresh 99 years and for redevelopment of the site to a gross plot ratio of 2.8.

Mr Ong Kah Seng, director of R’ST Research, said he was not surprised by the keen interest, as developers are “running low in land inventory and thirsty for land”. They are also keen on the Potong Pasir area, as new developments and retail are set to energise the area, he said. The price was slightly high but realistic, he said, calling it a “price bearing a little optimism”.

“Collective sales are making a comeback,” he said, adding that more contractor-developers will actively look for city fringe sites to acquire via collective sales.

Thong Sia Building, off Orchard Road, was the only development sold last year – for $380 million – while there were none in 2014.

Mr Desmond Sim, CBRE’s head of research, said recent sales will encourage people to form collective sales committees. However, their success is not clear-cut, depending on whether the site is in a prime location, and whether sellers and buyers are realistic, he said. “If the Government starts to release more residential land, some developers prefer government land sales,” he added.

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