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(SINGAPORE) In a move seen as reducing the risks of undertaking a massive development, Far East Organization and Frasers Centrepoint have set up their maiden joint venture, which has bagged Waterfront View, a privatised former HUDC estate facing Bedok Reservoir, for $385 million.

The price for the private treaty deal sealed late Tuesday night before the planned tender close for the property this Friday works out to a land price of $241 psf per plot ratio inclusive of an estimated $102.2 million payment to the state for lifting title restriction to enhance the site's plot ratio, and upgrading the site's lease from a remaining 78 years to 99 years.

The 809,037 sq ft site can be developed into a new condominium with a whopping gross floor area of over two million sq ft - enough for a massive project with about 1,600 units.

This is the biggest residential collective sale to date in terms of number of units involved (there are 583 units in the existing development), land area as well as dollar quantum, says DTZ Debenham Tie Leung, which brokered the sale.

Far East's and Frasers Centrepoint's breakeven cost could be about $450 psf, say analysts. Currently, 99-year condos in the area are going for above $500 psf for units that face the reservoir and below $500 psf for those that don't.

Depending on how Far East and Frasers Centrepoint come up with their design scheme, about 80 per cent of units in the new development may face the reservoir.

Industry watchers reckon that instead of competing with each other for Waterfront View at the tender, Far East and Frasers Centrepoint figured it made more sense to team up.

This reduces their risks in terms of exposure to such a huge development - and eliminating at least one competitor in the process. The duo are said to have made their offer, good for only a day, late Tuesday afternoon, accompanied by a $19.25 million cheque (for a 5 per cent deposit).

The collective sale agreement signed by Waterfront View's owners give the sales committee the mandate to negotiate a private treaty deal as long as the reserve price is met. This is understood to have been $370 million.

'The sales committee could either take the offer on the table, good for only a day - or take the risk of waiting and hoping for a higher offer at the tender that may or may not come,' said a source.

Waterfront View's sales committee chairman Matthew Yu said: 'We are very happy. It's a good price. The outcome came earlier and is better than we expected.'

DTZ's director for investment advisory services Tang Wei Leng said: 'Given the size of the development, there were really only a few parties who have demonstrated genuine interest. The sales committee was decisive, having considered all the options carefully. We are very happy for the owners.'

The $385 million price is above an independent valuation for the property which DTZ did not disclose. Owners controlling 82.33 per cent of share values in Waterfront View have agreed to the collective sale, which will be subject to approval from the Strata Titles Board. Owners of the existing 583 apartments and maisonettes have equal share values, which means they will each receive about $660,377 per unit, which is over 60 per cent more than what the units would fetch if sold individually today.

The site is zoned for residential use with a 2.5 plot ratio.

While the deal involves the maiden tie-up between Far East and Frasers Centrepoint, it is not the first time that the men helming the two organisations have joined hands. Far East is headed by property magnate Ng Teng Fong while Frasers Centrepoint is the property arm of listed Fraser & Neave group, which is now headed by Han Cheng Fong who, during his days as group CEO of the former DBS Land, oversaw many tie-ups with Mr Ng's Singapore unit Far East and Hong Kong arm Sino Land.

Market watchers are wondering if the two sides will team up for other acquisitions, including the second Somerset site being offered by the state. Far East clinched the first Somerset plot, the former Glutton's Square site, in January.

Waterfront View is the fifth site Far East has bought here this year. The five total $1.2 billion.