Friday, May 26, 2006

[RealEdge] TodayOnline : Waterfront an en bloc watershed?


  This story was printed from TODAYonline
 
 
  Waterfront an en bloc watershed?

Record collective sale reshapes property landscape

Friday • May 26, 2006

Shobha Tsering Bhalla
shobha@newstoday.com.sg

ON TUESDAY night, Singapore's biggest residential collective sale to date took place, with the massive Waterfront View being sold to two major local developers for $385 million.

But experts and analysts see the record-setting deal as one that goes beyond just dollars and cents.

The landmark agreement, which follows a smaller one earlier this year, could mark a shift in Singapore's urban renewal process by opening up new opportunities for redevelopment, as well as allowing more Singaporeans to benefit from the trend of collective sales.

The Waterfront View, a privatised former HUDC estate facing Bedok Reservoir, was sold to FCL Peak, a joint venture between Far East Organization and Frasers Centrepoint.

Among the many precedents it set was for the 809,037 sq ft land size involved — the largest for a collective sale — and the amount paid, which is the biggest in terms of absolute price, working out to $241 per sq ft per plot ratio. This includes $102.2 million for permission to enhance the plot ratio and extend the lease from 78 years to 99 years.

"By buying this site, the developers are setting a record and it shows that they have the appetite to take up the challenge, and have the ambition to undertake such a huge development project," said Ms Tang Wei Leng, director for investment advisory services at DTZ Debenham Tie Leung (South-east Asia), which brokered the deal.

Which leads to the other significant aspect of the deal: This is the first time such a big former HUDC property had been sold en bloc, according to Ms Tang. It gives so many "ordinary" people a chance to move up the property value chain.

Many of the owners of Waterfront View units are the original owners, having bought their units when the development was a Government housing project pitched between HDB flats and private housing. They stand to get $660,000 each, or an average premium of 65 per cent over the prevailing market rate of about $400,000 per unit.

"It allows heartlanders to benefit and be a part of the en bloc process. We always talk about how the rich are getting richer. Now it's not just the rich but also the heartlanders," said Ms Tang.

Equally importantly, the Waterfront View sale could point to a shift of interest by property developers to the mass market, said Dr Lui Seng Fatt, regional director and head of investments at Jones Lang LaSalle.

"It could be a signal that the interest has now come to the mass market. It appears that developers' interest in popular, mature markets is beginning to pick up," he said.

Waterfront View is the second former HUDC property sold so far and both were bought by Far East Organization. In January, it bought the 168-unit Amberville along Marine Parade Road.

The Waterfront site can be developed into a new 1,600-unit condominium with a gross floor area of more than two million sq ft. Analysts said the break-even cost is likely to be about $450 psf.

The Government's move to grant permission for upgrading the site's lease is also seen by some as beneficial for urban development and social cohesion.

"Politically and socially, I think it is a good move, because I think it is part of the urban environment renewal process, where the older estate will be revamped as these former HUDC and Executive Condos are not covered by the Government's MUP (Major Upgrading Programme)," said Dr Lui.

Additionally, the sale of Waterfront is expected to lead to an acceleration in the momentum for en bloc sales of other former HUDC properties, said DTZ's Ms Tang. Her company is already working on a collective sale for Pine Grove in Ulu Pandan.

She predicted that some owners of units in mature developments might take advantage of the interest generated by the Waterfront sale.

As for buyers, property investors might see the Waterfront deal as a signal to buy in mature estates to take advantage of a potential collective sale, said Dr Lui.
 
  Copyright MediaCorp Press Ltd. All rights reserved.


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