www.shaproperty.com

SIMON Cheong has just done a deal that's making some property agents fear it may set lower land prices and cool the current en bloc fever - at least in the Cairnhill area.

Sizeable savings: The terrace houses, together with Hilltops Apartments (in the background), can be redeveloped into a new 20-storey project with about 220 units averaging about 2,000 sq

His SC Global Developments has bought 16 terrace houses at Cairnhill Circle for $88 million, a hefty knockback of the owners' $120 million asking price a few months ago when their site was being marketed together with the neighbouring Hilltops Apartments which SC Global bought in April.

In the process, the listed group has succeeded in lowering its average unit land cost in Cairnhill from $951 per square foot of potential gross floor area to $880 psf per plot ratio, achieving a saving of about $32 million.

The $88 million purchase price for the 16 terrace houses works out to $722 psf per plot ratio (psf ppr), including a $12.81 million development charge.

In contrast, the $120 million initial price tag worked out to $951 psf ppr, matching the unit land price that Hilltops' owners were seeking.

SC Global clinched the Hilltops site when the tender closed in April at the $951 psf ppr asking price but declined to buy the terrace houses at the time.

Mr Cheong's strategy has worked as it led the owners to lower their price expectations. They have agreed to sell to SC Global for $88 million when it emerged as the highest of three bidders when the second tender for the site closed on Tuesday this week.

This is below the owners' reserve price - reportedly about $100 million.

SC Global's chairman and chief executive Simon Cheong, who has a reputation as a savvy property investor, yesterday felt vindicated by his strategy of staggering the acquisitions, given the sizeable saving.

Still, the owners of the terrace houses will walk away with sums ranging from $3 million to $8.1 million per house - double what they would have got had they tried to sell their homes individually.

DTZ Debenham Tie Leung's director for investment advisory services Tang Wei Leng said: 'The tender attracted a number of bids and we are happy that it presented owners with an offer that they have accepted unanimously.'

DTZ handled the tenders for the 16 terrace houses as well as for Hilltops Apartments.

The 16 terrace houses have a land area of 49,856 sq ft and together with the 67,308 sq ft Hilltops site sold earlier, SC Global will now have a combined freehold site of 117,164 sq ft occupying the highest point at Cairnhill.

The combined plot can be redeveloped into a new 20-storey project with a potential maximum gross floor area of 448,693 sq ft.

This is big enough for about 220 units averaging about 2,000 sq ft.

Market watchers estimate SC Global's breakeven cost for a new condo could be about $1,300 psf.

Assuming it manages to achieve an average selling price of, say, $2,000 psf, the project should yield a cool pretax profit of at least $300 million, say analysts.

SC Global is looking to launch the project in mid- to Q3 2007.

The Cairnhill site, together with the Paterson Tower site the group bought earlier this year and a site in the Martin Road area it has owned for sometime, means SC Global now has a prime district landbank of about 800,000 sq ft potential gross floor area.

The purchase price of the Paterson Tower, Hilltops and terrace house sites adds up to about $650 million and market watchers are wondering if SC Global is considering a share placement to potential investors.

But it just might be able to source for other ways to finance the acquisitions without doing an equity raising, they suggest. The group had about $92 million cash as at March 31 this year.

Meanwhile, there seems to be no let-up in new collective sale sites coming on the market.

Jones Lang LaSalle yesterday launched Gilstead Court in the Newton area with an asking price of $100 million.

This works out to $691 psf per plot ratio. No development charge is payable for the 75,479 sq ft freeehld site, which can be developed into a new project with a gross floor area of 144,668 sq ft. The site can be redeveloped into a new five-storey condo with about 111 units averaging 1,300 sq ft.

The tender for Gilstead Court closes on July 5.