www.shaproperty.com

For residential use: Reserve price of $529 million works out to $352 psf ppr

Its marketing agent is pitching the massive site of 836,425 sq ft not only for residential redevelopment but also potentially for mixed development options, including serviced apartments, small office home office (Soho) and commercial components.

However, the latter options - which will involve a change of use for the site, which is zoned 'residential' - is subject to approval by the Urban Redevelopment Authority (URA).

The site is the biggest to be put up for collective sale yet and that pretty much restricts interest in the site to big developers with deep pockets given the huge outlay involved, say market watchers.

The launch of the tender for the site yesterday was attended by representatives from Frasers Centrepoint and MCL Land. Gillman Heights marketing agent NRA Real Estate says the likes of GuocoLand and Wheelock have also shown interest in the site.

The $529 million reserve price set by the owners works out to $352 psf of potential gross floor area inclusive of two payments developers will have to make to the state - an estimated $46.7 million development charge to maximise the site's 2.1 plot ratio plus a land premium of about $42.8 million to top up the site's lease to a fresh 99-year term from the remaining 78 years.

A new condo on the site would break even at about $600 psf, estimates a seasoned developer.

The site is zoned for residential use with a maximum height of 24 storeys. This is big enough for a new development with 1,464 units averaging 1,200 sq ft.

If developers get approval for a change of use involving commercial elements, the payment to the state would be higher although URA was not able to indicate by just how much since that would depend on the scheme the successful bidder has in mind.

Market watchers note that the $352 psf per plot ratio based on Gillman Heights' $529 million reserve price and assuming a residential development scheme, is similar to the $350 psf ppr that CapitaLand and Lippo paid for a 99-year leasehold condo site next to Redhill MRT Station at a state tender which closed in November last year. The tender for Gillman Heights closes on Aug 31. Gillman Heights was completed 21 years ago and comprises 607 apartments and maisonettes plus one shop unit.

Based on the $529 million reserve price for Gillman Heights' collective sale, existing owners stand to receive about $850,000 per apartment and around $900,000 per maisonette. These sums are about 60 to 70 per cent more than if the units were sold individually.