$120m target for first en bloc site this year

PROPERTY market observers are probably rubbing their eyes in disbelief but it is true: an en bloc sale is under way at asking prices akin to boom times.

It is the first tender in about nine months and reflects improved buyer sentiment although the sale launched yesterday will certainly test that sentiment, given the price levels it is shooting for.

The freehold Dragon Mansion at 18 Spottiswoode Park Road, near Outram and Tanjong Pagar, has an asking price of about $120 million or $1,020 per sq ft per plot ratio. This is significantly higher than the transacted enbloc sale prices in the area during the 2007 boom. If this price is achieved, the estate’s owners will get around $1.7 million for each of the 72 units.

The estate has a land area of 41,874 sq ft and can be redeveloped into about 120 apartments of 1,000 sq ft in size.

Dragon Mansion owners had wanted to sell collectively at the height of the boom in mid-2007 but their attempt was delayed when collective sale rules were tightened later that year. They had to restart the process at the beginning of last year but they also revised up their price.

In the Spottiswoode Park area, developer UOL bought the 92-unit Spottiswoode Apartment en bloc for $79.5 million or $732 per sq ft per plot ratio in April 2007 – a price that was above earlier indicative sale levels. It later bought Oakswood Heights for $132 million or $740 psf per plot ratio.

Property experts said the Dragon Mansion price target of some $1,020 per sq ft is more suitable to the boom times.

Mr Nicholas Mak said the market is not ready to support such prices as the buyer will have to sell the redeveloped units at more than $1,800 psf.

‘There is still a disparity between today’s land levels and the price in 2007 when most of the en bloc sales were priced,’ said Credo Real Estate managing director Karamjit Singh.

‘Owners will need to adjust their price expectations. The market is looking up but it’s still a question mark whether land prices will go back to boom time levels,’ he said.

Owners at Laguna Park in the east have high expectations as well and Credo Real Estate might launch the estate for collective sale next month.

The asking price is at $1.2 billion. The development obtained the 80 per cent approval from owners late last year but the price they are hoping for was decided back in late 2007.

Credo will launch other en bloc sites this year if the estates can obtain the 80 per cent approval soon, Mr Singh said.

En bloc deals shot through the roof in 2007 when 111 transactions worth a record $12.4 billion were sealed but sales fell through the floor last year with only seven sales worth $371 million done, according to CB Richard Ellis.

Ms Chia Mein Mein, manager for investment at CKS Property Consultants, said Dragon Mansion obtained the required 80 per cent approval to sell early this year but it waited for a good time.

‘It’s because of the run-up in property prices recently. Recent launches are doing very well. Some developers have sold off their existing stock and are looking to land bank at this point,’ she said.

‘We think there’s a window of opportunity now as we really don’t know how long this rally is going to last.’

Meanwhile, new unit sales remain robust. There has been a flurry of project releases and demand has been strong. The 272-unit Sophia Residence in the Mount Sophia enclave sold nearly 85 per cent of 88 units released at a weekend preview at $1,500 psf on average.

Singaporeans accounted for 60 per cent of the buyers, with the rest being permanent residents and foreigners.

These buyers included the previous owners of Sophia Court, who sold the site en bloc to developer GuocoLand.