Thai tycoon snaps up entire Cairnhill project before launch

Published April 11, 2007

Thai tycoon snaps up entire Cairnhill project before launch

Sources say developer Hoi Hup achieves price of about $2,500 psf

By KALPANA RASHIWALA

(SINGAPORE) Hoi Hup Realty was supposed to begin previews for its freehold Suites @ Cairnhill on the former Cairnhill Gardens site about a fortnight ago.

But just a day before it could do that, it found a buyer for all 48 apartments in the project in a deal worth about $200 million, BT understands. This would work out to around $2,500 psf for the 19-storey development.

Sources said the buyer is a party linked to Thai Beverage tycoon Charoen Sirivadhanabhakdi. Mr Charoen controls the TCC group in Thailand, and is also one of the country's richest businessmen.

Interestingly, the $2,500 psf achieved for the sale to a single buyer was the same average price that Hoi Hup is said to have been targeting for the preview.

'What's more, the buyer will be paying Hoi Hup on normal progress payment terms, not deferred payment! That's great for Hoi Hup,' said a fellow developer.

Sources also said that City Development's recent preview of its 59-unit Solitaire project in the Balmoral Park area drew a Chinese buyer, who snapped up 10 units - or almost an entire block - for over $52 million.

CityDev last week announced that the project was sold within a week at an average price of over $2,000 psf.

Over at Reflections at Keppel Bay, Keppel Land said on Monday it had been approached by foreign investors interested in buying entire blocks in the 1,129 unit development. So far, it has achieved an average price of about $1,900 psf.

A seasoned property consultant said: 'It just reflects the current state of the high-end residential market - that foreign investors still consider our market attractive, despite the run-up in prices.'

'The money for bulk purchases is coming in substantially from the region, like Hong Kong and Indonesia, but there's also institutional money from US, Europe and Australia,' he added.

While foreign funds and investors buying up stacks or blocks of apartments in Singapore is not a new phenomenon, their bargaining strength against developers has waned lately and they have had to dilute the profile of properties they are choosing. This is because the market is flush with overseas money chasing a limited pool of properties available for sale.

'A few years ago, these overseas investors would have extracted a bulk discount from the developer and would buy only completed projects (preferably with leased apartments) that can start generating rental income almost immediately upon purchase. 'These days, however, they're finding they can't expect a discount and are looking at projects under construction. Another difference is these foreign funds are more flexible now and are prepared to consider not-so-prime locations. In the past, they focused only on the choicest areas,' the seasoned property consultant said.

Hoi Hup will develop Suites @ Cairnhill on the 25,083 sq ft Cairnhill Gardens site that it bought last year for $52.38 million. This works out to $795 psf of potential gross floor area inclusive of development charges. Market watchers reckoned Hoi Hup's break even cost for the project could be of the order of $1,100 to $1,200 psf.

Last year, Mr Charoen's unit Pacific Coast Assets inked deals that gave it full ownership of Intercontinental Hotel at Bugis Junction. The deals valued the underlying hotel property at over $250 million, according to earlier media reports.

His TCC group has a joint venture with Singapore's CapitaLand Group to invest in, develop and manage properties in Thailand.