Weekend, June 23, 2007

Big player on the bloc

Pacific Mansions crosses the bar with $1.18b asking price

Joseph Yadao
[email protected]

FARRER Court got the ball rolling by slapping on an asking price of $1.5 billion for its collective sale. Now, Savills Singapore is getting in on the act with the tender launch for the collective sale of Pacific Mansions at $1.18 billion.

"The recent record land transactions for prime residential sites reflect developers' bullishness for the luxury end of the residential market," said Mr Steven Ming, director of investment sales, Savills Singapore.

"Recent primary sales for some luxury apartments around and just outside the Orchard Road area have even exceeded $4,000 psf, reaffirming the strong demand for high-end luxury apartments from both foreign and local buyers," he added.

As far as actual collective sales figures go, nothing has surpassed the billion-dollar threshold. The current record stands at $835 million, which GuocoLand paid when it acquired Leedon Heights at the end of April.

Should Pacific Mansions find a buyer willing to match the indicative price guide, it will surpass this. Its $1.18-billion price tag equates to $2,400 psf per plot ratio.

Pacific Mansions, which sits on a 128,306-sq-ft plot at 8 River Valley Close, is one of the district's largest freehold sites to go en bloc this year.

There is no development charge payable as the Urban Redevelopment Authority has given approval for the redevelopment site to have a maximum permissible gross floor area of 493,223 sq ft. This exceeds the permissible plot ratio of 2.8, indicated in the 2003 Master Plan.

According to Savills, the site can accommodate a 36-storey development housing 130 apartment units of 3,800 sq ft each. It is marketing the development here, as well as Hong Kong, China, Japan, the UK and Europe. The tender closes at 3pm on July 26.

Could the bullish fervour surrounding the high-end sector of the property market result in an en bloc deal busting the billion-dollar mark?

Analysts Today spoke to were sceptical, but they stopped short of saying that it may never be reached.

"The developers may be confident, but I feel that there should be some kind of plateau. Prices cannot keep going up," said Mr Colin Tan, director and head of consultancy and research at Chesterton International.

Developers would be cautious about throwing more than $1 billion into a single project. Mr Tan believes that a fund or a joint venture would be likely contenders for sites above the billion-dollar mark.

"That is a lot of money to tie into a single project. Developers as well as their lenders would find it risky. With that amount, there will be a lot riding on the project," said Mr Nicholas Mak, Knight Frank's director of research and consultancy.

However, niche developers like SC Global could come in, armed with an intimate knowledge of their target market.

According to Mr Mak, record-breaking prices are usually achieved within the prime areas of District 9 and 10, which include Stevens Road, Patterson Road, Ardmore Park and Draycott Drive, which are just off Orchard Road. The collective sale of The Ardmore earlier this month fetched a record price of $2,338 psf per plot ratio.