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Thread: Fresh look at Grange Road with Spring Grove's collective sale bid

  1. #1
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    Default Fresh look at Grange Road with Spring Grove's collective sale bid

    http://www.straitstimes.com/archive/...e-bid-20140726

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    Fresh look at Grange Road with Spring Grove's collective sale bid

    Published on Jul 26, 2014 12:51 AM

    By Cheryl Ong


    AT LEAST one property expert is questioning whether Spring Grove condominium, in the upscale Grange Road precinct, can secure the eye-popping $1.39 billion price sought in a collective sale.

    The 325-unit condo would set a record for the largest collective sale concluded if its ambitious asking figure is met.

    Spring Grove enjoys a premier location - nestled in a coveted residential enclave and also close to Orchard Road.

    If sold, the price would work out to a breakeven price of $3,370 per sq ft (psf), analysts estimated. This translates to an expected selling price of $3,700 psf for the site's new development, assuming its developer plans for a slim profit margin of 10 per cent, they said.

    Ms Christine Li, research head at OrangeTee, noted that new projects in the area can be expected to go for $2,800 to $3,200 psf today.

    "It seems the Spring Grove price does not make sense," said Ms Li. "Developers would be taking a huge risk [with] such a large project in view of the Additional Buyer's Stamp Duty and qualifying certificate rules, together with the current tepid market conditions."

    Foreign developers require a qualifying certificate to hold land in Singapore, and are given up to two years after obtaining the temporary occupation permit to sell all units. If they fail to do so, charges based on the proportion of unsold units will be levied.

    Although the high-end market has been the biggest loser after stiff cooling measures were imposed on buyers, market watchers said the Grange Road area will not lose its shine given the quality of its projects and proximity to the shopping belt of Orchard Road.

    Moreover, interest rates are expected to remain low in the near term, while Singapore is home to a growing pool of millionaires and affluent investors, they said.

    Projects that have sprung up in the vicinity include SC Global's 66-unit The Marq on Paterson Hill, OUE's 462-unit Twin Peaks in Leonie Hill Road and Far East Organization's 28-unit Boulevard Vue in Cuscaden Walk.

    Median prices of new units sold at these projects over the past two years were between $3,000 and $5,000 psf, figures from the Urban Redevelopment Authority show.

    Since the total debt servicing ratio lending rules were introduced in June last year, deal making in the area has ground to a halt, said Ms Li. There were just 10 units sold in the first half, down from the 31 transactions a year ago.

    "Many developers of new high-end projects in this area are proceeding with construction works, but have held back on high-profile project launches," noted Ms Elaine Chow, research head at Chestertons.

    Examples include Bukit Sembawang's 85-unit Paterson Collection in Paterson Road as well as City Developments' 124-unit New Futura in Leonie Hill Road and 174-unit Gramercy Park in Grange Road.

    Median resale prices have slipped as a result of slowing demand. They fell 20 per cent from $2,532 psf in the third quarter of last year to $2,018 psf in the second quarter this year, said Ms Chow.

    On the leasing front, rents have fallen by 3 per cent in the first half, down from a 1.6 per slip in the second half of last year, DTZ data shows.

    While rental data in the vicinity is limited, anecdotal evidence hints at a weakening market. For instance, a 2,600 sq ft four-bedroom unit at Grange Infinite that could fetch a monthly rent of $16,000 about a year ago is being marketed at $13,500 to $15,000, Ms Chow noted.

    Despite the slow activity in the luxury segment, Ms Li suggested it could be the first to gain if the cooling measures are lifted. "The activities in this segment have little impact on the affordability and stability of the overall residential market in Singapore," she said.

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  2. #2
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    and the article did not mentioned that it is actually a FREEHOLD land on 99 yrs lease by the land owner!

  3. #3
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    Doesn't look like the en-bloc will be happening soon with the break-even price so high and amid the current downmarket.
    www.v360property.com - Where Property Comes Alive!

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