July 2, 2008

Kuwait fund buys just 36 Goodwood Residence units

It is not taking 97 units as it originally agreed to in Dec, and is also paying less

By Joyce Teo, Property Correspondent

KUWAIT Finance House (KFH) has ended up buying only 36 units in the posh Goodwood Residence, not the 97 it had wanted initially - and it is paying a lower price.

The Islamic banking group has paid $2,800 per sq ft (psf) for the apartments near Newton Circus - $400 psf below the price it agreed to in December when the property market was in full bloom.

The price at the time was a record for the area. The sale of the 97 units would have cost KFH about $818 million, which would have been the single largest purchase of residential units under construction in Singapore.

The sale also reflected the zest of foreign institutional funds to pump money into the then-dazzling property sector, a trend that has since slowed.

But the record-setting deal collapsed in March when developer GuocoLand said KFH had not exercised its option.

GuocoLand also said that it was in talks with the group over the grant of a fresh option for units in the 210-unit project being built at the former Casa Rosita site in Bukit Timah Road.

News of the option lapse hurt market sentiment, which was already weakening. GuocoLand itself said in a March statement that the private residential market in Singapore appeared cautious.

Market watchers speculated then that KFH had pulled out because it realised it had paid too much for the units and figured that reselling them quickly at a profit could be a difficult task.

Analyst estimates as to what a fair price for the apartments might be ranged from as low as $2,000 psf to nearly $2,900 psf.

KFH has bought two- and four-bedroom apartments and one penthouse unit, according to market sources. Its initial deal was for only four-bedroom units.

The sale price of $2,800 psf is still a benchmark for the Newton Circus area, said Savills Singapore's director of marketing and business development, Mr Ku Swee Yong. The transaction also reflects KFH's continued confidence in Singapore, he added.

Cushman & Wakefield managing director Donald Han added: 'It is a reasonable price, given today's market and considering the high quality specifications of the project.'

GuocoLand declined to comment on the transaction. It has yet to launch Goodwood Residence, something originally planned for the first quarter this year.

Guocoland's stock rose one cent to $2.19 yesterday with 737,000 shares changing hands.

The shares have fallen 61 per cent this year.

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