Deals for 22 units at Draycott Eight and Parkview Square in Bugis have fallen through

According to observers, this is primarily due to reasons specific to the respective transactions, though geopolitical uncertainty and rising interest rates have also made investors more selective

Aug 25, 2022

Parkview Square, a 24-story art deco style office skyscraper in the Bugis neighborhood for which Baring Private Equity Asia (BPEA) had been performing exclusive due diligence for a prospective S$900 million purchase, has failed to sell.

A stack of 22 units in the Draycott Eight condo, in one of Singapore's most exclusive residential neighborhoods, is also not being sold. It was reported in June that an Indonesian family was doing exclusive due diligence with the intention of purchasing the units from Angelo Gordon, a privately-held alternative investment business located in the United States.

A price of S$900 million would translate to roughly S$2,700 per square foot (psf) based on the net lettable area (NLA) of 336,000 square feet for Parkview Square, called the "Batman Building" for its style evocative of towers in the fictitious Gotham City, home of DC Comics superhero Batman (sq ft). The property is on a site with a balance lease of about 74 years, and its development potential has been maximized.

According to reports, BPEA conducted due diligence for roughly 2-3 months. Some technical challenges are alleged to have arisen, possibly resulting in a pricing disparity, resulting in a stalemate in discussions between BPEA and Parkview Square's owner, Chyau Fwu Development.

The project, located near Bugis MRT station, was built on land purchased in a public contract in 1997 by the late Hwang Chou-Shiuan or CS Hwang, who created a commercial empire in Taiwan under the Chyau Fwu moniker before moving to Hong Kong in the late 1970s and establishing the Parkview Group.

In District 10, Angelo Gordon's 22 apartments at Draycott Eight are expected to cost about S$168 million, which works out to little less than S$2,570 psf on a strata area of 65,401 sq ft.

The flats consist of 21 four-bedroom apartments (the majority of which are roughly 2,900 sq ft apiece) and a 4,069 sq ft duplex penthouse. Draycott Eight is a 136-unit condominium on a land having a leasehold period of about 74 years. In 2005, it was granted a Temporary Occupation Permit.

According to sources, the failure of Angelo Gordon's proposed sale of apartments to an Indonesian family was unlikely due to pricing or due-diligence difficulties. The concern of whether the transaction may potentially incur additional conveyance duty (ACD), similar to the additional buyer's stamp duty, was also not a deal breaker.

Angelo Gordon, which is registered with the US Securities and Exchange Commission, is said to have spent less than S$2,000 per square foot for its Draycott Eight units in 2017; it purchased them from Alpha Investment Partners' fund.

Wing Tai's Draycott Eight comprises three 24-story apartment blocks and a striking clubhouse in a big black-and-white conservation bungalow.

While geopolitical and macroeconomic worries, as well as increasing interest rates, have made big-ticket property investors more choosy, market observers believe the major reasons these two purchases have not materialized may be rather particular to the individual situations.