East Coast property obtains 80% mandate months ahead of deadline
Laguna Park in East Coast is trying its luck at the collective sale lottery for a third time with a reserve price of $1.48 billion, joining a number of mega sites that remain undeterred by the latest round of property cooling measures.
With 58 years left on its 99-year lease, owners of the 528-unit former HUDC estate reached the 80 per cent mandate about two months ahead of a Sept 30 deadline, and are launching its tender sale on Sept 18, collective sale committee chairman Tony Sum said.
The pot of gold that sometimes comes at the end of a collective sale has proven elusive for Laguna Park owners. Its previous attempts in 2007 and 2010 failed because of poor market conditions after the global financial crisis. And this year, the July 6 cooling measures hit just two months before the deadline to get the mandate for the third try.
“We were really disappointed,” said Mr Sum, 65. “There will be some impact on sentiment, but since we got the ball rolling and having achieved 80 per cent, we thought we should go for tender,” he said. “Thankfully, the latest development charge rate increase didn’t affect our sector in the East Coast area. So, developers won’t be hit with additional land costs.”
The rates, which are assessed every six months, are payable by developers seeking to enhance the use of a site or build a bigger project on it.
The 669,484 sq ft site is zoned residential with a gross plot ratio of 2.8, and could yield around 1,700 units sized at 100 sq m each. The land price works out to $1,253 per sq ft (psf) per plot ratio after factoring in the estimated differential premium of $453.5 million and lease top-up premium of about $416.1 million for a fresh 99-year lease.
Though he loves the view of the city and the sea from his home of 21 years, Laguna Park Management Corporation (MCST) chairman John Yap, 68, said the reality of the ageing lease is finally sinking in.
“I didn’t sign the first two times because I love this place. We have the East Coast Parkway (and future) Siglap MRT on our doorstep; Jumbo Seafood is just across from us. But with only 58 years left, it is not so favourable to hold on any longer. We all recognise there is a need for renewal,” he said.
Owners of the 516 residential units in Laguna Park stand to receive $2.6 million to $5 million each, while owners of the 12 shops will each get $2.53 million to $2.66 million. The tender closes on Nov 1.
Securing the 80 per cent mandate is just one part of the equation. Getting developers to bite is another.
Even before the new measures were announced, Colliers International data showed that 21 collective sale tenders, valued at $5.6 billion, closed in May and June without being sold, as developers took a breather to assess the large number of redevelopment sites available, evaluate potential risks and take stock of their development pipeline.
But this has not stopped another mega site, Pandan Valley, from gunning for a collective sale with a record-breaking price tag of $2.6 billion. Pine Grove is close to getting 80 per cent signatures with a reserve price of $1.72 billion. Others still in the process of getting the mandate include Mandarin Gardens, Braddell View and The Dairy Farm.
Asked if the owners are willing to lower their reserve price if no developer bids again, Mr Sum said: “We will cross that bridge when we come to it. We have to get a fresh 80 per cent to vote for a lower price, but that will be difficult to do.”
Analysts said the results of the hotly watched Horizon Towers, which was launched at a reserve price of $1.1 billion just before the measures and extended its tender closing to today, could set the tone for the collective sale market going forward.
“Source:[Laguna Park sets $1.48b price tag in 3rd bid to go en bloc] © Singapore Press Holdings Limited. Permission required for reproduction”
