Millionaires’ shopping list

Developers are rolling out projects as they anticipate the return of en bloc wealth into the real estate market. Those shopping for property have a wide range of choices. What will they buy?

The Year of the Dog has been particularly auspicious for the owners of Brookvale Park. On the eve of Chinese New Year (Feb 15), a joint venture between Hoi Hup Realty and Sunway Developments purchased the 160-unit, 999-year leasehold condo en bloc for $530 million.

It was Brookvale Park’s fourth collective sale at­tempt. For the owners, it will translate to gross pro­ceeds of $2.5 million to $4.4 million each.

Brookvale Park was sold en bloc to a joint venture between Hoi Hup Realty and Sunway Developments (Credit: JLL)

Kathleen Tan, one of the residents at Brookvale Park, has lived there for 17 years. “This has been our home since my husband and I got married in 2001, and it’s where we had our son,” says the part-time tutor with Nanyang Technological University. “We love the Sunset Way neighbourhood, where we’re surrounded by greenery and nice houses.”

Even without knowing the outcome of Brook­vale Park’s en bloc sale, Tan and her husband decided to purchase a terraced house at Merryn Terrace last October. The main reason was its proximity to St Jo­seph’s Institution, where her son started Secondary 1 this year. She will be receiving the keys to her new house in March, and is looking forward to renovating it and moving in.

Typical units at Brookvale Park start from three-bedroom units of 1,615 sq ft, which means Tan will receive $2.5 million from the proceeds of the en bloc sale.

With that windfall, Tan is open to investing in another property. This time, she wants a place near public transportation. “With the benefit of hindsight, we’ve seen these properties appreciate more quickly than those located farther,” she adds. Unit layout is another major consideration. “I’ve seen a 1,300 sq ft apartment that feels like 1,700 sq ft. But I’ve also been in a 1,300 sq ft unit that feels like 900 sq ft.”

Cashing in

The sale of Brookvale Park brings the tally in the first two months of 2018 to eight en bloc deals totaling $3.13 billion. “This is already more than one-third of the total deals done for the whole of last year,” says Tan Hong Boon, JLL regional director. If all these deals are successfully completed, there will be 1,260 new en bloc millionaires in Singapore.

Last year saw 35 en bloc sales totaling $8.68 bil­lion, which in turn spawned 3,375 new en bloc mil­lionaires. Developers are hoping to tap this newly minted wealth. “Most of the en bloc deals in 2017 were done in the second half of the year, which means many of the owners will only be receiving their payout this year,” said Eric Low, deputy CEO of Singapore-listed property group Oxley Holdings, in an interview with EdgeProp Singapore last month. “Can you imagine the amount of money entering the market when they start looking for a replacement property?”

Listed property giant City Developments Ltd will build a 600-unit, high-end condo named The Opus on the site of Amber Park (Credit: Samuel Isaac Chua)

Owners at the 200-unit Amber Park are expect­ed to receive the proceeds from their en bloc sale in April. The 192 three-bedroom unit owners will walk away with $4.376 million each, and the eight pent­house owners will pocket $8.3 million each.

Listed property giant City Developments Ltd (CDL), which purchased the site in a collective sale for $906.7 million last October, has already an­nounced that it will build a 600-unit, high-end condo named The Opus.

Over half the residents at Amber Park are own­er-occupiers, some of whom, like collective sale com­mittee chairman Lim Lian Seng, have lived there for more than three decades. “These tend to be retirees in their 60s and 70s, and they are looking at properties in the $1.5 million to $2 million range,” says the re­tired chartered surveyor.

While most of the owners at Amber Park are waiting to receive their payout before committing to a purchase, anecdotal evidence points to others who have already gone shopping. One Amber Park beneficiary is said to have snapped up two units at a developer’s sales gallery. Others have been scouring the Amber Road-Meyer Road enclave for a $3 mil­lion property. Meanwhile, the owner of a penthouse at Amber Park is believed to have paid close to $7 million for a semi-detached house on Dunbar Walk, a prime landed estate off East Coast Road.

What's available

“The profile of owners at Brookvale Park and Amber Park is quite similar,” says JLL’s Tan, who brokered the en bloc sale of both Amber Park in the east and Brookvale Park in the west. “There’s a good mix of upper-middle-income Singaporeans as well as a higher proportion of foreigners and investors com­pared with residents in the HUDC and suburban es­tates.” He reckons investors make up 30% to 40% of owners in these prime condominiums.

Oxley Holdings, for one, is hoping to tap this de­mand. Having purchased nine sites worth $2 billion last year — including en bloc sites with joint venture partners — it now intends to roll out eight to 10 new launches this year.

First out of the gate is likely to be the 150-unit, freehold The Verandah Residences, Oxley’s new proj­ect at 231 Pasir Panjang Road. It is a redevelopment of the former Lotus @ Pasir Panjang which Oxley purchased last June for $121 million.

Roxy-Pacific Holdings is looking to preview its new 57-unit, freehold boutique condominium development next door. It’s a redevelopment of the former Harbour View Gardens, which Roxy-Pacific purchased en bloc for $33.25 million in August 2016.

Meanwhile, CDL is expected to launch The Tap­estry, an 861-unit private condominium at Tamp­ines Avenue 10, in March. CDL had purchased the 99-year leasehold site in a government land sale last April for $370.1 million ($565 psf per plot ratio).

UOL Group will unveil its freehold, 139-unit Amber 45 development in 2Q2018. In 2H2018, it plans to launch the 729-unit condominium on the site of the former Raintree Gardens, which it pur­chased en bloc in a joint venture with United Indus­trial Corp in late 2016.

Including collective sale sites, there are at least 30 new projects slated for launch (see tables). It is not just the local residential market that benefits, though. According to Desmond Sim, CBRE head of research for Singapore and Southeast Asia, some of the en bloc wealth could be channelled into overseas property, primarily traditional investor favourites, Australia and UK.

Two instead of one

Some of the en bloc wealth might even make its way across the Causeway. Singaporean Peter Lim is an owner and resident of Summer Green, a 24-unit apartment block located off Balestier Road that was launched for en bloc sale in January.

The tender for Summer Green closed on Feb 12 and is now available for sale by private treaty. If the property is successfully sold at the asking price of $48.5 million, Lim is likely to be $2 million richer.

The tender for Summer Green has closed and it's now available by private treaty (Credit: Knight Frank)

He could buy two properties with his en bloc proceeds. One will be a home in Iskandar Malaysia — a brand-new, 1,000 sq ft, high-end condo in the vi­cinity of the Bukit Chagar MRT station (which is the MRT link from Singapore’s Woodlands and is sched­uled for completion by 2024). The other could be “a lifestyle condo” at the Puteri Harbour enclave. “I have those options with a budget of $350,000 in Iskandar Malaysia,” says Lim, founder of Pierre International Realty. “For that same amount in Singapore, I can buy only a 35-year-old, new-generation, three-room flat in Ang Mo Kio.”

Lim says his second property is likely to be a two-bedroom condo in Singapore, which he can then lease out. “While vacancy is still high, the rental market in the $5,000 range has stabilized in recent months”.

This explains Pacific Star Development’s op­timism in launching its remaining units at Puteri Cove Residences and in rolling out its SOHO units at Quayside in Puteri Harbour, Iskandar Malaysia in March.

For most home buyers, the sweet spot is still be­low $2 million, notes CBRE’s Sim. The 1% hike in buyer’s stamp duty that kicked in on Feb 20 translates to an additional $5,000 tax for a $1.5 million prop­erty, and $10,000 for a $2 million property. “It’s al­most like a wealth tax,” he says. “In the short term, it may be a psychological barrier, but home buyers will eventually come to terms with it.”

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