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Why did Wing Tai pull out of the Holland Tower en bloc deal?


Holland Tower sits within the Holland Park GCB Area (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Wing Tai Holdings announced on July 28 that its wholly-owned subsidiary Wincove Investment has withdrawn from the en bloc purchase of Holland Tower for $76.3 million, a deal it announced 4½ months earlier on March 15.

The Singapore-listed property developer cited "non-fulfilment of certain conditions" as the reason for pulling out of the deal. Wing Tai declined to comment further when contacted.

Read more: Wing Tai rescinds contract for the collective purchase of Holland Tower

Holland Tower is a 14-storey apartment block with just 19 units, of which the majority are 1,873 sq ft three-bedroom units. The property sits on a 21,878 sq ft freehold elevated site at 10 Holland Heights, a quiet road just off Queensway.

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Read also: Pine Grove to launch third collective sale at $1.95 bil

Under the URA Master Plan 2019, the site is zoned “Residential” and is situated within the Holland Park Good Class Bungalow (GCB) Area in prime District 10.


Holland Tower sits at the end of Holland Heights and falls within the Holland Park Good Class Bungalow Area, just off Queensway (Source: EdgeProp Landlens)

Setback constraints

Situated within the Holland Park GCB Area, the Holland Tower site was given a “special waiver” for apartment redevelopment. However, it is subject to stringent setback conditions, such as height and gross floor area (GFA). Being next to Queensway, a Category 2 road, which in Land Transport Authority (LTA) lingo means a major arterial road, there is a 15m setback requirement too.


Source: URA

For a new condominium block of 14 storeys, URA stipulates a minimum setback of 34m within a GCB Area. URA also does not permit further intensification of the gross floor area or the number of dwelling units.

Given the restrictive development controls, it may be difficult to meet a developer’s intended development plan for the new project, according to a property veteran.


Source: URA

Holland Tower has a built-up area of 43,691 sq ft, in line with its existing gross plot ratio of 2.0. "Developers may redevelop the site to its current built-up area, subject to approval from the relevant authorities," SRI Capital Market managing partner Low Choon Sin commented in a press release on March 15.

SRI Capital Market's Low, the exclusive marketing agent for Holland Tower, brokered the deal. CTLC Law Corporation was the appointed lawyer for the owners of Holland Tower.

Read also: Far East Shopping Centre debuts collective sale at $928 mil

When contacted, SRI Capital Market declined to comment for this story.


The 14-storey Holland Tower sits on a 21,878 sq ft, freehold elevated site with gross floor area of 43,691 sq ft (Photo: Samuel Isaac Chua/EdgeProp Singapore)

‘Luxurious and iconic residential development’

An ideal development for the site would be a boutique luxury condo with predominantly large-format apartments. Wing Tai planned to "leverage its superior location attributes to develop a luxurious and iconic residential development with stunning unblocked views of the lush greenery in Holland Park and the Singapore city skyline", according to executive director Tan Hwee Bin in the group's March 15 press release.

However, some consultants reckon its plan could have been derailed by the site constraints and restrictions.

The $76.3 million transacted price for Holland Tower translates to a land rate of $1,764 psf per plot ratio. “The cost is more difficult to estimate due to the site constraints and restrictions,” says a property consultant who declined to be named. “However, assuming a typical redevelopment site in the prime Holland area, the breakeven cost would be about $2,800 to $2,900 psf, with an average selling price of the new project in the range of $3,200 to $3,300 psf.”

Wealthy foreign buyers and Permanent Residents (PRs) tend to gravitate towards such condominiums in the Core Central Region (CCR).


The Good Class Bungalow Area of Holland Park, Swettenham Road and Ridout Road (Photo: Samuel Isaac Chua/EdgeProp Singapore)

 

Cooling measures revisited

However, the government's latest cooling measures on April 27, with additional buyer's stamp duty (ABSD) for foreigners doubling from 30% to 60%, has curbed demand.

According to Huttons Data Analytics, the number of non-landed residential properties purchased by foreigners has dropped significantly from 112 units in April to 66 units in May, down to just 27 units or 2.5% of all such transactions in June.

Read also: Foreigners need approval to purchase ‘Commercial & Residential’ sites, say MinLaw, SLA

Some developers reacted by postponing the launch of their luxury developments in the CCR. City Developments (CDL), for instance, had initially intended to preview its 246-unit Newport Residences, a redevelopment of the former FujiXerox Towers on Anson Road, on April 29. However, after the cooling measures of April 27, CDL said that Newport Residences' preview would be "postponed indefinitely".


Shun Tak did not proceed with the 5% down payment for High Point en bloc deal, which was due on December 23, 2021. The developer even forfeited its $1 million tender deposit (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Backing out of en bloc deals

This isn’t the first time a developer has backed out of an en bloc purchase. Hong Kong-listed Shun Tak Holdings, for example, aborted its en bloc purchase of High Point 2½ years ago, following to the roll-out of new cooling measures, which took effect on Dec 16, 2021. The most significant was the increase in ABSD for foreigners from 20% to 30%.

The week before, on December 9, 2021, Shun Tak announced it had won the tender for the en bloc purchase of High Point for $556.7 million. In its announcement, the developer stated its intention to redevelop the property into a luxury residential project targeted for completion in 2027.

Shun Tak did not proceed with the 5% down payment for High Point en bloc deal, which was due on December 23, 2021. The developer even forfeited its $1 million tender deposit.


Holland Tower is located within the Holland Park Good Class Bungalow Area (Photo: Samuel Isaac Chua/EdgeProp Singapore)

In Holland Tower’s case, Wing Tai may have already paid the 5% down payment. Based on the $76.3 million purchase price, the 5% amounts to $3.815 million.

It is also believed that Holland Tower’s collective sale committee has already applied to the Strata Title Board (STB) to have a sales order issued to the buyer, in this case, Wing Tai.

Once the sales order has been issued to the developer, the next 5% payment will be due. Since Wing Tai has rescinded the deal, it will not proceed with the following 5% payment.

“However, if the sales conditions were not met, the deposit would usually have to be fully refunded,” according to a property consultant.

This latest episode at Holland Tower is likely to cast a pall on a collective sale market already in the doldrums.

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