Thursday, January 27, 2011

Unclear outcome in several en bloc tenders

AN UNUSUAL quiet has come over the closing of several mega collective sale tenders that were launched amid much fanfare with $500 million-plus reserve prices.

New launches for collective sales, however, have continued unabated.

The lack of news on the closed tenders has stirred talk among some residents that developers' bids, if any, may have fallen short of reserve prices.

Recent reports, for example, have suggested that Tulip Garden - whose tender with a reserve price of $650 million was launched early last month and closed last Thursday - had received no bids.

A resident The Straits Times spoke to said he understood three parties had expressed interest but no bids were made.

Mr Karamjit Singh, managing director of marketing agent Credo Real Estate, however, said the firm was 'still in discussion with developers'.

If Tulip Garden gets sold for $650 million, it would be the third-largest collective sale by value here and the first freehold one above $500 million in three years.

Similarly, on the commercial front, no news is out yet on Tanglin Shopping Centre, whose tender with a reserve price of a hefty $1.25 billion closed on Tuesday.

City Developments (CDL), however, said in a statement yesterday that it had expressed interest in negotiating for the purchase of the development. Millennium & Copthorne Hotels, CDL's hotel arm, owns 85 retail and office units and 325 parking spaces there.

Ms Jean Goh, senior marketing director of marketing agent ERA Realty, declined to comment further, saying the firm was still in the midst of negotiations.

Hawaii Tower in Meyer Road, with a $700 million reserve price and whose tender closed yesterday, also got no bids.

Mr Jeremy Lake, CB Richard Ellis' executive director for investment properties, said the firm is following up with four parties that had expressed interest.

Experts say the collective sale market is being tested again with the Jan 13 property cooling measures leaving the market in flux as many were caught by surprise.

Tanglin Shopping Centre might be affected as ERA had earlier said it could be redeveloped to include homes.

The collective sale market had picked up last year with more than 30 sales totalling about $1.7 billion recorded as home prices surged. The strong rebound had been expected to continue this year.

Tenders launched before the latest property measures, and closing since, may have struggled to meet ambitious reserve prices, experts suggest, though they say it is too soon to draw conclusions.

Mr Alwyn Low, director of Deans Realtors, said even if bids with no special conditions came in above the reserve price for a collective sale, they would still take about a week to be finalised. There is also 10 weeks after the tender closes for private treaties to be ironed out.

Mr Donald Han, vice-chairman of property consultancy Cushman & Wakefield, said developers are more cautious. 'Deals of more than $500 million can still happen, but vendors might need to consider more realistic pricing in the light of the new measures.'

Some developers are also often more inclined to pursue government land sites as the sale process is faster and fuss-free, experts said.

Market watchers will be awaiting news on an expression of interest that closed on Jan 12 for strata offices and retail units at 1 Finlayson Green.

Credo's Mr Singh said the tender closing date for the Whitley Heights apartments has been pushed back to March 2, owing to requests from developers to look into the more complex nature of developing strata-landed homes.

The collective sale momentum, however, has carried on to this year. At least 10 collective sale tenders have been launched this year. These include Holland Tower, Newton View and Ying Mansions.

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