Friday, April 1, 2011

No takers for Tulip Garden

TULIP Garden was aiming to be the third-biggest collective sale here, with a bumper reserve price of $650 million.

But a final deadline came and went yesterday with no developer signing on the dotted line for the 164-unit Farrer Road condominium. The owners will need to relaunch the tender if they hope to pull off a sale.

The reserve price, if achieved, would be the first collective sale of a freehold site of over $500 million in three years.

Launched in December, the tender for the 316,708 sq ft site closed on Jan 20. Three parties were said to have expressed interest but no bids were made.

Under rules on collective sales, however, 10 weeks is allowed after the tender closes for private treaties to be ironed out. Yesterday was the end of the period.

Mr Karamjit Singh, managing director of Credo Real Estate, the marketing agent for the development, last night confirmed that while the firm was in discussion with developers, no private treaty has been inked within the 10-week period. However, the firm is in negotiations to launch a second tender.

But all is not yet lost even if no deal has been struck.

While the initial tender has now lapsed after the 10 weeks, owners may launch a fresh tender within one year of obtaining the 80 per cent consensus required to mount a sale attempt.

The relaunch, however, has to be at the same reserve price. Tweaking the reserve price would mean having to obtain the 80 per cent support all over again.

Some residents The Straits Times spoke to are not overly concerned at the outcome despite the potential gains. Owners of the apartments, ranging from 1,700 sq ft to 3,400 sq ft, stood to get between $3.14 million and $5.45 million in gross proceeds, Credo earlier said.

Mr Tony Lum, who has been living at Tulip Garden for more than 20 years in a 1,700 sq ft apartment, said that even if no deal is made, he is confident the freehold site can still be sold later, especially with Farrer Road MRT station coming up.

'Now if you try to get a unit of the same size, it's going to be so expensive. I might be getting about $3 million in payout but it won't be as good as my unit. I'm not in a hurry to sell,' he added.

Another resident, however, said that she would be disappointed as she had already purchased another property.

Tulip Garden was actually sold en bloc for $516 million in July 2007, but the deal fell through when the buyers - a consortium led by developer Bravo Building Construction - backed out in 2008, citing trouble raising funds for the purchase.

Experts say the steep asking price might be putting developers off, especially in the light of January's property market cooling measures.

The large number of government land sale sites released - with a faster and fuss-free sales process - has also siphoned capital away from the en bloc market, they add.

Large sites also often come with hefty price tags. Developers may prefer a joint venture purchase so as to share the risk.

Mr Alwyn Low, director of Deans Realtors, said the high expectations of home owners have led to some unrealistic asking prices. However, he expects at least one collective sale of more than $500 million to go through this year.

'There is still buying interest from developers for larger en blocs, but it is a fine balance trying to match that with the expectations of sellers... Smaller en blocs are often more popular with boutique developers,' he added.

Ms Stella Hoh, head of investments at Jones Lang LaSalle, who is marketing the $1.7 billion collective sale of Pine Grove - the tender for which closes on April 19 - said the outcome of mega collective sales should not be painted with a broad brush. 'Each site has its own attributes and developers will evaluate based on their own criteria,' she said.

A quiet has also fallen on other tenders that have closed but are still in the 10-week period. These include Hawaii Tower, Holland Tower, Whitley Heights and Tanglin Shopping Centre.

Hawaii Tower's marketing agent CB Richard Ellis says that it is 'working with a few parties'.

The development in Meyer Road with a $700 million reserve price received no bids when its tender closed in January, but had four parties express interest.

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