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Dairy Farm joins billion-dollar en bloc list with asking price of over S$1.68b

Dairy Farm joins billion-dollar en bloc list with asking price of over S$1.68b.

Owners to vote on terms of collective sale agreement on Saturday; 750,019 sq ft freehold development has potential GFA of 1.58 million sq ft.

ANOTHER residential development that could smash the collective sale record currently held by Farrer Court is The Dairy Farm, if it obtains the requisite approval from owners and is successfully sold.

Owners of the freehold development - now comprising 477 residential units and 10 retail shops - are holding an extraordinary general meeting this Saturday to approve the terms of the collective sale agreement and method of apportionment on sale proceeds.

Their asking price for the 750,019 sq ft freehold project is said to be in excess of S$1.68 billion. This is set to surpass the S$1.34 billion record held by the former Farrer Court, which was acquired by a CapitaLand-led consortium in 2007 and redeveloped into the 1,715-unit d'Leedon.

Other developments that are hoping to pull off Singapore's largest collective sale in quantum dollar terms include Pine Grove near Ulu Pandan Road, a former HUDC estate where owners are asking for at least S$1.65 billion. It currently has about 73 per cent of approval from owners by share value and strata area.

Also in the process of getting signatures from owners is former HUDC estate Braddell View, which is said to be asking for S$2.08 billion.

One other big development that could also smash the record is Mandarin Gardens, which has an asking price of S$2.48 billion.

The last collective sale attempt by The Dairy Farm, previously known as Dairy Farm Estate, was in 2007. This time, the collective sale committee (CSC) is hoping to hit the 80 per cent threshold approval from owners within six weeks, said CSC chairman Tay Tiong Choon.

Sieow Teak Hwa, managing director of the appointed marketing agent Teakhwa Real Estate, said he believes owners will be more receptive in view of the substantial premium this time round.

"They are getting at least double their current resale value if the enbloc is successful," he told The Business Times. "Many owners also felt the property has since aged another 10 years and repair and maintenance costs within the apartment units and common areas will inevitably go up."

Zoned "residential" with a plot ratio of 2.1, the potential gross floor area (GFA) is about 1.58 million square feet. This would translate into some 1,500 apartments, based on an average size of about 1,000 sq ft per unit. The new Hillview MRT station - 3 minutes' walk away - is now up and running.

The development charge (DC) for intensification of land use at The Dairy Farm site, based on the current DC rates, is estimated to be about S$61 million. Inclusive of the DC, the land rate for the site is estimated to be at least S$1,100 psf.

Property consultants note that the location of The Dairy Farm site is attractive, but its size poses risks to developers, who are likely to mitigate this by forming consortiums to bid for the site.

Alan Cheong of Savills Singapore, who is estimating a breakeven pricing of S$1,550 psf based on the estimated land rate, noted that the more prolonged process of a collective sale means developers have to consider whether the market can digest the 1,500 units two years down the road.

"With any delay in the completion of the purchase, the DC rate may increase," Mr Cheong said.

ZACD Group executive director Nicholas Mak said his estimated breakeven pricing of S$1,600-1,700 psf could be higher than the selling price of existing resale units in the vicinity.

But there are not many collective sale launches in the vicinity, which means less intense competition for the site, he added. Mr Mak felt the incoming developer would have to build more family-sized units there given its location.

So far, the second highest collective sale deal belongs to Pacific Mansion in River Valley, which was acquired last month for S$980 million by Singapore-listed GuocoLand, along with Intrepid Investments and Hong Realty.

Adapted from: The Business Times, 6 Apr 2018