Article Detail

Tiong Seng-Ocean Sky JV bags Cairnhill Heights in S$72.6m en bloc deal

03 Apr, 2018

A JOINT venture between Singapore-listed construction and engineering firm Tiong Seng Holdings and civil engineering company Ocean Sky International has agreed to acquire Cairnhill Heights condominium for S$72.6 million, less than the sellers' initial asking price of more than S$80 million.

Tiong Seng holds a 60 per cent stake in the joint-venture company TSky Development while Ocean Sky holds the remaining 40 per cent.

TSky Development had earlier acquired Sloane Court Hotel and a small, adjoining parcel in Balmoral Road last year for S$80.5 million. It is developing a 12-storey, 80-unit condominium on the land.

Both Singapore-listed companies Tiong Seng and Ocean Sky said in separate regulatory filings on Monday that they will, through TSky, set up a project company to undertake the redevelopment of the Cairnhill Heights site.

Located in prime district 9 next to the Orchard Road shopping belt, the freehold site of Cairnhill Heights spans 1,431.4 square metres with a gross plot ratio of 2.8. It may be redeveloped into a residential development of about 42 units based on an average size of 95 sq m.

Owners of the condominium had in December agreed to put the project up for collective sale, and had asked for more than S$80 million. This was estimated to result in a land rate of S$2,045 per square foot per plot ratio (psf ppr), inclusive of development charge payable at that time.

Both Tiong Seng and Ocean Sky did not provide an estimate on the land rate based on their purchase price.

ZACD Group executive director Nicholas Mak estimated that the purchase price of S$72.6 million would translate to an estimated breakeven price of about S$2,680-2,760 psf.

Should Cairnhill Heights be sold at its initial asking price of over S$80 million, the breakeven level for the incoming developer would have exceeded S$2,800 psf - "a risky proposition" for the densely built-up location, Mr Mak said.

"The JV got Cairnhill Heights at a fair price. In today's market, this is the going rate for prime land sites," he said.

In the vicinity, Singapore-listed Low Keng Huat (Singapore) had in February acquired Cairnhill Mansions in an en bloc deal for S$2,311 psf ppr - the highest land rate for a pure residential site in this collective sale cycle.

Meanwhile, more property owners are jumping onto the collective sales bandwagon.

Over in District 11, owners of Chancery Court on Dunearn Road launched the former HUDC (Housing and Urban Development Company) estate by tender on Monday with an asking price of S$390 million. If it succeeds, it will leave just five of Singapore's 18 former HUDC estates still around.

A redevelopment could potentially yield a maximum 480 units, averaging 70 sq m in size, said its sole marketing agent OrangeTee Advisory.

The site is subject to Pre-Application Feasibility Study (PAFS) on traffic impact and a traffic consultant has been commissioned to undertake the study, added OrangeTee Advisory.

After including an estimated differential premium of about S$180 million to the government to top up the lease from about 62 years to a fresh 99 years and the intensification of the site to the gross plot ratio of 1.4, the land rate works out to S$1,572 psf ppr, which OrangeTee executive director Alex Oh said "is comparatively attractive in relation to recent land sales nearby".

Marcus Oh, managing director of OrangeTee Advisory, added: "To give more certainty to developers, we took the initiative to undertake the PAFS and would expect the advisory on the maximum dwelling units from the authority before the tender closes. With this, developers will be able to conduct the redevelopment feasibility with peace of mind."

With a balance lease of about 62 years, the development comprises 136 apartments and eight commercial units spread over one tower block and seven blocks of four-storey walk-up maisonettes.

The site has a land area of about 24,074.4 square metres, or about 259,134 square feet, and is zoned residential with gross plot ratio of 1.4 under the 2014 Master Plan.

It is located about five to seven minutes' walk to Newton MRT station, near landed estates and Good Class Bungalows and within one kilometre of popular primary schools like Anglo Chinese School (Primary), Anglo Chinese School (Junior) and St Joseph's Institution Junior. Situated less than two kilometres away are Singapore Chinese Girls Primary School, CHIJ Primary (Toa Payoh) and St Margaret's Primary School.

Adapted from: The Business Times, 3 Apr 2018