Friday, April 1, 2011

Enbloc News: Strike #2 for Tulip Garden

* Below is extracted from the ST today

The final dateline for Tulip Garden collective sale 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.
Tulip Garden Strike 2

The reserve price of $650 million, if achieved, would be the first collective sale of a freehold site of over $500 million in three years. It would also be the third-biggest collective sale in Singapore. Owners of the apartments, ranging from 1700sqft to 3400sqft, stood to get between $3.14 million and $5.45 million in gross proceeds.

Launched in December, the tender for the 316,708sqft 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.

But all is not yet lost even if no deal is struck. While the initial tender has now lapsed after 10 weeks, owners may launch a fresh tender within one year of obtaining the 80% 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% support all over again.

Tulip Garden was actually sold enbloc for $516 million in July 2007 – 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 sale process – has also siphoned capital away from the enbloc 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.

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

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.                                                           

If only mega collective sales are concluded with brave words alone…


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