Whitley Heights enbloc: Sign of things to come?

The owners of Whitley Heights, just off Whitley Road, are re-launching their estate for tender at a lower price.

Credo Real Estate, which is handling the collective sale exercise, revealed yesterday that the first attempt in January this year was unsuccessful.

The offers received for the 130,165sqft freehold site in one of Singapore’s prime neighbourhoods, District 11, were below the owners’ initial reserve price.

“Earlier, the owners were hoping to achieve between $185 million to $120 million, which reflected a land rate of $1,421 to $1,613psf,” said Credo managing director Karamjit Singh.

Now, they have lowered their price target to $165 million, or $1,268psf, he said.

More than 80% of the owners have consented in writing to the reduced reserve price.

Asked if the tender would be successful after the adjustments, Mr Singh said he remains optimistic.

“It should be all right because the owners have made a significant enough adjustment to attract developers’ interest,” he said.

“At $165 million for the land, the developer may expect to break even at around $3 million per strata terraced. They should be able to sell the new strata units at an average of $3.6 million to $3.7 million per unit.”

Whitley Heights is a stone’s throw from the large houses in Chancery Lane and a number of top schools.

Analysts reckon the unsuccessful tender earlier this year is not so much reflective of the current market, but more of the nature of the site and its development uses.

When most residential apartment sites go en bloc, they are typically redeveloped into high-rise condominium units.

But for Whitley Heights, the site – which currently houses a 45-unit condo development – is to be redeveloped into two-storey landed homes.

This means the developer of the site could choose to build a combination of conventional terraced, semi-detached and detached houses, as well as strata terraced, strata semi-detached houses and strata bungalows.

This implies potentially less “intensive” use of the land for any developer, said SLP’s head of research, Mr Nicholas Mak.

“The en bloc sale premium could be less, as a result, for the developer,” he said.

The tender for Whitley Heights closes at 2.30pm on July 8.

Source: The Straits Times

A couple of thoughts came to mind after reading the article:

• A reduction from $185 million to $165 million – that equates to a discount of about 11% or over $400k less per household (assuming all 45 units are of equal size). Owners of Whitley Heights are definitely motivated sellers!

• Even if the original intention is to redevelop Whitley Heights into two-storey landed homes, surely this is not set in stone (or is it?). Would the buyer not have the option of building condos (albeit low-rise, as we believe there is height limitation on the site) if they feel that this will bring them better returns? So at the end of the day, wouldn't the cause of the initial failed enbloc attempt be the (high) reserved price (which is a function of what developers are willing to accept based on current market) rather than nature of the site and its development uses?

• More interestingly, will we see the likes of Pine Grove and Pearlbank Apartments following suit and start dropping their reserve prices in their next round of sale?

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