Two mixed-use developments up for en bloc sale


Jalan Besar Plaza seeking S$390 million, while Tai Wah Building asking for S$81 million

THE en bloc train steams ahead with another two projects jumping on the collective sale bandwagon on Tuesday. The mixed-use developments - Jalan Besar Plaza and Tai Wah Building off Orchard Road - both sit on freehold land and are asking for S$390 million and S$81 million respectively.

The owners of Jalan Besar Plaza in Kallang are into their third sale attempt, after two public tenders in 2015 and 2016 yielded no takers. Their latest asking price of S$390 million works out to S$2,170 per square foot per plot ratio (psf ppr).

For Tai Wah Building at Killiney Road, the asking price translates to S$2,035 psf ppr.

No development charge is payable for both, as their approved gross floor area (GFA) already exceeds their respective permissible plot ratios under the 2014 Master Plan.

For Jalan Besar Plaza, it can be built up to a maximum GFA of 179,697 sq ft. The property is in a neighbourhood known for its popular eateries and sporting facilities. Marketing agent Huttons Asia said that the plot can be redeveloped for both residential and commercial purposes. It added that URA was also prepared to consider serviced apartment use at the site, but the number of allowable units and layout would be subject to detailed evaluation at the formal development application stage.

The current 16-storey building comprises 44 residential units of 915 sq ft or 1,593 sq ft, and 111 commercial units in the commercial podium that spans three floors. The tender closes on Nov 10.

Terence Lian, Hutton Asia head of investment sales, said: "En bloc sales serve an important function in estate renewal because they allow land to be fully utilised after redevelopment. With so many residential en bloc sites concluded recently, Jalan Besar Plaza will provide an attractive option to developers in view of its mixed-use attributes."

Tan Hong Boon, regional director at JLL, added that mixed-use sites do attract some following, more so if they are located near transport nodes such as MRT stations, as the retail shops can then enjoy traction from not just residents, but also commuters.

Most developers who do residential projects are probably also able to build mixed developments or even serviced apartments with an architect's help, he said.

"Whether the supply of mixed-used sites is scarce or not, at the end of the day, it is still the pricing that helps developers decide whether it is profitable to bid."

He added that there tends to be a smaller supply of mixed-use sites in the en bloc market compared to purely residential sites because apportioning the sales proceeds is more complicated in the case of the former among the different segments of users.

The second property for sale is much smaller. Completed in the mid-1980s, Tai Wah Building is a four-storey building of two shops and six apartments. The freehold site has a land area of about 13,148 sq ft and is zoned for "residential with commercial at first storey" under the master plan. Subject to the authorities' approval, the site can be redeveloped up to its existing GFA of 39,809 sq ft.

Tai Wah Building is about 250 metres from Somerset MRT Station. It is also near schools such as River Valley Primary School and Chatsworth International. The tender exercise closes on Nov 15.

Swee Shou Fern, Edmund Tie & Company (SEA) senior director of investment advisory, said that freehold mixed-use sites in Orchard Road within the prime District 9 are hard to come by. The consultancy is marketing the property.

Rarely traded

She said: "Properties with these attributes on Killiney Road are tightly held and rarely traded. Tai Wah Building can be redeveloped into a boutique residential development with valuable commercial space on the street level enjoying prominent visibility onto Killiney Road . . . the property is also ideal as a serviced apartment development, subject to planning approval."

Of the 16 collective sales worth over S$5.8 billion this year, 13 were purely residential developments. The other three included Goh & Goh, a mixed-used building, freehold industrial complex Citimac and Elite Building, which sits on a site zoned for "residential/institution" use.

Over in Yio Chu Kang, the owners of ICB Shopping Centre, a mixed-use development on Yio Chu Kang Road, are also preparing to put the 30-year-old property on the market. All its owners have consented to an en bloc sale, and are looking at a price tag of S$65-70 million.

En bloc announcements seem to be streaming in these days.

The sales committee of Ivory Heights, a privatised HUDC estate in Jurong East, on Monday said that over 80 per cent of its owners at the second extraordinary general meeting voted in favour of the sale proceeds apportionment method and collective sale agreement.

The 84 per cent who voted in favour, however, made up only three-fifths of the total share value in the development, with some residents upset at the outcome. The next step would be to garner support for the collective sale, which also requires 80-per-cent consent from residents.

The committee is looking at a reserve price of about S$1.34 billion, or S$979 psf ppr. This includes an estimated differential premium of S$160 million to top up the lease to 99 years. SLP International Property Consultants is the marketing agent.

Source: Business Times, 10 Oct 2017