The property market is on an upturn and the prime districts have seen successful collective sales recently, the biggest of which was that of Pacific Mansion on River Valley Close, which was sold en bloc for $980 million on March 19.
Pacific Mansion was purchased by a joint venture company set up by listed property developer GuocoLand, led by Malaysian tycoon Quek Leng Chan, and privately held entities of Hong Leong Holdings in Singapore, controlled by his cousin and fellow tycoon, Kwek Leng Beng.
Pacific Mansion’s purchase price of $980 million translates into a land rate of $1,806 psf per plot ratio (ppr), which means the new freehold development on the site is likely to have selling prices in the range of $3,000 to $3,200 psf, estimate property consultants.
Meanwhile, Cairnhill Mansions was sold en bloc to Low Keng Huat for $362 million, or a land rate of $2,311 psf ppr, which will mean that the selling prices of the new development are likely to be $3,500 psf and above.
Given the future prices of these new developments, developers sitting on already-launched projects are also increasing their prices. Buyers who were undecided before may now feel the pressure to purchase a property, says Leong Boon Hoe, chief operating officer of List Sotheby’s International Realty.
Leong says GuocoLand is likely to restrategise its pricing of Martin Modern. The 99-year leasehold development is located at Martin Place, off Martin Road and River Valley Close. When the 450-unit luxury condo was launched last July, the average price was $2,100 to $2,200 psf. Transaction prices at Martin Modern have been trending higher.
Over the past fortnight, 13 units at Martin Modern were sold, with many of them surpassing $2,800 psf, although the caveats for these units have yet to be lodged, says Dominic Lee, head of the luxury team at PropNex Realty. However, following the sales of the 13 units by Lee’s team at PropNex, the sales gallery was closed on March 17. The developer is believed to be reviewing prices, and could launch a new phase at a later date and at higher prices.
According to Lee, projects in the prime districts of River Valley and Cairnhill are now crossing the $2,800 psf level and are likely to reach $3,500 psf in the current property cycle. He says prices achieved at Government Land Sales (GLS) sites have a greater impact on developers’ pricing strategies for new launches in the prime districts compared with prices of land sold in collective sales in the same neighbourhood.
He points to Martin Modern as an example. Prior to the close of the tender of the GLS site on Jiak Kim Street in December, prices of units sold at Martin Modern were around $2,380 psf, he notes. Following the sale of the GLS site to Frasers Property at $1,733 psf ppr, average prices at Martin Modern rose to $2,700 psf in January. The Jiak Kim Street site is located across the road from Martin Modern.
At Cairnhill Circle, seven units at Hilltops were sold during the week of March 6 to 13. They are a mix of two- and three-bedroom units ranging from 807 to 1,711 sq ft, and the average price was $2,967 psf. The 241-unit, freehold luxury Hilltops was developed by SC Global Developments and completed in 2011.
Besides Hilltops, other relatively new luxury condos in the Cairnhill area are also likely to see increased sales, according to Sotheby’s Leong. He cites Far East Organization’s The Scotts Tower and KOP Properties’ The Ritz-Carlton Residences.
There is a limited supply of luxury projects in the pipeline at the moment, and developers will certainly take their cue from the prices achieved at collective sales and GLS sites recently when pricing the remaining units in their development, adds Leong.
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