Park House breaks en bloc price ceiling

/ EdgeProp Singapore |
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At $2,910 psf ppr, this latest collective sale price for the prime Orchard Road site is the highest so far

Two blocks from St Regis Singapore, where North Korean leader Kim Jong-un stayed for the historic summit with US President Donald Trump, a milestone of a different sort was set. It was the collective sale of Park House, a 15-storey building located at the corner of Tomlinson Road and Orchard Boulevard. The tender for the building closed on May 31, and the deal was sealed at 12.30am on June 1. The purchase price was $375.5 million, a 21.9% premium to the guide price of $308 million when the site was launched for sale on April 23.
The buyer of Park House is said to be Hong Kong-listed Shun Tak Holdings, the company founded by Macau gaming tycoon Stanley Ho. It has a market capitalisation of HK$10.88 billion ($1.85 billion). Now 95, Ho stepped down as chairman of the firm in June 2017, and was succeeded by his daughter, Pansy Ho.
Park House achieved a record en bloc price of $2,910 psf ppr (Credit: CBRE)
Shun Tak’s purchase price of $375.5 million translates into a record breaking $2,910 psf per plot ratio (ppr) for a collective sale. Jeremy Lake, CBRE managing director of capital markets, who brokered the sale of Park House, also brokered the last record-breaker — the former Hampton Court for $155 million ($2,526 psf ppr) in January 2013 The buyer was Hong Kong-listed, British conglomerate Swire Group’s Swire Properties.
Roll of the dice
Park House marks Shun Tak’s first purchase of a residential property development site in Singapore but its third property investment in the city state. So far, Shun Tak’s preference has been in the prime Orchard Road neighbourhood.
The first acquisition was in August 2016, when Shun Tak purchased the bungalow at 9 Cuscaden Road for $145 million, or $2,145 psf ppr. The deal was brokered by JLL. The bungalow at 9 Cuscaden Road is behind Tanglin Shopping Centre, which is adjacent to St Regis Singapore, and near other luxury hotels such as The Regent Singapore and Four Seasons Hotel.
In its FY2017 annual report, Shun Tak says it plans to redevelop the prime, freehold site into a five-star hotel property with at least 140 keys. The existing bungalow will be demolished, and construction works are expected to begin in 2H2018, with completion scheduled for 2021.
View of Somerset area, where Shun Tak acquired a 70% stake in TripleOne Somerset in March last year (Credit: Samuel Isaac Chua/EdgeProp Singapore)
In March last year, Shun Tak acquired a 70% stake in TripleOne Somerset for $350 million from a consortium led by Perennial Real Estate Holdings. This marked Shun Tak’s first significant commercial property investment in Singapore. TripleOne Somerset is also located in the prime Orchard Road neighbourhood.
The commercial property, which has a gross floor area (GFA) of 766,550 sq ft, is undergoing a $120 million asset enhancement work. When completed, it will have a total net area of 572,000 sq ft of offices, medical suites and retail units. Renovation of the medical suites is expected to be completed by 2Q2018, and the retail portion, by 3Q2018.
‘A bold number’
CBRE’s Lake expects Park House to be redeveloped into a luxury condominium with 86 units, assuming an average size of 1,500 sq ft each. Based on the purchase price, the breakeven price is expected to be around $3,500 psf. “I guess it is a bold number,” Lake says. “But it will be fine.”
Lake: We were inundated by enquiries and we had 20 site inspections for Park House (Crediit: Samuel Isaac Chua/EdgeProp Singapore)
For comparison, Lake points to the luxury 3 Orchard By-the-Park by Malaysian developer YTL Group. The development is separated from Park House by a government land site that also fetched a record price last month. The 77-unit 3 Orchard By-the-Park contains three 25-storey towers designed by Italian architect Antonio Citterio, famous for his design of the Bulgari Hotels & Resorts.
Located at the corner of Orchard Boulevard and Orchard Spring Lane, 3 Orchard By-the-Park will be previewed at the end of this month. Indicative prices are “around $4,000 psf”, according to appointed marketing agent
Dominic Lee, PropNex head of luxury team. Only one tower at 3 Orchard By-the-Park will be released for private preview. The tower contains 14 two-bedroom apartments of between 1,066 and 1,163 sq ft; and 15 four-bedroom apartments of 2,250 sq ft.
The first of three towers at 3 Orchard By-the-Park will be previewed at around $4,000 psf (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Incidentally, 3 Orchard By-the-Park is also a redevelopment of an en bloc site — the former Westwood Apartments — which YTL Group purchased in November 2007 for $435 million. This reflects a land rate of $2,525 psf ppr. Meanwhile, a 7,836 sq ft penthouse at New Futura hit a new record when it was sold at $4,360 psf, or $36.28 million, in May. Recent units sold at the 124-unit luxury condo on Leonie Hill Road have surpassed $3,500 psf.
‘Bragging rights’
With YTL Group’s selling prices around $4,000 psf and New Futura’s prices above $3,500 psf, CBRE’s Lake reckons that the expected selling price for the new development at Park House “doesn’t seem beyond belief”.
Interest in the Park House site had been intense when it was launched for sale. “We were inundated by enquiries and we had 20 site inspections,” says Lake.
The appeal of Park House is its location, at the corner of Orchard Boulevard and Tomlinson Road, “which is very visible and has bragging rights”, notes Lake. Park House occupies a freehold site in prime District 9 and is within walking distance of the upcoming Orchard Boulevard MRT station.
Park House is located at the corner of Orchard Boulevard and Tomlinson Road. Adjacent to it is the government land site that fetched a record $2,377 psf ppr in a land tender last month (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Next door, the greenfield government land site was sold to a joint venture between Simon Cheong of SC Global Developments and two Hong Kong-listed groups — New World Development Corp and Far East Consortium International. The joint-venture partners bid $410 million, or $2,377 psf ppr, for the 61,597 sq ft, 99-year leasehold site on Cuscaden Road. According to the JV partners in a release on May 17, the Cuscaden Road site is “exceptional in Singapore’s luxury residential market”.
Hong Kong groups on the hunt
“We’re seeing a number of groups originating from Hong Kong looking at residential development sites,” notes CBRE’s Lake. “Their focus has been on the traditional prime districts of 9 and 10.” Besides Shun Tak, there is New World Development and Far East Consortium. The Cuscaden Road site marks the duo’s second collaboration in Singapore. The first was Artra, a 400-unit residential development sitting on a commercial podium, linked to the Redhill MRT station on Alexandra View. Artra was launched in April last year.
Far East Consortium has also been ramping up its investments in the prime districts of Singapore. Last week, the group announced that it had purchased Royal Oak Residence at 21 Anderson Road for $93 million. The 34-unit freehold property has a GFA of 87,000 sq ft. In March this year, Far East Consortium purchased Hollandia en bloc for $183.4 million ($1,703 psf ppr). This was followed by the purchase of The Estoril next door for $223.94 million ($1,654 psf ppr). At end-April, Far East Consortium announced it had tied up with Singapore-listed construction group-cum-developer Koh Brothers Group in an 80:20 JV to redevelop the two sites on Holland Road. The intention was to amalgamate the sites and build one single residential development of 242,190 sq ft.
Far East Consortium International announced that it had purchased Royal Oak Residence at 21 Anderson Road for $93 million (Credit: Samuel Isaac Chua/EdgeProp Singapore)
A unit of Li Ka-shing’s CK Hutchison Holdings purchased City Towers on Bukit Timah Road en bloc for $401.9 million ($1,847 psf ppr) in February. It will be the ninth residential development by CK Hutchison (previously Cheung Kong Property) in Singapore.
Lake reckons Hong Kong groups are redirecting their attention to the Singapore property market as Hong Kong property prices remain at an all-time high. “It’s a combination of reasons: Some groups are looking at diversification; others are happy to roll the dice again and come into Singapore to buy, especially since the residential market has been relatively subdued over the last four to five years, but sentiment has turned positive over the past year,” he observes. “The luxury segment has turned around over the last six month, and the expectation is that residential prices in Singapore are going to rise.”
Prime sites on the radar
Even though there are more groups from Hong Kong sniffing at prime sites in Singapore, whether they will commit to a purchase remains to be seen, says Lake.
So far, CBRE has brokered about $2 billion in en bloc deals this year, including the biggest deal this year, Pacific Mansion, at $980 million ($1,806 psf ppr) in March (Credit: CBRE)
To be sure, sites in the prime districts have seen more activity. So far, CBRE has brokered about $2 billion in en bloc deals this year, primarily in the prime districts, including the biggest deal this year, Pacific Mansion, at $980 million ($1,806 psf ppr) in March. The site was purchased by a JV between Singapore-listed Guoco- Land and subsidiaries of the privately held Hong Leong Holdings — Intrepid Investments and Hong Realty.
Up for sale in prime District 9 is the freehold Elizabeth Towers, with a reserve price of $610 million ($2,416 psf ppr). It is marketed by Knight Frank. Also on the market is Leonie Gardens, a 99-year leasehold condominium on Leonie Hill with a reserve price of $800 million ($2,104 psf ppr). Leonie Gardens is marketed by Huttons Asia. Launched for sale last month was Cairnhill Astoria in prime District 9, with a reserve price of $196 million ($1,964 psf ppr). According to marketing agent Colliers International, Cairnhill Astoria’s price of $1,964 psf ppr is inclusive of a development charge of $16.34 million.
Other developments in prime Districts 9 and 10 where owners are attempting a collective sale include High Point at Mount Elizabeth; 8 Orange Grove, located at the corner of Anderson Road and Orange Grove Road; and 27 Balmoral Park. These projects have appointed CBRE as the marketing agent and are in the process of gathering interest from 80% of the owners. “We’re in the melting pot,” says CBRE’s Lake.
Cairnhill Astoria in prime District 9 has a reserve price of $196 million, which translates to $1,964 psf ppr including development charge (Credit: Colliers International)
Orchard Bel-Air on Orchard Boulevard is also attempting a collective sale, with Savills Singapore as its marketing agent. “We expect to see more prime collective sale sites entering the market, and these should appeal to developers who see value in the prime and luxury residential segments as prices in Singapore are still substantially cheaper than other cities, such as Hong Kong,” says Lee Liat Yeang, senior partner in Dentons Rodyk’s real estate practice.
$1 bil en bloc sale within reach
With $9.4 billion worth of collective sale deals done in the first half of 2018, Lake believes the figure could exceed the $11.5 billion achieved in 2007, which was the peak of the last en bloc sale boom. “We could be looking at $15 billion this year,” he says.
While sites such as Park House, which are priced in the $300 million- to-$400 million range, remain “very palatable” to developers, sites priced in the $600 million-to-$800 million range tend to meet with some hesitation, adds Lake. It is possible for sites to cross the $1 billion mark, but they will take a little longer to secure buyers, as they required “two to three developers to come together to form a consortium”, adds Lake.
There will be sites, however, that “will struggle” to secure 80% consensus for a collective sale or to achieve their reserve price. “There’s an awareness that there are quite a lot of sites entering the market,” says Lake. “Good sites will still get multiple bids and, for various reasons, some may get no bids.”

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