Special Feature

In the shadow of d’Leedon

November 24, 2014 3:51 PM SGT

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SINGAPORE: The completion of the project, Singapore’s largest private condo so far, will have a major influence on the prices and rents in the Farrer Road neighbourhood. Given the scale and sheer number of units, will it imperil or uplift the value of properties in the area?

Artist and musician of America’s Got Talent fame William Close says he turns “entire architecture into [a musical] instrument”.

He has performed that feat at the Shanghai Grand Theatre in China, the Colosseum in Rome, the Space Needle observation tower in Seattle, Washington and even the Singapore National Museum in August.

Close has now set his sights on something on a more massive scale at d’Leedon, Singapore’s biggest private condominium.

With 16 strings extending up to 935ft from the rooftop of the clubhouse to the apex of one of the highrise towers, Close will turn the development into a giant harp.

And he will perform his ethereal Earth Harp Mini Symphony at the project’s completion party on the evening of Oct 25.

Close’s musical feat could temporarily dispel the gathering gloom in the property market even if it is for just one evening, and could provide an uplift to the sentiments of the owners of units at d’Leedon.

Among the 3,000 to 4,000 invited guests expected to attend the condo’s completion party, many are buyers of the units and some will also be residents.

The market’s concern is the total number of private residential units expected to be completed by yearend.

The figure is currently estimated at 17,082 units as at end-2Q2014, according to DTZ Research.

That figure excludes d’Leedon’s 1,715 units; if included, they would account for 10% of total new supply.

Next year will see close to 22,000 units completed, with another 23,876 units in 2016, according to Lee Lay Keng, DTZ’s regional head of research.

“The total number of units projected to be completed by year-end is around 20,000, which is the highest new completion figure on record, to be surpassed by only the numbers in 2015 and 2016,” says Donald Han, managing director of Chesterton Singapore.

Property agents and consultants are now speculating on the number of units that will resurface in the secondary market for sale and lease in the coming months.

This figure is likely to have a major impact on rents and prices in the area.

“My guess is that 30% to 40% of the buyers are owner-occupiers, which means close to 70% are investors.

So, we could see some of these units come up for lease and some for resale,” says Jacqueline Wong, senior director of residential leasing and ad hoc sales at Savills Singapore.

This could lead to “some stiff competition” among the individual owners within the development, especially for tenants, she adds.

The handover of the units in the project is expected to be carried out in phases, which Wong says will contain the deluge entering the market and limit the potential fallout.

‘Positive re-rating’ On the other hand, new developments, especially a landmark project such as d’Leedon, could be “a positive re-rating catalyst” in the neighbourhood, in terms of both pricing and rental levels, says Chesterton’s Han.

“Anyone driving past Farrer Road could not miss those towers, which are the tallest in the area, so it will not be difficult getting tenants to view the development.

It could have a positive effect in that area,” he adds.

D’Leedon is the largest private residential development in Singapore so far and the first high-rise residential project designed by world-renowned architect Zaha Hadid.

With Good Class Bungalows (GCBs) and mainly 12-storey condos in the vicinity, its seven “petal-like”, 36-storey towers are highly visible and instantly recognisable, says Wong Meng Kwan, CapitaLand Singapore’s senior manager of design management (residential), who has been involved in the project since 2008.

“Being the tallest in the area means they have the best views, even from the mid- and high-floor units,” says a property agent who declines to be named.

Besides its proximity to the Farrer Road MRT station, the project is also close to eateries and shops at Holland Village, Chip Bee Gardens and Dempsey Hill, within a short driving distance of the CBD and Orchard Road, as well as the Botanic Gardens, he adds.

Apart from the seven curvaceous high-rise towers, there are also 12 futuristic semi-detached villas that look out onto the GCB area.

D’Leedon sits on a sprawling 848,049 sq ft site and is a redevelopment of the former Farrer Court privatised HUDC estate.

The 618- unit Farrer Court was purchased en bloc by a CapitaLand-led consortium back in 2007 for $1.34 billion, and it is still the largest en bloc purchase, in terms of the number of units involved in the collective sale and the price tag.

The consortium partners are Capita Land, with the biggest stake of 35%; Hotel Properties Ltd (22.5%); a fund managed by Morgan Stanley Real Estate (22.5%); and Wachovia Development Corp, a unit of Wells Fargo & Co (20%).

“By virtue of the tapering of the towers as they meet the ground, they occupy only 22% of the site, thus freeing up more space for facilities and landscape,” says CapitaLand’s Wong.

Recreational facilities include two clubhouses, gyms and aqua gyms, a playground, a “maze garden”, a remote control car race track, a full-sized basketball court, two tennis courts and an outdoor exercise corner.

The facilities are clustered such that parents and grandparents can work out while keeping an eye on their children and grandchildren, he says.

Theatres for screening movies and reading rooms are also some of the facilities in the development.

The facilities, from the playground and outdoor gym to the theatre, were specifically designed for d’Leedon, and there is a subtle hint of Hadid’s favourite colour: purple.

Competitive pricing As at end-September, only 254 units (14.8%) in the project remained unsold.

The latest median price achieved was $1,712 psf.

“If you look at the number [of unsold units] on its own, it sounds rather large,” concedes Phylicia Ang, executive director of residential services at Savills Singapore.

“But if you were to compare it with the total number of units they have sold to date [1,461], the project has done very well.” D’Leedon previewed in November 2010, and the project sold more than 500 units in the first phase.

In November/ December 2012, the developer offered various packages with discounts of up to 10% for those who were either living or working nearby or whose children were attending schools in the vicinity.

After the seventh round of property cooling measures were introduced in January last year — including hikes in additional buyer’s stamp duty and a further reduction in borrowing limits for those buying their second or subsequent properties — the CapitaLand-led consortium made a bold move and within just days of the announcement, it launched a special promotion offering a discount of up to 15% to buyers of selected units.

Also in January that year, it sold 263 units at a median price of $1,406 psf, making it a top-selling project that month.

Now that the project is completed, expectations are that the developer will offer a special “completion discount” on units.

In an email in response to queries from City & Country, CapitaLand says, “We will be launching our CapitaLand Designer Series with another marketing campaign that will be announced at a later date.” The smallest units in d’Leedon are one-bedroom and one-bedroomplus- study units, measuring 592 to 840 sq ft.

There are also two-bedroom compact and two-bedroomplus- study units measuring 786 to 1,216 sq ft.

Meanwhile, three-bedroom and three-bedroom-plus-study units measure 1,076 to 1,873 sq ft.

Four-bedroom units measure 1,615 to 2,443 sq ft.

There are also “garden houses” spanning three levels, from the basement to the second level of the towers; they comprise four bedrooms, a private enclosed space including a garden and two basement parking spaces, and measure 3,703 to 6,534 sq ft.

Meanwhile, the penthouses include duplexes and triplexes measuring 2,852 to 6,265 sq ft, and almost all come with a private swimming pool and roof terrace.

The development has varied unit configurations, because of the curvature of the towers, as well as different levels of specifications.

For example, the “basic” units — typically the smaller one- and two-bedroom apartment types — will have ceramic tiles, Bosch kitchen appliances and laminated timber flooring in the bedrooms.

The “premium” units have compressed marble in the living and dining rooms, real timber flooring for the bedrooms, Miele kitchen appliances and Duravit sanitaryware, as well as a ceiling height of up to 3.5m.

A basic one-bedroom-plus-study unit on the 34th floor is priced from $1.6 million ($2,036 psf), whereas a premium 2,260 sq ft, four-bedroom unit on the 24th floor of another tower is on offer for $3.6 million ($1,593 psf).

“The pricing has always been reasonable and competitive in d’Leedon,” notes Savills’ Ang.

Besides the residential units, there are also eight commercial units, which will be leased to retail and F&B outlets to create a sense of vibrancy and community within the grounds.

There is also a covered walkway to the Farrer Road MRT station.

Rental pressure By virtue of the number of units, property consultants foresee some pricing and rental pressure at d’Leedon, and that is likely to affect condos in the vicinity.

“Today, the rental market is softening, owing to a combination of factors,” says Savills’ Wong.

“There’s more supply, fewer expatriate arrivals, more stringent criteria for employment pass application by the Ministry of Manpower, and expatriates’ housing budgets have also been cut.” The Farrer Road neighbourhood has many completed condos.

For example, there is The Levelz, Capita- Land’s freehold 126-unit private condo completed a decade ago.

The project is located on Farrer Road across from d’Leedon, and comprises mainly oneand two-bedroom units.

One-bedroom units of 797 sq ft were recently listed for sale at $1.33 million ($1,692 psf), while asking rents are around $3,800 a month.

Meanwhile, 1,001 sq ft, two-bedroom units are posting asking rents of $4,900 a month.

In the vicinity is Waterfall Gardens, a 132-unit high-end freehold condo by MCL Land, and completed in 2010.

The project comprises exclusively threeand four-bedroom apartments as well as penthouses.

Three-bedroom units of 1,830 sq ft recently achieved rents of $7,000 to $8,000 a month, notes Savills’ Wong.

Meanwhile, 2,196 sq ft, four-bedroom units have been leased for $9,000 to $10,000 a month, down from $12,000 previously, she adds.

Savills’ Wong reckons owners at d’Leedon may peg their one-bedroom units in the range of $3,000 to $4,000, with compact two-bedroom units possibly looking at asking rents of $3,800 to $4,500.

She expects owners of three- and four-bedroom units at d’Leedon to peg their asking rents closer to those at Waterfall Gardens.

“The reality now is that investors who had purchased their units several years ago and were projecting a rental yield of 5% to 7% will now have to lower their expectations, possibly closer to the 3%-to-4% range,” says a property agent who declines to be named.

Adjacent to d’Leedon is GuocoLand’s 381-unit Leedon Residence at Leedon Heights.

The freehold condo, designed by SCDA Architects, is pitched as a luxury condo.

As at end-September, 145 units had been sold, with the latest median price at $1,953 psf.

“Right from the start, Leedon Residence and d’Leedon had positioned themselves very differently,” says Savills’ Ang.

“So, the completion of d’Leedon, which is 99-year leasehold, should not affect the pricing of Leedon Residence, which is a freehold, luxury condo.”

Size matters Several 99-year leasehold condos with more than 1,000 units have been completed over the last five to six years.

The 1,111-unit The Sail at Marina Bay was completed in late 2008 and early 2009, when the global financial crisis hit.

The 1,129-unit Reflections at Keppel Bay was completed in early 2011, and the 1,040-unit The Interlace at Telok Blangah was completed at end-2013.

Incidentally, The Interlace is another project helmed by CapitaLand and Hotel Properties Ltd.

Another development that was completed in 4Q2013 was Kheng Leong Developments’ 1,145-unit The Minton, located in the neighbourhood of Hougang and Lorong Ah Soo.

D’Leedon’s number of units is still unsurpassed.

In the Farrer Road area, the development will have an edge over the others, as most tenants prefer brand-new projects, says Chesterton’s Han.

“There will be some competition among the individual landlords within d’Leedon to secure tenants,” he concedes.

However, CapitaLand’s attempt to create value through product differentiation with a landmark development by Hadid has definitely set a new benchmark in Singapore.

Its marketing efforts, such as a massive completion party with fireworks, laser show and an America’s Got Talent star, as well as its designer series show units may stem the general downward pressure on rents and prices.

Will market forces prevail in the long term? What will it mean for the project? “Whatever happens, it will be an interesting development to watch in the next three to six months,” says Savills’ Wong.

This article appeared in the Enterprise of Issue 649 (Oct 27) of The Edge Singapore.

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