EL Development has inked a deal to buy the freehold Diamond Tower at Jalan Rajah in the Balestier area for $49.6 million through a collective sale.
The price works out to a unit land price of about $652 per square foot of potential gross floor area inclusive of an estimated $300,000 development charge payable to the state.
Diamond Tower has a land area of about 27,323 sq ft and is zoned for residential use with a 2.8 plot ratio (ratio of maximum potential gross floor area to land area).
‘We intend to build an 18-20 storey apartment block with about 100 units, mostly one and two bedroom units but we’ll also have some three bedders,’ EL Development managing director Lim Yew Soon said when contacted by BT.
The breakeven cost for a new apartment development based on today’s construction costs works out to about $1,200 psf.
BT understands that EL Development may enter into a partnership with another party, said to be construction group Teambuild, for the site’s acquisition.
Diamond Tower’s collective sale was marketed by Urban Front Real Estate. It was offered through a tender exercise which closed last month without a deal being sealed.
‘We submitted our offer after that and are buying under a private treaty deal,’ Mr Lim said.
The proposed collective sale of Diamond Tower will be subject to approval from Strata Titles Board as its owners have not unanimously consented to the sale.
Developers have been hungry for land, following strong home sales over the past year.
Property consultants say that while the bigger developers with deep pockets are focusing on the Government Land Sales Programme to replenish their landbank, smaller and mid-sized players on smaller budgets are aggressively looking for land through private sources.
‘They are interested in smaller collective sale sites as well as redevelopment plots comprising a few landed homes. There are also investors/developers who may have bought land in the past and who are willing to divest now,’ says DTZ senior director, investment sales, Shaun Poh.
EL Development’s Mr Lim acknowledges that developers like him are ‘not that choosy location wise’ these days and that a more important criterion is to find sites with pricing that is ‘more acceptable’.
‘Districts like 9, 10, 11 and 15 are very popular but sites in these areas command very high price premiums; so we’ll consider even other districts.
‘For us, the site should be at least 20,000 sq ft and it should also be a regular shaped plot of land so we can build a project with a decent-sized swimming pool,’ he said.
Source: Business Times, 12 Apr 2010
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