Thursday, May 6, 2010

$38m price for 2 adjacent bungalows in Meyer area

Buyer likely to build apartment block on the 24,002 sq ft freehold plot

TWO adjacent bungalows in Margate Road off Meyer Road are said to have been sold for a total of $38 million.

The buyer is understood to be a low-profile boutique property investor that is likely to build a block of apartments on the combined freehold site of 24,002 sq ft. The plot can accommodate up to a 24-storey development of 55-60 apartments averaging about 850 sq ft.

The $38 million translates to a land price of $1,023 per sq ft of potential gross area including an estimated development charge (DC) of $13.6 million. This is close to the $1,047 psf per plot ratio (psf ppr) including DC that is said to have been paid for neighbouring 10, Margate Road in late 2007.

Soilbuild Group Holdings, which bought that property, later amalgamated it with the adjacent Margate Mansions to form an enlarged plot it is now redeveloping into Meier Suites. Soilbuild's land cost for the entire site was reported as $987 psf ppr.

Market watchers point out that the $1,023 psf ppr land price for the latest transaction, which involves 6 and 8, Margate Road, is close to what Chip Eng Seng paid recently - slightly over $1,000 psf ppr - for 16 freehold terrace houses in Fort Road.

However, that purchase is still subject to obtaining outline planning permission for a new development, as well as approval from the authorities to buy some state land for amalgamation with the property.

Cushman & Wakefield brokered the sale of 6 and 8 Margate Road through an expression-of-interest exercise that is said to have drawn more than five bids. The bungalows are being sold to the highest bidder.

No 8 Margate Road is being sold by Bian Guan Realty, while No 6 is being sold by the Estate of Tan Lai Choon.

The site is zoned for residential use with a 2.1 plot ratio - the ratio of maximum potential gross floor area to land area.

Assuming the new owner uses the balcony allowance of an additional 10 per cent gross floor area, the unit land price would be lowered to $954 psf ppr. Based on this, the breakeven cost for a new apartment project could be around $1,500 psf, analysts say.

Next door, Soilbuild sold units at Meier Suites, which comprises three and four-bedroom apartments, at prices ranging from $1,200 to $1,549 psf in February and March, according to monthly developer sales stats released by the Urban Redevelopment Authority.

In a separate transaction, a consortium said to include Soilbuild is said to have recently signed a deal to buy 23, New Industrial Road for $24 million. The freehold site houses an old industrial building that is likely to be redeveloped.

Source: Business Times, 6 May 2010

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