IT WILL be a closely-watched collective sale, not least because of its jaw-dropping $1.2 billion reserve price tag.
Despite the tough economic climate, Laguna Park residents, who stand to collect between $2.1 million and $4.1 million per unit, are hoping a developer or a consortium will snap up their massive 677,493 sq ft estate with its hot seafront location.
And waiting to see whether they succeed are other estates that could be en bloc candidates too - especially Lagoon View next door, which last month managed to gather enough votes to privatise the HUDC estate.
"Some of my neighbours have started to fantasise, and they agreed to privatisation because they have a dream figure, that each household could get $2 million," said retiree and Lagoon View resident John Tan.
But getting a buyer to bite the bait dangled by Laguna Park, a former HUDC development, will be a challenge, said analysts.
The obvious hurdle is the price, which is second only to another ex-HUDC estate, Farrer Court, which was sold for $1.3388 billion in June 2007 at the height of the en bloc frenzy.
"Given the credit situation, the banks are still tight on financing so it really depends on the credibility of developers to get the loan," said Jones Lang LaSalle local director of investments, Stella Hoh.
Any interested developers would have to undertake the sale through a consortium: The $1.2 billion asking price is higher than the market capitalisation of many individual developers, noted Ngee Ann Polytechnic real estate lecturer Nicholas Mak.
The 838,488 sq ft Farrer Court, for example, was bought by CapitaLand with three other partners.
According to marketing agent Credo Real Estate, Laguna Park's price tag reflects a land rate of around $844 psf per plot ratio, after including costs of around $400 million to up the plot ratio and to top up the lease to a fresh 99-year term.
This means the total cost to developers could be a whopping $1.6 billion.
"At $844 psf/pr, the successful purchaser may work toward breaking even at around $1,200 to 1,250 psf, with a view to pricing the new units at $1,400 to $1,600 psf," said Credo's deputy managing director Tan Hong Boon.
How does that compare to current prices of apartments in the area? According to Urban Redevelopment Authority data, new development Parc Seabreeze (which features some sea view apartments) transacted at $1,193 to $1,520 psf in July. Units at Silversea, also at Marine Parade, were sold at $1,150 to $1,746 psf.
There could also be competitive pressure from other older seafront developments nearby, such as Bayshore Park, Mandarin Gardens and Lagoon View, which have the potential to go en bloc.
But perhaps Credo has no real option but to put out Laguna Park on the market now when sentiments are positive, said Mr Mak. With en bloc consent obtained last December, Credo has to get a buyer within a year of the mandate under the current collective sale rules.
Credo's Mr Tan said the company is "quite positive" about Laguna Park's sale as it has been receiving enquiries from developers.
The market, meanwhile, is waiting with bated breath. This year has not yet seen a successful en bloc sale. Dragon Mansion, with an asking price of $120 million, was put up for tender in July but there has been no news since the exercise closed on Aug 11.
"If Laguna Park succeeds in getting the reserve price of $1.2 billion, it will lift sentiments in the entire market," said PropNex's investment sale and commercial head Charles Chua.
Meanwhile, Laguna Park residents seem prepared that an en bloc sale will take place, though not all are happy about it. The lead-up to the vote had involved acrimony and even incidents of vandalism.
"We did vote to go en bloc ... because the market was going down," said one resident in her 60s who declined to be named.
Source: Today, 3 Sep 2009
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