CNA Report: Pine Grove en bloc status

By The Folks @PropTalk - May 9, 2011 No Comments

Three weeks after the close of a tender, Pine Grove condominium is still waiting for a bid.

The site's reserve price of $1.7 billion appears to be out of reach of potential buyers.

Analysts say a reserve price of around $1.275 billion may reflect current market demand.

Pine Grove's marketing agent Jones Lang LaSalle has kept quiet about the outcome of its tender.

However, Channel NewsAsia understands that Pine Grove, which has an independent valuation of $1.25 billion, has received at least one private offer.

Christina Sim, director of investment, Cushman & Wakefield, said: "A more realistic price would be some 20 to 25 percent below the $1.7 billion mark. The agents still have a good ten-week period to negotiate any private treaty sale from the date of the close of the tender."

According to analysts, $1.275 to $1.36 billion is a more realistic price for Pine Grove. But that will translate to smaller gains for residents.

Pine Grove has 660 units, ranging from 1,163sqft to 1,938sqft each.

Based on a reserve price of $1.275 billion, residents will receive from $1.57 million to $2.06 million, depending on the size of their unit. This is 25% lower than what they would have received at the original reserve price of $1.7 billion.

Analysts say residents of the 27-year-old property should go ahead with a lower offer.

Ms Sim said: "We must remember that Pine Grove is a 99-year leasehold property. And as time goes by, the property keeps depreciating. So right now, it actually makes a lot of economic sense for them to cash out."

Analysts expect Pine Grove be transformed into a mid- to high-end residential development.

But demand for mid- to high-end projects, which are commonly found in the central regions, remain muted.

Colin Tan, head of research & consultancy, Chesterton Suntec International, said: "For developers going for this niche market, there is this need to build their land banks.

"The question is how soon do they see the recovery or rather the take-off for this high-end sector again. It has taken off in 2007. Since then, it has cooled down and is slow in the recovery."

According to Urban Redevelopment Authority data, home prices in the central region grew 0.1 per cent this quarter, slower than the 2.5 per cent for suburban areas.
Source: Channel News Asia

So the million dollar question is: will the owners "bite" at the lower en bloc price?


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