Enbloc News: No takers for Pacific Mansion & Pearl Bank Apartments

By The Folks @PropTalk - November 11, 2011 3 Comments

The close of the tender for Pacific Mansion yesterday marked yet another collective sale ending with no firm offers in sight.

The Straits Times understands that the owners of Pacific Mansion’s 288 residential units and two commercial units will now be discussing options with interested parties.

The River Valley Close development was put up for sale last month with an indicative price for $990 million, or $2,008psf ppr – the second attempt at a collective sale.

In 2007, the owners had asked for $1.18 billion, or about $2,400psf ppr, in a high-profile collective sale that failed to attract bids matching the asking price from developers.

Pearl Bank Apartments in Outram, whose tender closed on Nov 3, has also found no takers.

The owners were asking for $725 million or $1,445psf ppr – lower than then $750 million it had asked for previously.

It is the fourth time the 99-year leasehold development has been put up for sale. Sources say it is not clear if the owners will be keen to take another stab at a collective sale.

Several developments put up for collective sale recently have reduced their initial asking prices.

Dunearn Gardens in Newton is now going for bids between $550 million and $561 million, a dip from its 2007 guide price of $578.5 million.

Mega collective-sale site Laguna Park in the east also lowered its reserve price from $1.33 billion set in May to $1.25 million.

Several other big collective-sale sites, such as Pine Grove, Tulip Garden and Hawaii Tower, have also failed to find buyers.

Such “mega sites” carry hefty price tags that sometimes surpass the billion-dollar mark, and often span a huge land area – two factors analysts say exclude all but a limited number of deep-pocketed developers.

“Forking out such a huge amount often means that developers will have to make sure they have enough cash, but they also have to find a bank that’s willing to help them finance that huge sum,” said Ku Swee Yong, chief executive of International Property Advisor.

He added that it is a big risk not many property players are willing to take, given the jittery economic climate.

“Development charges and sums to top up the lease have to be factored in as well. All these arrangements have to be made and there is a chance the Strata Titles Boards might not approve the sale in the end.”

The readily available supply of Government Land Sale (GLS) sites has also taken the shine off collective-sale properties.

Compared with such properties, buying a GLS site is a less complicated process, said Mr Alan Cheong, Savills’ research and consultancy associate director.

“Bidding for a GLS site means you compete with other developers, but with collective sales, you’re up against other developers and the owners of the property.”

Owners often cite the freehold status or prime location as desirable attributes of their properties.

But analysts point out that demand for properties in central locations such as District 9, 10 and 11 is weaker now, with most of the price growth in the current market led by mass-market segment, making collective sale projects in prime areas an even less attractive investment.

However, market experts said the smaller sites could still see interest, possibly from niche players and those new to the property development sector.
Source: The Straits Times

So two more (collective sales) bite the dust… again. Some may say that hindsight is always 20/20, but if you have followed our previous posts on the recent collective sales, you will appreciate why the wife and I are not a tad surprise by the outcomes of Pacific Mansion and Pearl Bank Apartments.

Given the current poor economic climate, one wonders why owners of developments that are asking for $200 million or more are still pushing their estates out for collective sales. The developers are certainly no fools, and unless one is a sucker for punishment, such en bloc attempts at this juncture are just setting themselves up for failure and disappointment.

Then again, the wife and I are no experts while these collective sales are managed by professional property marketers. So they should know better…


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