SINGAPORE - Three Singapore developers are stepping up land banking via the collective sale market, with their latest tie-up being the acquisition of Park View Mansions in Yuan Ching Road for $260 million. 

 

Citing higher costs, construction delays due to labour shortage and supply disruptions, as well as macroeconomic uncertainties arising from the spike in inflation and interest rates, Chip Eng Seng told the Singapore Exchange on Thursday (July 28) that, for the Park View acquisition, it is " prudent to manage these risks by collaborating with suitable partners whenever possible" .

 

Singapore-listed Chip Eng Seng said its partners, KSH Holdings and SingHaiyi Group, are " familiar parties with whom it has forged good working relationships through past and ongoing development projects" .

 

They partnered in a number of high-profile deals last year, including the $650 million collective purchase of Peace Centre/Peace Mansion last December. Other partners in this deal include Ho Lee Group.

 

In May last year, the subsidiaries of Chip Eng Seng, SingHaiyi and Hong Kong-listed Chuan Holdings acquired Maxwell House for $276.8 million, and earlier this week, Euro-Asia Apartments in Serangoon Road was sold to a KSH indirect subsidiary for $222.18 million.

 

Developers may form joint ventures to pool resources and cut development costs, Cushman & Wakefield' s head of research Wong Xian Yang said.

 

Mr Tan Hong Boon, JLL executive director, Singapore capital markets, said the uptick in activity is a continuation of the collective sale cycle that started in 2020, but had been dampened by the December 2021 cooling measures.

 

Some developers are confident to re-enter the market now given the strong take-up of new launches including Piccadilly Grand, Liv@MB, and AMO Residence amid low unsold inventory, analysts say.

 

But Ms Tracy Goh, head of investment and collective sales at PropNex, noted that asking prices for some collective sale sites have increased, and it remains to be seen if developers will bite.

 

On Thursday, Chip Eng Seng announced that its unit CEL Development, together with Sing-Haiyi Pearl and TK 189 Development, were awarded the collective sale tender for the 160-unit, 99-year leasehold Park View Mansions. They intend to redevelop the site into a residential project with up to 440 units.

 

CEL' s stake in the joint venture is 40 per cent, while Sing-Haiyi Pearl and TK 189 have an interest of 30 per cent each.

 

Sing-Haiyi Pearl is equally owned by SingHaiyi Group and Haiyi Holdings, which are controlled by Singaporeans Gordon Tang and Celine Tang - who are also Chip Eng Seng controlling shareholders.

 

KSH unit Kim Seng Heng Realty owns 66.67 per cent of TK 189, while Ho Lee Group holds the remaining 33.3 per cent.

 

Park View' s previous collective sale attempt at $320 million failed in 2018.

 

Its $260 million sale price translates to a land rate of $1,023 per square foot per plot ratio (psf ppr), including the estimated differential premium and lease top-up to a fresh 99 years.

 

Located near Lakeside and Chinese Garden MRT stations, the development, which is within the Jurong Lake District, sits on a land area of 191,974 sq ft and is zoned for residential use with a gross plot ratio of 2.1. It can be redeveloped up to a gross floor area of 403,145 sq ft.

 

Mr Tan said he expects collective sale sites will continue to fill the gap " given the relatively low supply of residential sites from the Government Land Sales (GLS) programme" .

 

But collective sale sites that are overpriced may fail, he warned.

 

Mr Wong expects a majority of deals done this year to be for small- to medium-sized sites, with " some larger sites transacting successfully if the price is right" .

 

" It is unlikely to be a blockbuster year for en bloc deals because developers are cautious given the new property curbs and uncertain environment.

 

The year so far has seen 10 residential collective sale deals totalling $1.9 billion, a far cry from the 2017/2018 cycle which saw more than $10 billion in deals done, Mr Wong said.

 

While land banking will continue, collective sale activity could slow next year as unsold inventory levels rise, GLS supply continues to ramp up, and if demand slows in the face of an economic slowdown, he added.

Momentus Hotel Alexandra will reopen in 1Q 2023.

Chip Eng Seng Corp plans to refurbish its hotel at 323 Alexandra Road and upon completion of the exercise, rebrand the hotel as Momentus Hotel Alexandra.

Now known as Park Hotel Alexandra, the hotel is expected to reopen in the first quarter next year.

The refurbished hotel will have 443 keys and will have a new look for its rooms, lobby as well as food and beverage offerings.

The management of the hotel will be by Momentus Hospitality, a subsidiary of Chip Eng Seng.

&ldquo Given the expected uptrend in the global tourism and hospitality sector, Momentus Hotel Alexandra, which is owner operated, is well positioned to play a key role in the big reset of the hospitality sector,&rdquo says Angeline Tan, vice president of CES Hospitality.

Chip Eng Seng did not disclose the cost of the refurbishment and rebranding.

Chip Eng Seng shares closed on July 27 at 63 cents, up 2.46% for the day and 48.81% year to date.

 

PROPERTY developer Chip Eng Seng : C29 -1.55% is terminating its sale contracts with purchasers of units in 28 Lyall South Perth, a proposed mixed-use development in Western Australia by the group&rsquo s 70 per cent-owned joint venture (JV) subsidiary. 

 

Based on expressions of interest issued and sale contracts signed, about half of the residential units for the project have been sold since it was launched for sale in August 2020.

 

Construction of the project has yet to commence.

 

In a bourse filing on Thursday (Jul 21), the group said it has been unable to engage a builder to construct the project &ldquo on terms which are financially viable&rdquo , in light of rising construction costs in Western Australia due to supply chain disruptions brought about by the Covid-19 pandemic.

 

The situation has been further exacerbated by the ongoing Russia-Ukraine conflict while project financial costs have also risen significantly, said the group.

 

Chip Eng Seng has therefore decided to &ldquo allow the purchasers a timely exit&rdquo by terminating the sale contracts as the appropriate course of action.

 

Termination of the sale contracts involves returning purchasers their deposits in full, together with any bank interest accrued on the deposits.

 

&ldquo In view of the incremental execution and financial risks to complete the project and there being no visibility as to when the rising costs will retreat to more normal rates, the group and its JV partner have concluded that it is no longer feasible to continue with the project notwithstanding that sales of the units have been relatively encouraging,&rdquo it added.

 

The group said it intends to explore &ldquo other viable options&rdquo for the site together with its JV partner, Sirona Lyall Street.

 

Chip Eng Seng&rsquo s JV subsidiary acquired the site &ndash comprising 2 adjoining properties at 31 Labouchere Road and 24 Lyall Street &ndash back in 2017, with the group&rsquo s share of the consideration amounting to some S$7.6 million.

 

The adjoining properties have a total site area of 2,040 square metres. At the time of the acquisition, it housed 3 residential style buildings which were previously leased for commercial office purposes.

 

Together with Sirona Lyall Street, the group had planned to redevelop the site for a mixed-used development comprising residential apartments with a commercial podium.