Pine Grove condominium in Singapore launches fourth collective sale attempt at S$1.95 billion reserve price

SINGAPORE: Pine Grove condominium will be put up for collective sale again via public tender, setting a reserve price of S$1.95 billion.

This 660-unit former HUDC estate, located in Ulu Pandan and possessing 60 years left on its 99-year leasehold, had previously been offered for sale in 2019 at S$1.86 billion.

This marks the fourth collective sale effort by Pine Grove since 2008, and it has achieved 80 per cent consensus for sale on three occasions.

If successful, owners of 1,163 sq ft units could receive approximately S$2.39 million in gross proceeds, while those with 1,934 sq ft homes might secure S$3.2 million, according to ERA Realty Network, the marketing agent.

With a land rate of S$1.95 billion, the per sq ft per plot ratio stands at S$1,434, factoring in a 10 per cent bonus gross floor area from various incentive schemes.

This rate also accounts for an estimated land betterment charge (LBC) of approximately S$1 billion for intensification and a lease upgrade to a fresh 99-year lease.

Developers pay the LBC for the right to enhance site use or construct larger projects.

Details of the Pine Grove condo (Source: EdgeProp)

The site spans 893,218 sq ft with a gross plot ratio of 2.1, permitting redevelopment into a residential project with up to 2,050 new units, subject to planning approval.

Key insights from Pine Grove’s collective sale and GLS outcome

Mr Tay Liam Hiap, ERA’s managing director of investment sales, noted, “Pine Grove is the largest residential site, both in terms of land size and price quantum, to be launched for sale (en bloc) this year.”

He added that the launch occurred because there’s a year from achieving the 80 per cent consensus to find a buyer and apply to the Strata Titles Board for a sale order.

Due to the more favourable than anticipated outcome of the government land sale (GLS) for Parcel A at Pine Grove, owners are optimistic about achieving better results.

In June 2022, a partnership between UOL Group and Singapore Land Group secured the top position by bidding S$671.5 million, equivalent to S$1,318 per square foot per plot ratio (psf ppr) for the GLS plot.

The plot attracted five bids, leading analysts to describe it as one of the most competitive races at that time.

Developers face elevated development risks from higher construction costs, economic uncertainty, and cooling measures, according to Mr Wong Xian Yang, head of research for Singapore and South-east Asia at Cushman & Wakefield.

“The en bloc market also faces competition from the GLS programme. The Government has ramped up the supply of GLS sites to cool prices and may continue to do so. Some developers prefer to acquire GLS land as the process is more straightforward,” he said.

Cushman reported that from January to August 2023, only three en bloc projects valued at over S$665.2 million were sold, compared to 11 projects worth S$1.87 billion in the same period in 2022.

Mr Wong attributed this to a gap between buyer and seller expectations and developers’ caution due to high replacement costs.

“The gap between buyers and sellers continues to weigh on the overall en bloc market. Developers are cautious on bids, while sellers’ expectations have remained steady as replacement costs are high,” Mr Wong said.

A Knight Frank report from April 2023 indicated that only one-third of collective sales have succeeded in the current cycle, down from 60 per cent in the 2017-2018 boom cycle, as developers become more cautious in the face of increased risks and compressed profit margins.

The most recent successful residential en bloc deal involved the sale of Kew Lodge, a freehold landed residential site in District 11, to Woh Hup subsidiary Aurum Land for $66.8 million.

Pine Grove, one of the first two HUDC estates to be privatised in 1996, stands out for its substantial land size, ranking second among 18 former HUDC estates developed between 1974 and 1987.

Ku Swee Yong, Director of International Property Advisor Pte Ltd, commented, “Which developer will take this risk given that (a) it takes at least close to a year to clear Strata Titles Board and complete the sale, (b) interest rates for property development will remain high at 4%, (c) increased GST next year adding to construction n material costs, (d) GLS bid prices have been trending down. Even if there were developers keen on such giant sized parcels of land, their bankers might find this too risky in the current environment.”

The tender for Pine Grove is set to close at 3 pm on 29 November 2023.