Knight Frank Singapore on Monday announced the launch of a new en bloc sales site at Farrer Road. The site, Sutton Place, is a freehold residential redevelopment site off Farrer Road. Knight Frank is also the sole marketing agent for the site, which has been put up for sale by tender.
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A five-storey development comprising 44 apartments, Sutton Place sits on a site area of 8,657.0 sqm (approximately 93,185 sq ft). The sales site is regular in shape and is elevated away from traffic, overlooking surrounding developments. Under the 2014 Master Plan, the site is zoned “Residential” with an allowable plot ratio of 1.6, and is not subject to a Pre-Application Feasibility Study (PASF). Subject to approval from the Urban Redevelopment Authority (URA), the site can be redeveloped into a new condominium with 198 apartment units, at an average size of 753 sq ft.
Sutton Place is within 500 metres from Farrer Road MRT station on the Circle Line and is well connected to other parts of Singapore via Farrer Road, the Ayer Rajah Expressway (AYE) and the Pan-Island Expressway (PIE).
The sales site is also a quick 10 to 15 minutes’ drive away to Orchard Road and the Central Business District.
With a strong locality, Sutton Place is conveniently situated in proximity to an array of amenities and food and beverage outlets within Holland Village, Chip Bee Gardens and Dempsey Hill. Better yet, the development is surrounded by popular schools, including Nanyang Primary School (within 1km radius), Raffles Girls’ Primary School, Nanyang Girls’ High School, The Chinese High School, Anglo-Chinese School (International), Hwa Chong Institution and National Junior College.
The reserve price for Sutton Place is S$268.0 million. Subject to confirmation from the relevant authorities, a development charge of approximately S$17.88 million is payable for the development of the property, translating to a land rate of approximately S$1,917 psf ppr.
Ian Loh, Executive Director and Head, Investment and Capital Markets, Knight Frank Singapore, says, “Residential developments along the Holland Road / Farrer Road stretch have long been sought after by home buyers due to its proximity to multiple amenities, as well as established educational institutions.
“URA’s recent tender award of the Holland Village mixed-use development Government Land Sales site will further add to the vibrancy of this location. Despite recent cooling measures, the price quantum is still palatable and the potential for less than 200 units is a low-risk acquisition to developers.”
The tender for Sutton Place will close on 6 September 2018, Thursday at 3 pm.
Knight Frank’s announcement of the launch of the en bloc sales site comes on the heels of the new property cooling measures.
The Government recently imposed an additional Additional Buyer’s Stamp Duty (ABSD) of 5% that is non-remittable under the Remission Rules (payable on the purchase price or market value, as applicable) for developers purchasing residential properties for housing development.
The Government said that being entities, developers will also be subject to the ABSD rate of 25% for entities. Developers may apply for remission of this 25% ABSD, subject to conditions (including completing and selling all units within the prescribed periods of 3 years or 5 years for non-licensed and licensed developers respectively). Details are provided under the Stamp Duties (Non-licensed Housing Developers) (Remission of ABSD) Rules and the Stamp Duties (Housing Developers) (Remission of ABSD) Rules.
This new 5% ABSD for developers is in addition to the 25% ABSD for all entities. This 5% ABSD will not be remitted, and is to be paid upfront upon purchase of residential property. Real estate market watchers have suggested that the en bloc sales market will be hot by the new property cooling measures.
JLL for example said: “The collective sales market will also be dampened as developers become wary of end-demand and are hurt by the 5 per cent non-remittable ABSD on land purchase.”
And CBRE added: “Property developers will be affected most from these changes on their land acquisition costs. Property developers will now have to pay 25 per cent on a land acquisition based on the land cost instead of the previous 15 per cent. Although this is remissible when the property developer manages to completely sell all the units in the development within five years, there is a new additional 5 per cent ABSD tax on the transaction price imposed where it will not be remissible.”
While DBS Analyst Derek Tan said: “We believe that we have seen the end of the current collective sale cycle. The revised ABSD rates (25 per cent ABSD and an additional 5 per cent non-remittable for collective sales) greatly increases the capital commitment for developers looking to land-bank further in a period of increased uncertainty in buying volumes and heightened supply entering the market in the coming two years. The immediate strategy for developers with upcoming launches will be to re-look their pricing and launch strategy. In the longer term, if sell-through rates do not follow through, the risk of potential write- off to land values will be a concern. However, this is not a base case scenario at this moment.”
Mr Richard Lai, group chief financial officer of property developer GuocoLand, said that upmarket condominiums, “the initial reaction of any investors, most of which will be foreigners, is that they will hold back, wait and see”. Adding: “The higher-end market products will have a different target market and, therefore, will have very different reactions than the more mass-market ones.”
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