A LACKLUSTRE property market is not deterring residents of Spring Grove condominium in upscale Grange Road from making an attempt at a collective sale with a record $1.39 billion price tag.
If successful, it would become the largest such deal concluded here, surpassing CapitaLand's purchase of the former Farrer Court for $1.34 billion in 2007.
The sale is unusual because the owner of the freehold title is the United States government.
The property includes a conserved Victorian-style bungalow within the compound, the former residence of the US ambassador.
Ownership returns to the US government once the lease is up. In most cases, the Singapore Government holds the underlying freehold title for leasehold land.
The sale committee of the 99-year leasehold property, with about 75 years left, got the green light after securing the requisite 80 per cent consent from owners in March.
The 263,513 sq ft development comprises three 20 storey blocks, with 325 units.
Owners are expected to receive proceeds of $2.6 million to $6.9 million each, said Mr Ian Loh, head of investment and capital markets at Knight Frank, who is the broker.
This translates to about $2,600 per sq ft (psf), while units have sold for about $2,800 psf at the 99-year leasehold Twin Peaks down the road.
It is the largest residential project in Grange Road, said Mr Loh, with a maximum permissible gross floor area of 553,377 sq ft based on a plot ratio of 2.1.
Mr Joseph Chia, chairman of Spring Grove's collective sale committee, said the asking price "did start lower" but the effort gained traction among owners only as the price was raised.
"It's clear to us that it is challenging in this market, but this is something we will go with given that we've decided to do it collectively," said Mr Chia.
Spring Grove's asking price includes the costs required to top up its lease to 103 years, which works out to a land price of $2,512 psf per plot ratio (ppr).
Top-up costs would be paid to the US government.
The break-even cost for the redeveloped project is set to be $3,400 to $3,500 psf, said Mr Loh.
Consultants said the large price tag and high break-even price could be a drawback, although developers would take interest in the site's prime location.
Although foreign developers may have the appetite for large sites, local developers have also secured plots in record-breaking deals.
But Century 21 chief executive Ku Swee Yong said foreign players might consider projects that are being built but have not been sold.
"This way, they can also avoid the long process of buying sites through collective sale."
This article was first published on July 17, 2014.
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