Chuan Park – A developer’s S$1.0 billion vote of confidence on Singapore property
- Media reported that Chuan Park condominium (District 19) received an offer of S$890m from a developer, 5% below reserve price of S$938m
- If accepted, this en-bloc will be 2nd billion dollar residential land purchase of 2022, after Dunman Road GLS
- Estimated breakeven for the site to be S$2,050 – S$2,150 psf, launch price could hit S$2,500 psf, a new high for D19.
- Property market transactions taper momentarily in Jun’22, upcoming new launches (AMO residences, Lentor Modern) to drive sales in the near term.
- Maintain our full year primary sales to remain c.8,000 – c. 8,500 units.
What has happened
Singapore’s largest en-bloc underway.
Chuan Park, a 444 unit, 99-LH condominium development located in District 19 has received a $890m offer from a developer, 5% below its original price tag of S$938m. Owners of Chuan Park has previously attempted the sale of the development back in Oct’21 / April’22 at an asking price of S$938m but the tender closed without a bid. Based on media reports, we understand that the offer was an improved one from an original S$860m from the developer that was received during the 10-week private treaty period. It was rumoured that the interested developer is a joint-venture between Kingsford and MCC, which has recently sold out the 1,862-unit Normanton Park within a sale period of 18-months.
A potential 900-unit development next to Lorong Chuan MRT station.
Chuan Park was completed back in 1985 and located next to Lorong Chuan MRT station on the circle line, Chuan Park has 444 condominium units and two strata commercial units. Sitting on a 400,588 sqft site with a plot ratio of 2.1. Under the URA master plan, the site can be redeveloped into a new 900-unit development with a total GFA of c.841,236 sqft. Assuming the S$890m sale goes through and taking into account the reported S$192m for the lease top up for the site, the developer will commit close to S$1.0 billion for this site. We estimate that the all-in land rate will be close to c.S$1,287psf (or c.S$1,200 psf taking into account 7% GFA bonus) and the breakeven for the site to be close to c.S$2,050 – S$2,150 psf, meaning that launch prices could hit close to S$2,400 – S$2,500 psf when launched.
En-bloc momentum re-starting despite economic headwinds. Given substantially sold inventories and an overall unsold units of c.16,000 (1Q22), the residential market remains in a “tight situation” given absorption rate of <2.0 years. As such, despite macro uncertainties and the hike in mortgage rates, we have seen developers continue to be actively land-banking with the en-bloc space an avenue to add selectively given the limited available sites in the government land sales (“GLS”). If Chuan Park is sold, this will represent 2022 largest en-bloc sale with more enbloc sites tenders to be closing in the coming month.
Primary market transactions saw a momentary decline in June’22. Due to a dearth of new launches, developers sold 488 units (496 include executive condominiums) in June’22, representing one of the slowest month since May’20. That said, we expect momentum to pick-up on the back of new planned launches in the coming months (AMO residences and Lentor Modern ) but expect 2H22 to be a weaker half compared to close to c.4,500 transacted in the primary market in 1H22, held back by higher mortgage costs which have in recent times increased towards 3.0% (vs close to c.1.2%-1.3% as the start of the year). We maintain that the full year primary sales of 8,000 – 8,500 units.