Residential project’s buyer believed to be a fund representing US, UK investors
In the latest en bloc sale of a new residential project, Fortune Development group is believed to have sold its entire M21 freehold apartment development at Mandalay Road to a group of overseas investors for around $100 million or an average $1,400 per square foot (psf).
Sub-sale plan: When completed in 2009, M21 will have 61 units. Market watchers reckon the new owner is probably planning to sell the apartments individually M21’s showflat was opened for a briefing for sales agents and a small party was held there on Aug 2, but before the weekend was out potential home buyers were told that the whole project had been sold, BT understands.
The buyer is believed to be a fund representing US and UK investors. Savills, the project’s sole marketing agent, declined to comment on the deal when contacted by BT.
The M21 development will be 17 storeys high when it is completed around late-2009 and will have a total of 61 units. These comprise one, two, three and four bedders - all with study rooms/family rooms - and three penthouses.
Market watchers reckon the new owner is probably planning to sell the apartments individually in the sub-sale market to ride on the current firm market.
BT understands that in May, Novena Capital (whose shareholders include Fission Development) sold all 24 freehold apartments in its Novelis project at Sinaran Drive near Novena MRT to a Middle Eastern-registered company, for about $25 million or $1,500 psf on average. And the Middle Eastern party is offering the units for sale at about $1,650-$1,700 psf in the sub-sale market. It is understood to have sold four units so far.
Last week, Keppel Corp and Keppel Land sold two villa apartment blocks in their Reflections at Keppel Bay condo to the Al-Nibras Islamic Real Estate Fund - a joint venture between Kuwait Finance House and Amanah Raya Berhad - for about $286 million. The 56 waterfront homes in the two blocks were believed to have been sold for $2,000-$2,500 psf.
Market watchers note that bulk purchases of apartments by investors have been gathering pace this year, with a view to selling the units for a quick gain and/or renting out the units (particularly for completed developments).
In June, seven units at the completed JC Draycott were sold at one go, for $1,825 psf. In late March, Thai tycoon Charoen Sirivadhanabhakdi bought 47 of the 48 apartments at Hoi Hup’s Suites @ Cairnhill for $205 million or about $2,550 psf.
Individuals shopping for homes may be miffed if they are denied a chance to buy a unit in a new project directly from a developer because the developer has sold a whole stack of units or even the whole project to bulk buyers. Such individual buyers may then have to buy their dream homes in these projects from these bulk purchasers in the subsale market - at higher prices.
However, market watchers say that from the developers’ standpoint, the appeal of bulk purchases is that they reduce the risks to developers if an investor is willing to take a chunk of units in a project.
In addition, with the current buoyant property market, developers don’t have to give any extra discount to bulk buyers. ‘From a developer’s viewpoint, it makes no difference whether they sell 50 units to 50 individual buyers or one buyer. The price is the same these days. The bulk buyer, or en bloc buyer, must accept the fact that because of the state of the market, it is difficult to get discounts on bulk purchases,’ explains CB Richard Ellis executive director (residential) Joseph Tan.
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