Kuwait Outfit Snaps Up 97 Apartments In $818m Deal

Source : The Business Times, December 19, 2007

Purchase of units in GuocoLand's condo under development in Bukit Timah is biggest of its kind

Foreign institutional investors continue to bulk buy apartments in new residential developments in Singapore.

Money spinner: GuocoLand's pre-tax profit from the sale of the 97 units alone works out to around $500 million. The company bought the former Casa Rosita site in April 2006 for $280 million or $706 psf per plot ratio

The latest deal - and biggest such transaction to date - is Kuwait Finance House's $818.4 million purchase of 97 four-bedroom apartments in GuocoLand's freehold condo, Goodwood Residence. The property is being developed on the former Casa Rosita site.

The average unit price is understood to be slightly over $3,000 per square foot. This is a new high for the prime Bukit Timah area; it is about 25-30 per cent above the $2,500 psf average price that Sui Generis is fetching at nearby Balmoral Crescent.

At over $800 million, the deal is the 'single largest purchase of units in a Singapore residential project under construction', says GuocoLand group president and CEO Quek Chee Hoon.

Industry observers' back-of-the-envelope calculations show that GuocoLand's pre-tax profit from the sale of this first batch of 97 units alone works out to around $500 million.

The four-bedders bought by a fund managed by Kuwait Finance House (Malaysia) Berhad range from 2,500 sq ft to 3,900 sq ft, GuocoLand said.

The Singapore property arm of Malaysian tycoon Quek Leng Chan is likely to release the remaining 113 units in the 210-unit freehold condo for sale in the first quarter next year, depending on market conditions. The development includes apartments with two and three bedrooms, as well as penthouses.

The largest penthouse, a duplex unit of about 12,000 sq ft with a rooftop pool, is expected to go for nearly $40 million. The WOHA Architects-designed project also includes 15 cabana-styled apartments.

This is not KFH's first such investment in the Singapore property market. A few months ago, an Islamic real estate fund set up by KFH and the Malaysian government-owned Amanah Raya Berhad, picked up two blocks (with a total of 56 apartments) at Reflections at Keppel Bay for about $286 million.

Other recent foreign bulk purchases of apartments in new projects here include Macquarie Global Property Advisors's $136 million acquisition of 19 units at 8 Napier, at an average price of $3,550 psf.

A Spanish private-equity fund is believed to have bought 20 apartments at The Cascadia, further down Bukit Timah Road, at about $1,600 psf.

While Singapore developers and property consultants are cautious about prospects for high-end residential prices next year - most are expecting modest gains of up to 10 per cent, after a nearly 50 per cent spike this year - the outlook appears rosier to foreign investors, market watchers say.

'From the perspective of these foreign funds, they must place out monies they have raised. If they look at US, there are sub-prime and credit squeeze problems. Growth in Europe is slow. Frankly, they may not have a lot of options but to look to Asia,' the research head of a property fund management outfit said.

Also, Singapore appears an island of calm in a sea of turbulence, he said. 'It's relatively stable, will soon have the integrated resorts and F1 attractions, and the island has positioned itself as a wealth management hub - these are still important factors drawing foreign institutional money to Singapore property.'

Goodwood Residence, which will comprise two 12-storey blocks, is slated for completion in 2010.

The development has received the Building and Construction Authority's Green Mark Award (Platinum). Goodwood Residence will have more than 500 trees (including 58 preserved trees) planted in the estate. In addition, the development site shares a 150-metre-long boundary with the lush Goodwood Hill.

GuocoLand bought the former Casa Rosita site in April 2006 for $280 million or $706 psf per plot ratio.

Other upcoming Singapore condo projects by GuocoLand include Sophia Residence, with about 270 units, which the group plans to release around Q3 next year, and an upscale development on the Leedon Heights site that is slated for launch in 2009.

KFH is also co-sponsor - together with Singapore's Pacific Star Group - of the Baitak Asian Real Estate Fund, whose major investments include a stake in KL Pavilion, a mega development with luxury residential, mall, office and hotel components in the prime Bukit Bintang area of Kuala Lumpur.