Thursday, September 3, 2009

Marine Parade's Laguna Park For Sale At S$1.2b Reserve Price

Source : Channel NewsAsia, 02 September 2009

The Laguna Park estate in the Marine Parade area is up for collective sale, with an asking price of S$1.2 billion, according to its marketing agent Credo Real Estate.

Laguna Park, Marine Parade Road.

The owners of the current property stand to get between S$2.1 and S$2.3 million each for their apartments. Penthouse owners could get between S$3.5 and S$4.1 million.

This could potentially be Singapore's second billion-dollar en-bloc deal, after Farrer Court in 2007.

Laguna Park, a former HUDC estate, is now home to 528 units spanning a land area of 670,000 square feet.

If the en-bloc sale goes through, this parcel could eventually accommodate about 1,500 units with an average size of 1,200 square feet.

Credo said that it has already received enquiries from major developers and funds. The competition for the 99-year leasehold land parcel is expected to be keen - with the reserve price at $1.2 billion dollars.

"If we do not receive bids above the reserve price, there is still potential for us to sell the site through negotiations, by a private treaty. In the new law we have 10 weeks for that, but I seriously think we don't need that," said Tan Hong Boon, deputy managing director, Credo Real Estate.

The price tag translates to a land rate of some S$844 per square foot per plot ratio.

The successful bidder will also have to pay about S$400 million to top up the lease and a development charge.

More than 80 per cent of Laguna Park's owners have given their consent for the collective sale, Credo said.

According to analysts, the draw for Laguna Park is the size of the plot and its proximity to the sea, which will provide the future development with a good view.

"If you look at the quality of land in Singapore, Laguna Park has got one of the longest stretches of sea, with coastal views. It's about 400 to 500m of seafront view and it's also unblocked on the other side. Very rarely you get a plot of land with such spectacular views," said Christina Sim, director, Investment, Cushman & Wakefield.

Observers said the developers are likely to use the opportunity to replenish their land stocks.

"Since March-April onwards, the absorption rate in the real estate market has been phenomenal. The take up is probably over 10,000 units already this year. It looks like developer stocks are really drying up. And because there's a huge draw down on stocks, the developers balance sheets are reflecting a really fantastic cash flow. They would be in the market to look at land banking again," she added.

Analysts said that the break-even land cost is around S$1,250 per square foot, and the future units are likely to fetch prices higher than that.

The units at The Silversea, another private development in the vicinity, recently transacted for as much as S$1,750 per square foot.

As per the analysts, even if the sale for Laguna Park goes through by the year end - launches shouldn't be expected any time soon. That's because developers will be waiting till after the integrated resorts open in 2010, before launching units for what many analysts call - a jewel in their crown. - CNA/sc

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