SINGAPORE - Chuan Park’s $890 million collective sale – one of the biggest deals for this current cycle – will move ahead after the High Court ruled that the sale was made in good faith.

Friday’s ruling comes ahead of the July 5 contractual deadline under the sale and purchase agreement for majority consenting owners of the 446-unit condominium to obtain the order for sale to move ahead.

This is potentially the biggest residential collective sale deal since that of Tulip Garden in Farrer Road for $906.9 million in January 2019. It also surpasses the $815 million sale of two freehold development land parcels in Thiam Siew Avenue to a Hoi Hup Realty-Sunway Developments joint venture in November 2021.

Justice Kwek Mean Luck, in a judgment issued on Friday, found that as at July 5, 2022, 342 units with a total share value of 1,409 shares (80.93 per cent) and total strata area (80.11 per cent) had consented to the collective sale of the 99-year leasehold condo in Lorong Chuan at $890 million.

The 80 per cent requirement set out in Section 84A(1)(b) of the Land Titles (Strata) Act has been met, the judge said.

Mr Norman Ho, senior partner, corporate real estate at Rajah & Tann, said it is “important for the majority sellers to get the order for sale by July 5, otherwise the contractual deadline is breached and the developers can walk away from the purchase”.

“Chuan Park sellers should be celebrating because the en bloc market is going to get more challenging, given that en bloc premiums (the difference between the open market resale price and the en bloc sale price) have shrunk to as low as 30 per cent and the cost of a replacement property is higher,” added Mr Ho.

In Friday’s 56-page ruling, Justice Kwek found that the defendants failed to provide any credible evidence to show the collective sale committee (CSC) did not act in good faith in arriving at the sale price of $890 million.

Chuan Park’s CSC, which represents the majority owners, applied to the High Court to seek approval for the sale after the Strata Titles Board in December 2022 issued a stop order following three rounds of mediation which failed and after a group of six minority owners did not withdraw their objections to the transaction, according to The Business Times (BT).

Between August and September 2022, some dissenting owners had filed their objections to the Strata Titles Board.

They alleged that Chuan Park’s CSC and marketing agent ERA Realty failed to disclose material facts relating to a higher development baseline for the condominium – which translates into a “deep discount” for the buyers – among other issues, BT reported.

The dissenters claimed in BT’s report that Chuan Park owners were told that the 37,215.6 sq m site’s plot ratio is 2.1, which translates to a maximum gross floor area (GFA) of 78,152.76 sq m.

But a 2017 letter from the Urban Redevelopment Authority (URA) showed that a development charge for the site kicks in for development above the maximum GFA of 89,824 sq m, that is, a baseline of 2.4, according to BT.

Had the baseline ratio of 2.4 instead of 2.1 been used in the valuation, that would mean the buyer can build an additional 11,671 sq m of built-up area, which can then be sold for higher profits, the dissenters claimed. This would have affected the owners’ decision on whether to support the collective sale at $890 million, according to BT.

But the judge found “the defendants have not produced any evidence or calculation that suggests why the actual GFA of Chuan Park may be higher than the plot ratio of 2.1”.

“Moreover, the URA had expressly informed the CSC twice... that the proposed redevelopment of Chuan Park would be guided by the current Master Plan plot ratio of 2.1,” said the judge.

Other objections to the sale included claims that the 80 per cent mandate had not been met.

The dissenters alleged that this sale price was not arrived at in good faith because the CSC did not ensure that a pre-application feasibility study (PAFS) was carried out, had relied on a valuation report that was based on an incorrect GFA, and did not take steps to verify the GFA of Chuan Park.

But the judge found that “it is not clear that doing a PAFS would have immediately increased the marketability of Chuan Park”.

“The defendants have not shown that the sale price of $890 million was not the best price reasonably obtainable in the circumstances because the CSC did not ensure that a PAFS was carried out,” he ruled.

Chuan Park was sold on July 5, 2022, to buyers related to developers Kingsford Group and MCC Singapore.

Owners of the 444 homes stand to receive gross proceeds of about $1.16 million for a 710 sq ft unit, and up to $2.53 million for a 2,045 sq ft unit. Of the two commercial units, the 474 sq ft unit will receive $1.09 million, and the 1,238 sq ft unit, $2 million.

Mr Marcus Chu, chief executive of ERA Asia Pacific, said: “Given the scale of this project, it was not an easy en bloc sale.”

Kingsford and MCC said Chuan Park will be redeveloped into “a new-concept residential project in District 19”.