A unit of Malaysian property developer Selangor Dredging has bought a prime freehold residential plot in the plush Orchard area.
Champsworth Development - 50 per cent owned by SDB International, a subsidiary of Selangor Dredging - paid $72 million for 1 Draycott Park. The sale price includes a development charge of about $15.3 million, translating to about $1,787 per sq ft per plot ratio, for the 17,442 sq ft site.
In a filing with Bursa Malaysia, the developer said it purchased the land via private treaty from Ms Seow Ai Ling and Mr Tang Wee Houe. Mr Tang is an architect.
The developer said it was considering building "exclusive mid-rise apartments" on the site, which now has a seven-storey block built in the 1990s, with eight apartments ranging from 860 sq ft to 6,200 sq ft. The site, zoned residential, can be redeveloped up to 36 storeys high.
The parcel is in the residential enclave of Claymore Hill and Ardmore Park, near the Tanglin Club and American Club. It is also within walking distance of Orchard Road.
The purchase will be 30 per cent paid for with internal funds and the rest with bank borrowings.
This is not the Malaysia-listed developer's first purchase here. It made headlines in December for buying a freehold site in Serangoon Road from National Aerated Water Company for $47 million.
Ms Suzie Mok, senior director of investment sales at Savills Singapore, who brokered the deal, said: "This transaction signals to the market the high-end non-landed residential segment has moved on to the next phase of price recovery."
The break-even price for the new development is expected to be between $2,700 and $2,800 psf, said Savills in a press release.
Mr Nicholas Mak, head of research and consultancy at real estate investment firm ZACD Group, said the price paid for the site was bullish, but did not signify an imminent price recovery for the high-end property segment.
"The price of the land may go up, which means the cost for this project will go up, but it does not mean that prices for the segment will increase," he said.
He noted that to be profitable, the developer would have to launch at prices of about $3,300 psf - at least 10 per cent above recent transacted prices in the area.
Foreigners make up about half of high-end property buyers here, and the 15 per cent additional buyers' stamp duty rate imposed on foreigners will continue to curb demand.
Property prices in the core central region have been falling. They fell 1.2 per cent over the course of last year, and posted a 0.4 per cent fall for the first quarter of this year.
Mr Mak forecast that high-end property prices will continue on a gentle slide for the rest of the year.