Teck Guan Ville's collective sale to Tee Land called off after new cooling measures

Property developer Tee Land has decided not to exercise its option to purchase Teck Guan Ville in what was originally a $60 million collective sale.
Property developer Tee Land has decided not to exercise its option to purchase Teck Guan Ville in what was originally a $60 million collective sale. PHOTO: GOOGLE MAPS

The recent property cooling measures are having an impact on selling en bloc with property developer Tee Land deciding not to exercise its option to purchase Teck Guan Ville in what was originally a $60 million collective sale.

Tee Land will forfeit its 1 per cent deposit. In its Singapore Exchange announcement yesterday evening, Tee Land cited the "impact on market sentiment and purchasers' interest" following the Government's announcement on July 5.

It "has decided to adopt a more prudent and circumspect approach towards new projects in the meantime, pending clarity on the industry outlook", it added.

Tee Land had announced on June 28 that it had entered an option-to-purchase agreement to acquire the freehold, 3,928.8 sq m plot located at 338 to 364 Upper East Coast Road.

In its June announcement, it had said the purchase was to have been financed by internal funds and bank borrowings, and was not expected to have any material impact on the group's net tangible assets or earnings per share for the financial year ending May 31, 2019.

Last year, Tee Land scooped up the freehold Casa Contendere at 35 Gilstead Road through a collective sale for $72 million and a strata development comprising six townhouses along Seraya Crescent off Upper Thomson Road through a collective sale at $25.74 million.

COMMERCIAL SECTOR'S APPEAL

The commercial sector now looks relatively more appealing to developers and investors since it is unaffected by the new ABSD cooling measures, which affects mainly residential properties. Furthermore, foreigners and overseas investors would not be subject to ABSD on commercial properties, and the loan-to-value limits also remain unchanged.

 HUTTONS ASIA'S DEPUTY HEAD OF INVESTMENT SALES ANGELA LIM

In another example of the property cooling measures weighing on the market, Katong Plaza and Fortune Park became the latest collective sale hopefuls to extend their tender closing dates to Sept 11 and Sept 14 respectively.

Huttons Asia, which acts as the property consultant for both freehold projects, announced the extensions yesterday. It said the decision was made in consultation with each collective sale committee. The cooling measures which kicked in on July 6 include higher additional buyer's stamp duty (ABSD) rates and tighter loan-to-value limits.

Huttons Asia's deputy head of investment sales Angela Lim said: "The commercial sector now looks relatively more appealing to developers and investors since it is unaffected by the new ABSD cooling measures, which affects mainly residential properties. Furthermore, foreigners and overseas investors would not be subject to ABSD on commercial properties, and the loan-to-value limits also remain unchanged."

Katong Plaza, zoned as a mixed-use site for commercial and residential use under the Urban Redevelopment Authority's Master Plan, has seen close to 90 per cent of owners agreeing to the collective sale, with an asking price of $188 million or $1,969 psf ppr (per square foot per plot ratio). It was launched for sale on June 7.

Ms Lim said: "A mixed-use project like Katong Plaza allows developers to diversify their risk - the developer could choose to retain a portion of the commercial space for an anchor tenant, while selling the remaining strata commercial units to retail investors. There is also very low risk for the residential portion of the new development, as it can yield approximately 80 units based on an average unit size of 70 sq m."

A version of this article appeared in the print edition of The Straits Times on July 27, 2018, with the headline 'Teck Guan Ville's collective sale to Tee Land called off'. Print Edition | Subscribe