Logan Property Pays $462M to Snatch Up Second SG Project This Year

China’s Logan Property has bought up the Florence Regency complex in Singapore for S$629 million ($462 million) with the hopes of redeveloping the 389,236 square foot (36,161 square metre) site into as many as 1,446 homes, according to a statement last week by the company.

The deal marks Logan Property’s second project in Singapore, after the Shenzhen-based developer teamed up with another mainland builder to purchase a residential site on Stirling Road for the record-breaking price of S$1 billion this past May.

Logan’s offer broke a stalemate between the complex’s current owners who were marketing the site through a collective sale, and a group of potential bidders who had previously balked at the asking price for the 336-unit development in northeastern Singapore.

Bid Equivalent to S$842 Per Square Foot

For its second Singapore property, Logan is acquiring the right to develop just under 1.1 million square feet (about 101,251 square metres) of homes in Singapore’s Hougang area. “Florence Regency is one of the last few privatized HUDC in the North East region,” noted JLL regional director Tan Hong Boon in a statement, referring to the complex originally having been developed by Singapore’s Housing and Urban Development Company.

The price the developer is paying equates to around S$842 ($618.5) per square foot of buildable area, after factoring in the S$288.6 million ($212 million) payable to the government to refresh the lease to 99 years and develop the site to a gross plot ratio of 2.8.

Chinese Developer Breaks Standoff over Site Price

Logan Property’s offer came after a public tender for the site that closed on September 27 attracted three bids, only one of which exceeded the reserve (minimum) price of S$600 million ($440.7 million). All the bids fell short of the S$629 million independent valuation by Colliers International, prompting the owners to court other bidders, as the collective sale agreement required the sale price to be no lower than the valuation.

Following the tender, property consultancy JLL marketed the site under private treaty with a December 5 deadline to complete the sale. The three bidders, which reportedly included transplanted mainland builder Kingsford Development, were unwilling to raise their offers.

Thanks to Logan Property, the owners are expected to receive sale proceeds of S$1.84 ($1.35) to S$1.89 ($1.39) million per unit, according to a statement by JLL. The former Housing and Urban Development Company (HUDC) estate is located at Hougang Avenue 2 in northeast Singapore. The site is nearby the Hougang MRT station and the bus interchange with Hougang Mall, and within walking distance of Upper Serangoon Road.

The prospect of housing oversupply in the neighbourhood added to the previous bidders’ reluctance to cough up the asking price for Florence Regency. The collective sale of the nearby Rio Casa at Hougang Avenue 7 for S$575 million ($415.3 million) this past May was followed by the en bloc sale of Serangoon Ville at Serangoon North Avenue 1 for $499 million in July. Including the public tender of a private residential site at Serangoon North Avenue 1, the three sales are expected to bring more than 3,000 units to the market.

The Florence Regency transaction marks the 16th major collective sale in Singapore this year, bringing the total deal volume to over S$6.5 billion ($4.77 billion). Property consultancy Colliers expects the en bloc sale wave to intensify further with another 50 to 60 potential deals in the pipeline, according to a recent report.

Logan Property Makes Another Overseas Foray

For Logan Property, the deal marks the third time this year the Hong Kong-listed developer has trumped other bidders in its willingness to pay high prices for sites outside of mainland China.

This past May, the top 100 Chinese developer teamed up with fellow Chinese builder Nanshan Group to place a more than S$1 billion ($722 million) bid for the Stirling Road residential site near Singapore’s Queenstown MRT station. The land tender by the mainland joint venture was the biggest in the city’s history, surpassing a twenty-year-old record by more than 32 percent.

In February, Logan partnered with another mainland builder, KWG Property Holdings, to buy a waterfront residential site on Hong Kong’s Ap Lei Chau island for HK$16.86 billion (US$2.17 billion) – at the time the most expensive purchase at a government land sale in the city’s history.