The Singapore housing market is on the rebound and one of the southeast Asian financial hub’s biggest development groups has bought out the residents of a 200-unit housing block on the island city’s east coast to add to its project pipeline. The transaction marks the biggest collective sale of an existing freehold housing project in the city’s history.
A unit of City Developments, along with sister company Hong Realty paid S$906.7 million ($667 million) to buy up Amber Park from the development’s former owners in the city’s latest collective sale. Both companies are units of family-controlled conglomerate Hong Leong Group, with CDL indicating in a stock market announcement that the group plans to redevelop the site into an 800 unit, high rise project.
Singapore housing prices rose for the first time in over four years during the third quarter of this year, with analysts from UBS saying in a report published last week that the city’s housing prices was due for a turnaround.
Hong Leong Joins Rush for New Projects
The prospect of a housing market recovery has developers such as Hong Leong stepping up their pursuit of new housing sites.
“CDL and our JV partner Hong Realty are delighted to win the tender for this very attractive and sizable site in the well sought-after Katong and East Coast area,” said CDL CEO-Designate Sherman Kwek in a statement. “This is one of our most significant investment deals in the Singapore residential market in recent years.”
CDL was the original developer of Amber Park, which is located close to the East Coast Parkway in the city’s Marine Parade area. The listed company is taking an 80 percent stake in the project, while Hong Realty, the private real estate arm of Hong Leong Group will hold a 20 percent stake.
The joint venture is paying the equivalent of S$1,515 per square foot of built area in its future project. The site covers 213,675 square feet and is approved for the construction of up to 598,290 square feet of new space. Subject to government approvals, CDL and Hong Realty plan to build four 25-storey blocks of luxury condominiums on the freehold site, according to the company statement.
Singapore Market on the Rebound
Hong Leong’s purchase of Amber Park is the latest in a surge of collective sales of existing housing projects in the densely-populated city state, as developers rush to rebuild their pipelines of homes.
According to statistics released last week by Singapore’s Urban Redevelopment Authority, the prices of private housing rose 0.5 percent in the third quarter of this year, compared to the period from April through June. The uptick in private home prices was the first increase in four years since the government introduced cooling measures.
“The tender was keenly contested and attracted as many as eight tender submissions,” noted Tan Hong Boon, a regional director at JLL. He added that, “Amber Park’s successful sale now holds the record as Singapore’s largest freehold collective sale by dollar value.” Owners of units in the soon to be demolished development will receive between S$4.3 million and S$8.3 million for their homes, according to the international property consultancy.
The Amber Park sale fell just short of beating the S$970 million price set in August when the Tampines Court public housing project was bought out by local developer Sim Lian.
Prior to that sale on Singapore’s upper east coast, in May of this year a joint venture between local developers Oxley and Lian Beng bought out the Rio Casa project in northeastern Singapore for S$575 million.
In a report comparing housing affordability in some of the world’s largest cities, UBS last week predicted that the Singapore market might be due for a rebound after its long decline. “A housing market turnaround seems to be in the cards and we foresee price growth at a low single digit rate next year,” the investment bank’s study noted.