Developer Wing Tai Holdings is backing out of a deal to acquire a residential project in Singapore’s Holland Village area, saying that conditions for completion of the deal signed by its Wincove unit in March had not been met.
“The Company wishes to announce that Wincove has exercised its rights to rescind the contract for the Acquisition due to non-fulfilment of certain condition thereunder,” the company said in an announcement to the Singapore stock exchange late on Friday.
The cancellation of the deal to redevelop Holland Tower, a 14-storey building in District 10, one of the most sought-after residential locations in the city, was announced on the same day that Singapore’s Urban Redevelopment Authority released statistics showing that home prices in the second quarter had dipped for the first time since 2020, with inventories of unsold housing growing rapidly.
After Singapore home prices grew by around 8.4 percent on average last year, authorities in the city-state have boosted taxes and increased home supply to tame housing inflation, with recent land tenders drawing tepid responses from developers.
Passing on Prime Site
Wing Tai had acquired the rights to the 21,862 square foot (2,033 square metre) freehold site for S$76.3 million ($56.8 million), via a collective sale launched in February by the owners of the units in the current building. That price was just over the tender guide price of S$76 million.
With the existing project spanning 43,691 square feet of built area, Wing Tai would have been paying S$1,748 per square foot of accommodation.
At the time that the tender result was announced, Wing Tai executive director Tan Hwee Bin said, “We plan to leverage its superior location attributes to develop a luxurious and iconic residential.” The company did not give specifics regarding what aspects of its agreement with the sellers of the Holland Tower had not been fulfilled.
The site is within a 15-minute walk of the Holland Village MRT station and is within the Holland Park Good Class Bungalow area, one of a limited number of locations in the city set aside for detached homes with large landed areas. The site also benefits from proximity to educational institutions including ACS International School and Nanyang Primary School.
Figures released by the URA on Friday showed that average prices for new private homes in Singapore fell by 0.2 percent during the second quarter, compared to the preceding three months, as a wave of new projects gave buyers more choice and developers saw inventory levels climb.
The dip in home prices was the first since the fourth quarter of 2020, and came after developers rolled out 2,374 new private homes during the April through June period, down from the 1,312 units launched during the first three months of the year.
Take-up of new launches fell from 95.7 percent in the first quarter to 89.6 percent in the April through June period – the lowest in 10 quarters, according to URA data.
Wing Tai is backing away from the Holland Village site after investment in Singapore real estate fell to a two-year low of S$3.8 billion in the second quarter, which was down 50 percent from the S$7.6 billion recorded over the same three months in 2022.
In a report issued this month, property consultancy Colliers estimated that Singapore real estate investment in 2023 will total S$24.7 billion, which would mark a 14.8 percent drop from last year’s total of S$29 billion, and potentially notch the city-state’s lowest volume in three years.
A pair of government tenders for Singapore residential sites during July each drew just two bids, with prices coming in below or at the bottom end of analyst expectations.
In a tender announced 18 July, Sim Lian Group won a site in eastern Singapore’s Jalan Tembusu area for S$828.8 million after analysts had projected a S$1 billion selling price for the plot.
That deal came after a joint venture between CapitaLand and UOL Group won a site in northeastern Singapore’s Tampines area for S$1.2 billion in a tender announced on 11 July, with that bid coming in at the low-end of earlier estimates.