Shunfu Ville sold for $638m to Qingjian

Shunfu Ville sold for $638m to Qingjian

Shunfu Ville was sold to developer Qingjian Realty for S$638 million on Thursday, marking the largest collective sale since 2007.

This translates to a total land cost of S$747 per square foot per plot ratio on potential gross floor area, after factoring in differential premium payable to the state to top up the lease to a fresh 99-year lease and for intensification of the site, according to JLL, the sole marketing agent for the collective sale.

Owners holding 80 per cent of the development's share value and strata area had signed the collective sale agreement. The sale price is lower than the reserve price of at least S$688 million during a relaunch in January after a failed attempt last September.

Each owner stands to get around S$1.7 million, The Straits Times reported.

The 358-unit Shunfu Ville, built in the late 1980s by the former Housing and Urban Development Company (HUDC) and privatised in 2013, sits on a 408,927 square foot site with about 70 years left on its lease and a plot ratio of 2.8.

Qingjian Realty general manager Li Jun told BT: "We are also very pleased to have this opportunity to return to Bishan-Thomson. In early 2008, Qingjian Realty acquired its first land for development, a DBSS project just across the street from Shunfu Ville - Natura Loft. Now, eight years later, we have come full circle, after developments in Punggol, Sengkang and Sembawang, back to the Bishan-Thomson area."

The site could potentially yield over 1,000 units with an average size of 1,000 sq ft.

There has not been any government sites in the Bishan-Thomson area up for sale since October 2014.

Karamjit Singh, international director at JLL, noted that this is the second largest former HUDC estate sold collectively in absolute price terms as well as the largest enbloc deal in nine years. The deal offers the developer, in one stroke, a development pipeline similar to that of acquiring two or three sites from the government.

"While this deal would likely rekindle interest among other enbloc sellers, we would expect only those with strong physical attributes like Shunfu Ville, pegged at realistic prices, to find takers among developers," he said.

Other market watchers were more circumspect about whether this marks a revival of the enbloc market, given the punitive measures on unsold units for developers. Some condominiums such as Normanton Park, Amber Park, Spring Grove, Riviera Point and Derby Court have all tried their luck to no avail.

A large site raises the risk of a developer having to pay the additional buyer's stamp duty (ABSD) for unsold inventory, some industry players say. Developers are required to finish building and selling a project on a residential site within five years or pay ABSD on land cost with interest.

For collective sales, the five-year deadline kicks off from the date of the collective sale order granted under the Land Titles (Strata) Act.

But Qingjian's Mr Li is unfazed. He believes the impact of the ABSD has caused developers to have a clearer view on demand, be it from occupiers or from investors. "At the same time, the location of Shunfu Ville in the Bishan-Thomson area has always been popular. With a clearer view of real demand, and with the long-term warm reception to the area, we believe that the size of the project will not be an issue," he said.

SLP International executive director Nicholas Mak noted that it is "quite unlikely" to see a revival in collective sales because of the mismatch in asking prices and what developers are prepared to pay.

With the scaling back of government land sales, Mr Mak said he expects two to three enbloc deals each year but of a smaller scale as long as the ABSD remains in place.

This article was first published on May 20, 2016.
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