Qingjian makes bold moves in real estate

Developer Qingjian Realty took two bold steps into new territory last month - buying one of the most pricey en bloc sites here, as well as securing a $301 million Bukit Batok mixed-development site.

Both were firsts for the firm, which has been developing property in Singapore for some eight years.

Qingjian is buying the Shunfu Ville en bloc site for $638 million, and has now disclosed that it eyed other collective sale sites - such as Normanton Park and Eunosville - before making its pick.

The Shunfu plot had the edge over other options, owing to its attractive location and reasonable pricing, Qingjian general manager Li Jun told The Straits Times.

Shunfu Ville sold for $638 million

  • 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.
  • 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 site could potentially yield over 1,000 units with an average size of 1,000 sq ft.
  • The new project can rise up to 36 storeys. This will give the future condo project on the site nice views of MacRitchie Reservoir and the surrounding greenery.
  • Karamjit Singh, international director and head of investments and residential 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.
  • "While the Shunfu Ville sale could spark some life back into the market, the supply of realistically priced collective-sale opportunities is a key challenge," said Mr Singh.
  • Going by the turnout for Shunfu Ville, most developers do not seem bullish. The site, first launched for sale last year, attracted two letters of interest - one of which was from eventual purchaser Qingjian Realty (South Pacific) Group.
  • It again attracted only two parties, including Qingjian, when the site was relaunched in January despite the land cost of about $747 per sq ft per plot ratio being quite reasonable, compared with recent sales nearby.
  • Would-be bidders were no doubt wary of the large site, given the law now that developers must build and sell all units on a site within five years or face paying Additional Buyer's Stamp Duty.

"I have been monitoring the Shunfu site since last October. I also viewed the Normanton Park project, and went to the Eunos site twice. After an initial study, we felt their prices were on the high side."

The 358-unit Shunfu Ville, on a 408,927 sq ft site, is under 200m from Marymount MRT station.

Although its $638 million offer was the third-largest en bloc price on record, Qingjian secured the Shunfu Ville site well below the reserve price of $688 million.

By comparison, Normanton Park had a reserve price in the region of $840 million, while Eunosville's owners had asked for $688 million.

"Shunfu was picked because we are very confident of the site. It is convenient in terms of transportation, you get a nice view of MacRitchie Reservoir on high floors, and it has good schools nearby," Mr Li added.

He also viewed a mixed-use reserve site at Holland Village, which the firm might have considered if it had failed to bag the Shunfu offer.

Qingjian expects to launch the project 12 months after it gets Strata Titles Board approval - which could come in the fourth quarter of the year at the earliest, Mr Li noted.

Existing owners of units at Shunfu Ville will be invited to preview the new project when it is due to be put up for sale.

The Shunfu site will yield more than 1,000 residential units, including one- to five-bedders and, potentially, terraced houses. Mr Li said the houses would appeal to landed home owners in the area keen to get the benefit of full condo facilities.

He remains coy about precise unit pricing but said: "I probably won't sell it at $1,800 to $2,000 psf, that's too high... I think in a development, if more units are priced below $2 million or around $1.5 million, people would be keen ."

Despite the large number of units the site can yield, Qingjian is confident of selling them all without incurring additional buyer's stamp duty (ABSD) for the unsold stock.

The firm drew confidence from the site's attractive location, as well as the dwindling number of new launches as the Government has reduced the supply of development sites in recent years.

The ABSD rules require developers to build and sell all new units within five years - in this case, from the date of the collective sale order granted under the Land Titles (Strata) Act.

In a busy month, Qingjian also snagged a mixed-development plot - its first - in Bukit Batok West Avenue 6 for $301.16 million, via the government land tender. It could yield about 500 condo units, with retail units on the first floor.

"This is an opportunity for us to get into the commercial segment... The mall will serve not only the condo units but also the 9,000 new HDB flats that are expected to be built around the area over the next four years," Mr Li noted.

He added that Qingjian will consider working with experienced partners for the retail component of the project, which will offer amenities, including a supermarket, a foodcourt, fast-food restaurants, education centres and a launderette.

The Bukit Batok West development will likely be launched in the middle of next year, after its executive condominium (EC) project in Choa Chu Kang Avenue 5 hits the market next February. Mr Li said the firm remains cautious in bidding for new sites and would consider them only if the price is right.

Qingjian's latest project is the 632-unit The Visionaire EC in Sembawang, which is about 30 per cent sold since it was launched in April.


This article was first published on June 3, 2016.
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