SINGAPORE – The collective sale committee of Pine Grove condominium is trying to get the requisite 80 per cent mandate from owners to relaunch a collective sale at a lower reserve price of $1.78 billion, after the tender closed in November 2023 without any bids at the $1.95 billion price.

In September 2023, the former HUDC estate in Ulu Pandan, which has 59 years left on a 99-year lease, launched its fourth collective sale attempt since 2018 via public tender at $1.95 billion.

ERA has been in private treaty discussions with several parties since the tender closed, and these talks will continue until Feb 7.

An extraordinary general meeting (EOGM) and a signing session will be held on Jan 21 to assess owners’ interest in relaunching the 660-unit condominium for sale at $1.78 billion, according to a Jan 18 letter from its marketing agent ERA Realty Network seen by The Straits Times.

The letter said the new price was found to be a “fair valuation” by Premas, a unit of Cushman & Wakefield. This assessment included the full potential in redeveloping the 893,218 sq ft site into a 2,050-unit development.

“Several developers have informally indicated interest in the Pine Grove collective sale at the specified valuation price. This has prompted the ongoing effort to secure the necessary 80 per cent consensus before the upcoming tender deadline... in mid- to late March 2024,” ERA said.

The EOGM, which can commence only if at least 30 per cent of the unit owners attend, will present updates on the timeline and potential sale of Pine Grove.

Signatures gathered by ERA on Jan 21 will serve as an initial assessment of the interest level in the collective sale at the new reserve price.

If successful, owners of 1,163 sq ft units in the project stand to get gross proceeds of about $2.19 million, while those who own 1,690 sq ft units could get $2.69 million, and those that own 1,938 sq ft homes could get $2.9 million.

At $1.78 billion, the land rate works out to $1,335 per sq ft per plot ratio (psf ppr), said Mr Eugene Lim, key executive officer of ERA Singapore. This is after factoring in the 10 per cent bonus gross floor area, an estimated land betterment charge (LBC) of $974.4 million for intensification, and lease upgrade to a fresh 99-year lease.

Developers pay an LBC for the right to enhance the use of some sites or to build bigger projects on them.

In comparison, the Pine Grove (Parcel B) GLS site received a top bid of $692.4 million, or a land rate, of $1,223 psf ppr, from an MCL Land-linked entity in November 2023.

An adjacent Pine Grove (Parcel A) site – the future 520-unit Pinetree Hill – was sold in 2022 to a joint venture between UOL Group and Singapore Land Group at $671.5 million, or $1,318 psf ppr.

More attractive sites released under the government land sales (GLS) programme have diverted attention from the residential collective sale market. That, along with higher development risks and a mismatch in price expectations between developers and collective sale sellers, has left the market in a stalemate.

As a result, just three residential collective sale deals worth $574 million were done in 2023. In 2022, 11 such deals totalling $1.87 billion were concluded, according to Cushman & Wakefield.

Cushman’s head of research for Singapore and South-east Asia Wong Xian Yang said developers are increasingly seeking small to medium-sized sites to manage higher costs and risks.

Another challenge to the collective sale market is the harmonisation of floor area definitions by government agencies that kicked in on June 1, 2023, which has reduced the amount of saleable area and margins for developers’ residential projects.

Collective sale sellers, on the other hand, have been raising their asking prices so that they can afford a replacement property, as private home prices have jumped significantly.

This has widened the mismatch in expectations between what developers are willing to pay and what en bloc owners are asking for, Mr Wong said.

While this policy change also applies to GLS sites, the process of developing a project on a GLS site is much shorter, and does not involve demolition or require collective sale owners’ consensus, analysts say.

Pine Grove was one of the first two HUDC estates to be privatised in 1996. Out of 18 former HUDC estates developed between 1974 and 1987, it ranked second in terms of land size, after Braddell View, followed by the former Farrer Court.