SINGAPORE - The collective sale committee (CSC) for Pine Grove condominium is getting closer to securing the requisite 80 per cent mandate to relaunch a collective sale at a lower reserve price of $1.78 billion.

More than 60 per cent of the 660-unit condominium’s home owners have signed a supplemental agreement to lower the reserve price to $1.78 billion, marketing agent ERA Realty Network said on Feb 19.

The former HUDC estate in Ulu Pandan, which has 59 years left on a 99-year lease, launched its fourth collective sale attempt since 2008 via public tender at $1.95 billion in September 2023.

The Straits Times reported in January 2024 that the CSC was trying to get the requisite 80 per cent mandate from owners to relaunch the collective sale at $1.78 billion on March 6, after the tender closed in November 2023 without any bids at $1.95 billion.

Around 46 per cent of owners gave their consent to the $1.78 billion reserve price at an extraordinary general meeting held on Jan 21.

“The revised reserve price of $1.78 billion reflects an 8.7 per cent reduction from the previous price of $1.95 billion, presenting an opportunity for developers and investors looking to acquire a sizeable development site facing the Dover forest and near the Dover MRT station,” said ERA chief executive Marcus Chu.

A Jan 18 letter from ERA Realty to owners 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.

If the CSC succeeds in getting the 80 per cent mandate before March 6, the tender will be relaunched at $1.78 billion. If it does not get the mandate by then, the tender will be relaunched at $1.95 billion.

“Even if we don’t get the 80 per cent mandate by March 6, we will still work to get the mandate by tender closing on May 5,” Mr Tay Liam Hiap, managing director of investment sales for ERA Realty Network, told The Straits Times.

Mr Tay noted that a few developers had indicated at the November 2023 tender closing that they will consider a lower price.

“The land valuation is $1.78 billion, so they cannot bid lower than that... If we don’t get the mandate by May 5, but get a bid at $1.78 billion, then we have to take the offer to the owners and hope to get the mandate by around mid-July 2024 to seal the deal,” he added.

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 who 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. This is after factoring in the 10 per cent bonus gross floor area, an estimated land betterment charge (LBC) of $975 million for intensification and a lease upgrade to a fresh 99-year one.

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

The estimated LBC of $975 million is based on September 2023 rates, and may be subject to revision on March 1, 2024.

Mr Tay added: “Because the recent GLS (government land sale) tenders saw muted land prices, hopefully, that will lead to lower LBC (rates for residential use) on March 1, which could make the site more attractive.”

The recently revised additional buyer’s stamp duty (ABSD) remission clawback for residential projects “offers respite to developers who are unable to fully sell the new units within five years, a positive development for large collective sale sites like Pine Grove”, Mr Chu said.

Currently, developers buying land on or after Dec 16, 2021, have to pay 35 per cent ABSD that may be remitted upfront subject to conditions, plus 5 per cent ABSD that is non-remittable.

If the developer fails to sell its residential units within five years from the date of buying the land, the 35 per cent remittable component will be clawed back with interest, regardless of the number of unsold units.

With effect from Feb 16, 2024, projects with at least 90 per cent of units sold at the five-year sale timeline will be subject to a lower ABSD remission clawback rate.

Given the changes, Mr Tay said that assuming developers buy the Pine Grove site at $1.78 billion,“failing to sell the last 1 per cent or an estimated 20-plus units within the five-year sale deadline would mean an ABSD remission clawback of $445 million plus interest based on an ABSD rate of 25 per cent, compared with $623 million plus interest under an ABSD rate of 35 per cent”.