Built between the 1970s and 1980s, Changi Garden was placed on the market for a collective sale for an asking price of $196 million. Changi Garden just sold for an amazing $248.8 million which is 27% above the asking price! This property consists of 60 apartments, 12 penthouses, and 12 shops.
Each owner of an apartment will receive between $2.14 million and $2.27 million. Penthouse owners will receive between $4.03 million and $4.74 million and shop owners are going to get between $4.7 million to $7.08 million.
CEL Real Estate Development beat out eight other bidders and won the property for $888 per square foot per plot ratio for the 200,093 sq. ft. site. Analysts said that the offer for the estate is 30% higher than the asking price, was unexpected due to the nature of the mixed development of residences and shops and not in a central location.
CEL Real Estate Development is a wholly owned subsidiary of Chip Eng Seng Corp. Filing with the Singapore Exchange on Tuesday, Chip Eng Seng stated they have plans to develop low rise residential condominiums consisting of around 320 units with full facilities and possibly some shops.
Mr Alan Cheong, who is the senior director of research and consultancy representing Savills Valuation and Professional Services, stated that the property market is really in a very unusual phase. In past history, developers focused on prime districts for collective sales but today, they seem to be covering the entire island. He also pointed out that Changi Garden is located directly across from Changi Prison which makes this a very unusual sale.
Despite the high asking price, developer was willing to go even higher which means the price tags will be even higher once the site is launched.
Leading executive officer of ERA Realty Network, Eugene Lim, said the prices per unit at the site will depend on the market conditions. The sales prices seem to reflect the confidence that the developers have in this property market for the short-term and a belief that the prices will increase.
It is believed that the break-even price for CEL, based on the current market, would be approximately $1,350 to $1,400 per square foot. This is based on findings from Nicholas Mak, head of the research and consultancy dept. at integrated asset management ZACD.
This year alone, there have been more than 10 collective sales including Tampines Court which sold for a record high at $970 million which is considered the highest sale for a former Housing and Urban Development Company since 2007.
Just recently, Normanton Park sold for $830.1 million, Amber Park condominiums sold for $906.7 million. These two alone set a record for Singapore’s largest freehold collective sales by dollar value.
This trend in the property market seems to be only the beginning. Developers seem to have the confidence that bidding over the asking prices, will still give them an edge on the market and allow them to make an enormous profit. It doesn’t seem to matter the location of these collective sales, including Changi Garden sitting across from a prison. Only time will tell how well this works out for developers in Singapore.
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