Raintree Gardens, a block of flats in the Potong Pasir area of Singapore has been sold for well above average market value in a very contested tender process. The block was developed by the former Singaporean Housing and Urban Development Company. The 175 unit HUDC building was privatised and the sale was given the green light after eighty percent of the residents agreed to sell their units.
Raintree Gardens Former HUDC at Potong Pasir Avenue 1
The sale comes as part of three recent transactions that set new records for property prices in the area, all three transactions were concluded in 2016 after years of stagnation in the area’s property market. Raintree Gardens was sold for a total price of 332.4 million US dollars. That equals about 1.9 million US dollars per unit, a hefty growth on the original purchase price. The owners are sure to walk away smiling. This price represents an increase of almost 90 percent over the previous average sales price for units in the building.
Winning Bid for Enbloc from UVD Projects for Raintree Gardens
The winning bid on the property was awarded to UVD projects, a joint venture between UOL Group and United Industrial Corporation. The group credits its successful bid to being open to giving the sellers favourable terms. UVD Projects have indicated that the acquiring of Raintree Gardens opens the door to development in the nearby Bidadari area. The group would like to stake its claim in the current wave of developments in the area. UVD aims to develop a 750 unit or 201,405 square foot property on the premises of Raintree Gardens. The hefty price that UVD paid for the site amounts to 797 US dollars per square foot. This figure includes a premium paid to extend the lease to another 99 years.
Developers Keen in Enbloc Sites for Development
Director of RST Research, Mr. Ong Sengh was not surprised by the price paid for the property. According to him developers are keenly looking for land and do not have enough inventory available. This phenomenon leads to somewhat higher prices being paid for the right properties. According to Mr. Sengh collective sales are making a long awaited comeback. The sale of Raintree Gardens was preceded only by the 2015 sale of the Thong Sia building. In 2014 there were no sales transactions recorded in the area.
Mr. Desmond Sim, head of research at CBRE feels that recent sales transactions will serve as motivation for other collective sales transactions. He also mentioned however that not all collective sales committees will necessarily be successful. It depends a lot on the location of the premises and the attitude of the buyers and sellers. If both parties are realistic in their terms, the chances of a successful transaction is greatly increased. Should the government start releasing more land to developers, many developers may choose to purchase this instead as it is easier to develop barren sites if their location is ideal.
The sale of Raintree Gardens is an indication that the market in the area is alive and well. It also shows that property remains an excellent investment, especially property in a desired location. The increase in value in this specific example was astonishing and there are many more such examples out there.