Versailles re-launches public tender, starting bid lowered to $96m

Asking price reduced after unsuccessful May tender.

Versailles, a 55-unit residential development, has just been re-launched for sale by public tender by sole marketing agent Jones Lang LaSalle Singapore.

The District 15 freehold site, with a land area of approximately 53,073 sq ft, is zoned “Residential” with a gross plot ratio (GPR) of 2.1 in the 2008 Master Plan. In this locale, it could potentially be built up to 16 to 18 storeys, subject to approval from the relevant competent authorities.

After the last unsuccessful tender exercise that closed on 30 May this year, the Collective Sale Committee (CSC) managed to seek a fresh mandate to reduce the Reserve Price (RP) of the property. This is in response to offers received for the site which were below the owners’ initial RP. The CSC is now in a position to accept any offer that is in excess of $96 million, a reduction of 9.3% to 14.5% from the last asking price of $105 million to $110 million.

“We believe developers would be motivated to bid competitively as they know the sellers are pragmatic and willing to re-align their expectations to market conditions,” said Ms Yong Choon Fah, National Director of Investments at Jones Lang LaSalle.

“This site should be attractive to many medium-sized developers who will find the below $100 million quantum manageable, unlike those sites offered in GLS (Government Land Sales). In the last 12 months, most of the successful GLS sites were above $200 million, with the largest at $1.428 billion awarded to Frasers Centrepoint Limited, a mixed commercial and residential site at Yishun Central,” added Ms Yong.

At $96 million, the developer’s effective land cost translates to approximately $1,007 psf per plot (psf/pr), down from $1,088 to $1,133 psf/pr based on the allowable plot ratio of 2.1, including an estimated development charge of $16.2 million. This site is not affected by the recent revision of Development Charge (DC) rates.

Said Ms Yong: “Versailles is a rare freehold condominium redevelopment site located in the vicinity of the upcoming Paya Lebar Central, and within walking distance to two MRT stations. Located some 500 to 600 metres from the Paya Lebar MRT interchange station for the Circle and East-West lines, and Dakota MRT station for the Circle Line, the site enjoys direct and easy access to most parts of the island, including the Central Business District, Orchard Road, the Singapore Sports Hub and Changi International Airport.”

The recent announcement of the relocation of the Paya Lebar Airbase to Changi, which will free up some 800 hectares of land for exciting redevelopment options in the northeast and east of Singapore, will likely have a positive spill-over effect to the locality.

The potential Gross Floor Area (GFA) of approximately 122,598 sq ft could yield some 148 units of varying sizes, based on the URA’s guideline on maximum allowable number of dwelling units for non-landed residential developments outside the central area.

“Another selling point of the subject property is its freehold tenure with a GPR of 2.1. This is especially attractive in the light of the bumper supply of 99-year leasehold sites from GLS in recent years. In an analysis of URA-compiled statistics for the period from 2010 till to date, out of the supply of approximately 58,000 residential units from Outside Central Region (OCR) and Rest of Central Region (RCR) new launches, only about 28% are of freehold tenure, while the remaining 72% are leasehold units. With the limited supply of freehold land, freehold condominium developments in good locations should attract strong buying interest from Singaporeans and foreigners alike. Foreign buyers generally prefer freehold units in good location. To some foreign buyers from Indonesia and China, a freehold title is attractive due to its rarity in their homeland.” says Ms Yong. “As such, the lack of new supply of residential projects in the vicinity should also bode well for the successful purchaser of Versailles.”