Home owners at the Laguna Park condominium in Marine Parade are now faced with the choice of selling their homes at an average of 20 per cent lower than their initial asking price.

This comes after a failed tender earlier this month.

Then, the site received a bid from an Indonesian-owned, locally incorporated company of S$1.728 billion, but a downpayment could not be made in time.

Since then, the collective sale committee has circulated a letter informing owners of a new potential selling price of S$967 million.

Under en bloc sale regulations, 80 per cent of owners need to vote in favour of this price tag before the sale can proceed.

When Laguna Park opened for tender in September, most owners stood to gain around S$2.1 million to S$2.3 million each. Penthouse owners would have gotten between S$3.5 million and S$4.1 million each.

But at the new price being considered now, owners will get almost 20 per cent less or about S$1.8 million.

Some analysts said this price might be too low to be attractive to sellers. But they said sellers need to take into consideration some of the less positive aspects of the property.

Nicholas Mak, property consultant, said: “They must be aware that this is an ageing development and the lease of 99 years has been run down significantly.”

He added that sellers who are planning to buy similar properties that also have a view of the sea will probably have to pay as much as SS$2 million.

And he expects most owners to have to have to downgrade from their older, but more spacious units, to smaller new homes.

Charges to top up the lease to a 99-year term and to increase the site’s plot ratio comes up to about S$440 million.

Earlier, buyers would have been looking at paying around S$850 per square foot per plot ratio – a price many analysts considered expensive.

At the new prices, the cost comes down to S$700 per square foot per plot ratio for the 528-unit leasehold Marine Parade project.

Property consultancy Colliers said S$967 million is a more realistic selling price, and could lead to some developers re-considering the tender.

However, many analysts also noted that the total price is still very hefty for any one local developer in today’s market.

Laguna Park has a land area of 677,463 square feet, which means about 1,500 apartments can be built on the site.

According to the development’s marketing agent Credo, the sales committee has until around mid-November to strike a deal with a buyer, before the collective sale agreement expires on December 19.

Source : Channel NewsAsia – 26 Oct 2009

OWNERS of units at Laguna Park, whose $1.2 billion collective sale bid failed last week, are now considering a lower sale price of between $950 million and $1 billion.

The new range works out to between $693 and $723 per square foot per plot ratio (psf ppr), including an estimated $400 million payable to the state to raise the intensity of the site to the plot ratio of 2.8, and topping up the lease to a fresh 99-year term. This compares to $844 psf ppr at the reserve price of $1.2 billion.

These were some of the numbers discussed at a meeting of about 200 Laguna Park residents yesterday afternoon, called to consider the results of the failed tender and discuss possible options.

Even though two bids had been submitted by the close of tender last Tuesday, no buyer put down payment to seal the $1.2 billion deal.

Credo Real Estate, which is marketing the 528-unit leasehold Marine Parade project, said last week that one submission from an Indonesian-owned, locally incorporated company offered $1.728 billion – above the owners’ reserve price.

But it withdrew its offer on Thursday, citing difficulties faced by its bankers in processing and remitting the funds to Singapore. The only other submission was from a prominent local developer, with whom Credo is now conducting negotiations.

Credo’s managing director, Karamjit Singh, said that the owners now have till around mid-November to strike a deal with a buyer, before the collective sale agreement expires in December.

The sales committee will now need 80 per cent of the Laguna Park owners to agree to what is likely to be a lower sale price than their reserve, in order to close a deal.

Laguna Park has a land area of about 677,463 sq ft. Some 1,500 apartments with an average size of about 1,200 sq ft each can be built on the site.

Source : Business Times – 19 Oct 2009

Owners of units in Laguna Park, whose tender closed unsuccessfully on Friday, are now considering selling at a lower price.

The new price is said to be between S$950 million and S$1 billion.

The development’s marketing agent Credo said residents are likely to receive letters advising on the situation in the next two or three days.

Earlier, many property analysts said Laguna Park’s initial S$1.2 billion reserve price was on the high side.

Residents of Marine Parade’s Laguna Park streamed out of the gates at about 4.30pm on Sunday afternoon, after a 2.5-hour meeting to discuss the fate of the collective sale of the development.

Despite two bids being made when the tender closed last Tuesday, no buyer managed to put down a payment to seal the S$1.2 billion deal.

At that price, each owner would have received between S$2.1 million and S$2.3 million.

Residents MediaCorp approached all refused to come on camera, but off camera, it seems their views are mixed. While some are agreeable to accepting a lower price, other said they would rather wait for the market to pick up again before relaunching the collective sales process.

Some noted that while those present at the meeting were split into two camps, the entire meeting went by cordially.

They attributed this to the people management skills of the sales committee.

The question now is whether the sales committee will manage to garner the crucial 80 per cent consent level from its owners, with the lower price tag.

The sales committee has until December 19 to close a deal before the collective sale agreement expires.

If there is no deal by then, the entire collective sales process will have to be restarted again.

One local company, whose shareholders are based in Indonesia, more than matched the reserve price, at S$1.7billion.

But Credo said that by last Thursday evening, the firm decided to pull out because it could not get its bankers to provide the funds for the bid.

Credo said the second expression of interest came from a prominent local developer. MediaCorp understands the developer is now expected to further negotiate with the majority owners before settling on a firm price.

Source : Channel NewsAsia – 18 Oct 2009

OWNERS of East Coast condominium Laguna Park have failed in their bid to sell the property en bloc for $1.2 billion through a tender process.

Industry analysts say the result was not surprising, considering the high asking price.

However, in a curious twist of events, one company had submitted a bid for $1.728 billion – only to withdraw the offer on Thursday night.

The estate’s marketing agent, Credo Real Estate, said yesterday in a statement that it had received two submissions at the close of the tender on Oct 13.

One of them was from a locally incorporated firm which offered the eye-popping $1.728 billion bid. The other expression of interest was from a ‘local and prominent developer’, which was believed to have made an offer below the reserve price.

Credo declined to name both firms, citing confidentiality agreements.

But it is understood that principal shareholders of the first firm which had offered above the reserve price are based in Indonesia, said Credo.

The firm was due to submit the tender deposit on instructions specified by the owners, but the firm’s lawyers wrote in on Thursday night to withdraw the offer. They said the firm faced ‘difficulty in their bankers processing the funds and remitting them to Singapore’, said Credo.

Owners of the 528-unit development at Marine Parade yesterday said they had not heard any news officially from the sales committee, although a meeting for owners has been slated for tomorrow.

One owner, who declined to be named, said she was neutral as to whether the sale went through or not. ‘Whether it sells or not, it doesn’t really matter,’ she said.

Chesterton Suntec International’s research and consultancy director Colin Tan said the condo’s failure to find a buyer ’simply confirms that developers are not going to pay unrealistic prices’.

‘Developers are signalling to sellers that if you’re not realistic, we won’t be interested in putting in bids.

‘They are mindful of the ability of home buyers to pay even higher prices. This is not sustainable so they’re not willing to bear higher risks,’ said Mr Tan.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak noted that en bloc deals have not seen much success this year.

Dragon Mansion in Spottiswoode Park, as well as Changi Garden Condominium at Jalan Mariam, have been tendered with no deals done.

‘Owners are still expecting pre-crisis price levels which developers are now not prepared to pay. Either the owners wait even longer, or prepare to accept a lower price,’ said Mr Mak.

This might prove difficult. As another Laguna Park resident put it: ‘I don’t think anybody will sell at a lower price.’

Credo said it is still in negotiations with the local developer on a possible deal. Owners have until mid-December, when the collective sales agreement expires, to sell the estate via private treaty.

The former HUDC estate has a large land area of about 677,493 sq ft and a gross plot ratio of 2.8.

The sprawling 30-year-old condominium has been in the headlines over a spate of vandalism attacks on the property of residents who were not keen on the sale.

THE PRICE FACTOR

‘Owners are still expecting pre-crisis price levels which developers are now not prepared to pay. Either they wait even longer, or prepare to accept a lower price.’ – Ngee Ann Polytechnic real estate lecturer Nicholas Mak

Source : Straits Times – 17 Oct 2009

The company that had submitted the higher of two bids withdraws, citing funding difficulties

LAGUNA Park, which went up for collective sale last month at $1.2 billion, has failed to attract a buyer so far.

The 528-unit leasehold project at Marine Parade remains unsold after the company that submitted the higher of two bids faced funding problems.

At the close of the tender on Tuesday, two submissions were received for the property, said Credo Real Estate, which is marketing the development.

One submission was from a locally incorporated company that offered $1.728 billion – well above the owners’ reserve price of $1.2 billion. The company’s main shareholders are understood to be based in Indonesia.

The other submission was from a prominent local developer, which expressed an interest in negotiating.

BT understands that the developer was not willing to meet the reserve price.

Credo conducted negotiations on the terms of the sale with the Indonesian-owned company, which was to re-submit the tender deposit in the owners’ prescribed format.

However, on Thursday evening, the offerer’s lawyers wrote to the owners’ lawyers saying that the offer had been withdrawn because the offerer faced ‘difficulty in its bankers processing the funds and remitting them to Singapore’.

Credo is now conducting negotiations with the local developer, said Credo managing director Karamjit Singh.

The majority owners of Laguna Park now have about a month or so to enter into any private treaty deal before the collective sale agreement expires in December 2009.

‘The tender was good in that it showed that developers are still keen on this kind of site,’ said Mr Singh. The problem was with the price, he said.

A banker whom BT spoke to earlier said that even if a developer was willing to pay $1.2 billion for a site, finance for both the land and construction could be hard to come by.

Market watchers were surprised at the amount offered by the Indonesian party.

The reserve price of $1.2 billion works out to $844 per square foot per plot ratio (psf ppr), including an estimated $400 million payable to the state for an increase in intensity of the site to the plot ratio of 2.8 and topping up the lease term to fresh 99 years.

The $1.728 billion offer, on the other hand, worked out to about $1,122 psf. Laguna Park has a land area of about 677,493 sq ft. About 1,500 apartments with an average size of about 1,200 sq ft each can be built on the site.

Source : Business Times – 17 Oct 2009

The tender for the Laguna Park en bloc sale has closed unsuccessfully.

Credo Real Estate said there were two bids for the 528-unit development at Marina Parade at the close of the tender on Tuesday.

A local company whose shareholders are based in Indonesia had offered a price of S$1.7 billion, well above the owners’ Reserve Price of S$1.2 billion.

But Credo said by Thursday evening, the firm decided to withdraw its offer, citing difficulties in their bankers’ ability to process the funds and remit them to Singapore.

The second bid was from a prominent local developer who expressed interest to pursue negotiations with the majority owners.

MediaCorp understands the local developer will settle on a bid price after negotiations with the owners.

Credo said the majority owners have about a month to enter into any private treaty deal before the collective sale agreement expires in December.

Executive director of property consultancy DTZ, Ong Choon Fah, said she is not too surprised by the announcement.

“With the government land sales and the confirmed list restarting next year, and we still have land parcels in the reserved list, there will be an alternative source of land for the developers,” Ong said.

“For example, recently the site at Serangoon Ave 3 which saw 15 developers bidding for it… at prices that had surpassed market expectations,” she added.

Source : Channel NewsAsia – 16 Oct 2009