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Hot market smokes out solo land sites

19 single-owner plots worth $1.05b sold this year

(SINGAPORE) With the property market running hot, it is not just collective sales that have ballooned. Over the past two years, more residential land sites owned by single owners were sold as well.

So far this year, 19 residential sites owned by single owners and worth some $1.05 billion in all were sold to developers, data provided by property firm CB Richard Ellis (CBRE) shows.

And in 2006, there were 15 single-owner land sales worth a total of $865 million. By comparison, just four singleowner land sales worth $303 million were done in 2005.

Market watchers say a property market that is strong and active will bring out more sellers – both of the en-bloc variety as well as single owners.

‘Collective sales have hogged the limelight of late, but the single-owner sales have also been very active,’ says CBRE executive director Jeremy Lake. ‘If you look at overall residential sales, you will see that they have gone up too. So single owners are just mirroring the overall market.’

Ku Swee Yong, director of marketing and business development at Savills Singapore, says that in the case of those sites owned by associations or clubs, members who were looking to sell might have been able to convince those who were previously not in favour of selling to change their minds, considering the prices that the properties can now fetch.

‘When the price is better, they (those looking to sell) manage to clear the hurdle,’ Mr Ku says.

The 19 sites sold by single owners this year include a few owned by associations, including one sold by Chui Hui Lim Club. The club sold a Keng Lee Road site to Sim Lian Group for some $115.8 million.

CBRE’s data also shows that this year, while there were a few large single-owner sites that were sold, the bulk of the 19 properties were small – with 10 of them going for less than $30 million each.

Market watchers attributed the increased interest in smaller sites to new players in the property market. These smaller developers generally do not have the resources to bid for en-bloc sites that go for hundreds of millions dollars – the province of the likes of CapitaLand, City Developments and foreign property funds.

‘When the market is good, it will attract new entrants,’ says CBRE’s Mr Lake. ‘And you will find some people who will want to get into the market, but might not be able to afford the big sites.’

Sesdaq-listed Tee International is an example of one new entrant which has been snapping up smaller sites. The company, which has a market capitalisation of $41.5 million, has been in the electrical and mechanical engineering business since 1980. But since the start of the year, Tee has been buying a string of freehold terrace houses and apartments with plans to develop them into luxury ’boutique’ homes.

Among its purchases are three single-owner sites, CBRE’s data shows. Tee acquired two single-owner plots in Cairnhill Circle in July – one for $7.7 million and the other for $5.5 million. It also bought a single-owner property in Thomson Road for $6.9 million in January this year.

Similarly, Eastern Holdings, which publishes magazines, also picked up two small single-owner sites in Grove Drive this year – one for $12.5 million and the other for $10.3 million. The company is also relatively small, having a market capitalisation of about $70 million.

Savills’s Mr Ku says that there are also some high net worth individuals who are buying smaller sites, redeveloping them and then selling them – all within a short span of time – to capitalise on the property market.

These wealthy individuals were also adding to the demand for smaller sites, he says.

 

Source: Business Times 22 Nov 07

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