Prices should be less than market rate as house owners need to be compensated
TWO sizeable landed residential plots off Mandai Road will be sold via auction later this month – with prices expected to be below the market rate for comparable plots.
The catch: The 23 houses that sit on the land are owned by different owners rather than the two brothers who own the two respective plots.
That means the buyers of the plots will have to negotiate with the owner-tenants of each house separately and compensate them individually.
After that, the buyer can build three-storey landed homes on the 999-year leasehold sites, both sited on Meng Suan Road.
Colliers International, which is conducting the auction on Jan 30, said fairly large landed plots are relatively rare. For instance, the Government will release only two landed sites for sale in the first half of this year, said its deputy managing director for agency and business services and auctioneer, Ms Grace Ng.
The first Meng Suan Road plot has an area of 21,066 sq ft and is occupied by a row of nine single-storey terrace houses. The second is 31,043 sq ft and with a row of 14 single-storey terrace houses.
The father of the two brothers who own the sites sold the houses to individual owners 40 to 50 years ago for less than $5,000 each.
This may sound unusual, but sales with tenancies were quite common in the past, said Ms Ng. The owners of the Meng Suan Road houses have enjoyed a great deal as they pay the land owners ‘ground rent’ of just $20 a month.
Negotiating with these owners may take time, but the buyer will be able to take heart that he is likely to get a good price. ‘We have applied some discount because they are encumbered with existing tenancies,’ said Ms Ng.
The indicative price of the sites is between $250 and $260 per sq ft, inclusive of the development charge. This puts the smaller plot at about $5.3 million and the bigger one at around $7.8 million.
Negotiating with the house owners will be somewhat simplified by the fact that owners of six of the 23 houses are related to one another, said Ms Ng.
Dealing with multiple owners may not be easy, but it is something that boutique development firm Link (THM) Holdings has proven it can handle.
The firm, which began as a fashion business, said yesterday that it had acquired a freehold site in Ban Guan Park, off Holland Road, comprising nine apartments and nine shops, after negotiating with the individual owners since late 2005. It paid $31.1 million for the site of 32,900 sq ft and plans to build 20 semi-detached houses.
The firm said there were several failed collective sale attempts in the past decade.
Its director, Mr Kenny Tan, said the firm then decided to talk to individual owners to address their concerns and to get them to sell individually.
Source: The Straits Times 8 Jan 08