Laguna Park Tender Fails

Laguna Park could go at 20% discount to initial tender

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.
Channel NewsAsia: 26 Oct 2009

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$1.2b Laguna park en bloc sale bid fails

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.
Straits Times: 17 Oct 2009

Tender for Laguna Park en bloc closes unsuccessfully

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.

ChannelNewsAsia: 16 Oct 2009

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

This doesn't sound unsuccessful to me.

Local developers like their closed door sessions to strong-arm weak committees with unreasonable deadlines. I hope their sale committee knows how to play hardball and ALL owners are kept in the loop as to what is happening.