The reserve price for Simsville’s attempted en bloc sale is expected at S$859 million to S$901.5 million, based on a land price of S$1,200 to S$1,250 a square foot per plot ratio, according to marketing material seen by Shenton Wire, which was presented to the property’s condo owners Saturday.
An en bloc sale is a collective sale of multiple units of property; in Singapore, when a development is sold en bloc, the buyer usually plans to demolish the existing property and re-develop. The owners are typically paid a sizeable premium in an en bloc sale, but a super majority of at least 80 percent must agree to the sale and later to the purchase price.
The data, from the agent PropNex, showed the total strata area of the property was 59,096 square meters, or around 639,109 square feet, with a plot ratio of 2.8.
Under the proposed reserve price deal, each unit owner would receive S$1,350 to S$1,417 per square foot, the data showed.
SimsVille has 522 units across four towers as well as facilities including pools, tennis courts and other amenities. The units have been priced at around S$1,021 to S$1,228 per square foot in recent transactions, or at around S$1.07 million to S$1.8 million, according to data from property website 99.co.
One unit owner told Shenton Wire it didn’t seem likely the deal would reach the 80 percent approval threshold as new units in the same area were pricing at around S$1,800 to S$2,000 a square foot. The unit owner indicated a belief that nearly half the units at Simsville were used as investment properties and were rented out.
Data from Square Foot Research said the implied rental yield at Simsville was 3.16 percent; that data also showed the historical low per square foot price for units in the development was S$315, set in 2006, suggesting some unitholders’ may have significantly higher yields.
The Square Foot Research data indicated nearby condos sold in the secondary market were priced at similar levels as recent transactions at Simsville. The data showed some nearby condos had higher implied rental yields than Simsville.
The unit owner had asked during the meeting to brief condo owners if it was possible to rezone the property for mixed use, rather than strictly residential, and was told it’s “theoretically possible,” but it hasn’t been done before and there would be no clarity on how much the buyer would need to pay for the change.
The estimated development charge a buyer of the property would need to pay is S$58.41 million, without balconies, while the estimated top-up premium to extend the leasehold length, is S$100 million, according to the PropNex data.
The residential property, located in Singapore’s Geylang neighborhood, was completed in 1998. It’s uncommon for properties less than 30 years old to successfully complete an en bloc deal in Singapore. SimsVille is a 99-year leasehold property; its countdown started in 1994.