HomeLand SalesPine Grove Condo Collective Sale. Will It Be Irresistible For Developers?
Pine Grove Condo Collective Sale

Pine Grove Condo Collective Sale. Will It Be Irresistible For Developers?

Pine Grove Condo's Fourth Collective Sale Attempt Was Unsuccessful

The former HUDC estate in Pandan, which has 59 years left on a 99-year lease, launched its fourth collective sale attempt since 2008 via public tender at S$1.95 billion in September 2023. The tender closed in November 2023 without any bids at S$1.95 billion. 

Fifth En-Bloc Attempt for Pine Grove Condo With Lower Reserve Price

The collective sale committee (CSC) for Pine Grove condominium is getting closer to securing the requisite 80 per cent mandate to relaunch a collective sale at a lower reserve price of S$1.78 billion. 

More than 60 per cent of the 660-unit condo’s home owners have signed a supplemental agreement to lower the price to S$1.78 billion according to the marketing agent. 

“The revised reserve price of S$1.78 billion reflects an 8.7 per cent decrement from the previous price of S$1.95 billion, presenting an opportunity for developers and investors looking to acquire a sizeable development site facing the Dover forest and near the Dover MRT Station,”, said ERA chief executive Marcus Chu. 

A Jan 18 letter from ERA Realty to the owners said the new price was found to be a “fair valuation” by Premas, a unit of Cushman & Wakefield. 

This assessment included the full potential in redeveloping the 893,218 sq ft into a 2,050-unit development. 

Potential Payout For Pine Grove condo owners

Mr Tay Liam Hiap, managing director investment sales for ERA Realty Network noted that a few developers had indicated at the November 2023 tender closing that they will consider a lower price. 

“The land valuation is S$1.78 billion, so they cannot bid lower than that… If we don’t get the mandate by May 5, but get a bid at S$1.78 billion, then we have to take the offer to the owners and hope to get the mandate by around mid-July 2024 to seal the deal,” said Mr Tay. 

If successful, owners of 1,163 sq ft units in the project stand to get gross proceeds of S$2.19 million, while those who own 1,690 sq ft units could get S$2.69 million, and those who own 1,938 sq ft homes could get S$2.9 million. 

At S$1.78 billion, the land rate works out to S$1,335 per sq ft per plot ratio. This is after factoring in the 10 per cent bonus gross floor area, an estimated land betterment charge (LBC) of S$975 million for intensification and a lease upgrade to a fresh 99-year lease. 

Developers pay an LBC for the right to enhance the use of some sites or to build bigger projects on them. 

Government Land Sales (GLS) in Pine Grove

There were two recent Government Land Sales (GLS) in the area fairly recently. Pine Grove Parcel A was sold in 2022 and launched as Pinetree Hill Condominium while the tender for Pine Grove Parcel B was awarded in November 2023. 

Pine Grove Parcel A (now known as Pinetree Hill)  – The top bid of $671,500,800 was submitted by an 80:20 joint venture between UOL Group and Singapore Land Group (SingLand), which translates to a land rate of $1,318 psf per plot ratio (psf ppr).

Pine Grove Parcel B  – The top bid price of $692.388 million submitted by Sinarmas Land-MCL Land translates to $1,223 psf per plot ratio (psf ppr). This is 23.8% higher than the second-highest bid of $988 psf ppr submitted by the joint venture between UOL Group and Singapore Land (SingLand) Group.

However, the highest bid of $1,223 psf ppr for Parcel B is 7.2% lower than the $1,318 psf ppr submitted by UOL and SingLand for the neighbouring Parcel A.
The 269,552 sq ft, 99-year leasehold site at Parcel B has a maximum gross floor area of 566,003 sq ft. It can be developed into a new residential project with 565 units. PropNex’s Wong estimates the future average selling price of the new condo at Parcel B to be around $2,300 to $2,400 psf.

Will Pine Grove condo's Fifth En-Bloc Attempt Finally Make It?

We think that developers’ response will be lukewarm at best for a few reasons which we will list below. 

  1. ABSD – Even with the recent lowered ABSD clawback for developers, it is still a large sum to cough out if the project fails to sell out. Given the changes, Mr Tay from ERA said that assuming developers buy the Pine Grove site at S$1.78 billion, “failing to sell the last 1 per cent or an estimated 20-plus units within the five-year sale deadline would mean an ABSD remission clawback of S$445 million plus interest based on an ABSD rate of 25 per cent, compared with S$623 million plus interest under an ABSD rate of 35 per cent”.

  2. Developers’ preference for GLS sites – It was noted that Pine Grove condo went for its fourth collective sale attempt in September 2023 and drew zero bids while the tender for Pine Grove Parcel B was launched in August 2023 and received 3 bids.

    At $1.95 billion, the land rate for Pine Grove condo works out to $1,434 per sq ft per plot ratio, after factoring in an additional 10 per cent bonus gross floor area under various incentive schemes.
    It is noted that even if a collective sale is successful, there may still be obstacles that may come up along the way such as owners who contest the sale or if there are issues with getting approvals from the competent authorities. 

  3. Insufficient time gap – We note that the time gap between Pine Grove Parcel A and B land sales sites was a year apart and Parcel B’s winning bid was 7.2% lower than the earlier Parcel A. Launching the collective sale so soon after the sale of the two land parcels may not be an opportune time due to insufficient time for developers to clear all the supply before the ABSD deadline.

  4. Supply and Price – Pinetree Hill has a balance inventory of 325 units. Pine Grove Parcel B is estimated to yield 565 units while Pine Grove condo can potentially yield 2,050 units. That would mean the Ulu Pandan area could see 2,940 residential units alone. Let’s not forget the Clementi Ave 1 GLS site which can potentially yield 500 units and is in close proximity to Pine Grove. 
    Even with a lower reserve price of S$1.78 billion, we think that developers might play it cautious and come back another time when market sentiments improve. 

With an estimated 40 new condo launches this year, do reach out to us for a home planning consultation and analysis on the property market.