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High reserve price of S$1.8 billion likely a factor in lack of bids for People's Park Centre en bloc

The collective sale tender for People’s Park Centre closed on Aug 18 at 3pm.

High reserve price of S$1.8 billion likely a factor in lack of bids for People's Park Centre en bloc

People's Park Centre at 101 Upper Cross Street. (Photo: Facebook/People's Park Centre)

SINGAPORE: A "high quantum amount of S$1.8 billion" was a possible contributing factor for the lack of bids in the collective sale tender of People's Park Centre, said real estate agency ERA Realty Network on Friday (Aug 19).

ERA had put up People’s Park Centre in Chinatown for collective sale at a reserve price of S$1.8 billion in July.

The tender for People’s Park Centre closed on Aug 18 at 3pm, without any bids.

In response to queries from CNA, ERA said the "high quantum amount" was a possible contributing factor. They said that any joint offer will be more complex and may need more time, adding that there have been "no collective sale (of) over S$1 billion since 2007".

When asked if the reserve price was too steep for potential investors, ERA said that "although the quantum is a record for the collective sale in Singapore, the land price is still feasible in current buoyant market especially the rekindled interest for commercial land."

"In the previous collective sale attempt in 2019 at S$1.5 billion, People's Park Centre was not able to get the required 80 per cent mandate from the subsidiary proprietors," said ERA adding that the "owners' sentiments and perceived value of the place are strong".

The 99-year leasehold mixed-use commercial-and-residential development comprises 324 retail units, 256 office units, 120 residential units and a car park.

ERA said in July that the reserve price translates into S$2,620 per square foot per plot ratio, including the differential premium and the premium to top up the land tenure to a fresh 99-year lease.

The collective sale obtained 84 per cent of the owners’ signatures by strata area, and 80 per cent by share value, said ERA.

The agency pointed out that with the sales of Tanglin Shopping Centre, Golden Mile Complex and Peace Centre, "People's Park Centre poses an attractive opportunity to own a landmark piece of land".

The sale has now entered into the private treaty stage, which will go on for 10 weeks. During this time it is possible to enter into a private agreement with a purchaser and to submit the application to the Strata Titles Boards, said ERA.

"The price will still have to be at or above the reserve price, without which we will still need to get a fresh mandate from the subsidiary proprietors," it added.

ERA said it is following up with enquirers and reaching out to more potential buyers, adding that they do not "see any necessity of waiver at the first instance."

Providing CNA with his analysis, Huttons Asia’s senior director of research Lee Sze Teck said while the location of People's Park Centre is "no doubt attractive", the "price tag is a bit steep".

He said that construction costs have increased a lot since 2020 and depending on the development, this might amount to "S$2.5 billion or higher", something which is seen as risky to developers, he said.

With the current land rate, Mr Lee said the eventual sale of residential units may set a new benchmark in the Chinatown area but "this may not be seen as realistically possible in today's market."

As the development has entered into the private treaty phase, if there is a bid below the reserve price, the collective sale committee will need to obtain 80 per cent approval from the subsidiary proprietors to accept the bid, said Mr Lee.

Source: CNA/fh(ta)


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