Offer for condo too low, so developer revamps units for better earnings.
Wed, Oct 20, 2010
The New Paper
By Koh Hui Theng
THE offer price to buy the development en bloc was below expectations.
So the developer, Melodies Limited, which owns Cassia View, decided to refurbish the place and then resell each unit individually.
The units, which had been rented out, are all owned by the developer.
The company is now expecting to get S$15 million more from the sale of the units.
And with 80 per cent of the units sold so far, the developer looks to be on target.
It started when the 20-storey, 72-unit freehold project on Guillemard Road was put on the market last year.
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At that time, it attracted a S$70 million bid, or about S$780 per sq ft (psf) of strata area.
Melodies felt that the offer price was too low.
"We were not pleased with the response as we felt the property could fetch a higher rate," a company spokesman said.
So Melodies decided to spruce up the apartments and sell them individually.
The S$3 million renovation bill it chalked up included refitting kitchens with new tiles, cabinets and appliances.
Bathroom fixtures from high-end brands were installed, doors were changed and bedroom parquet floors were polished.
External walls received a new coat of paint.
Mr Liang Thow Ming, the executive director and head of residential services of Credo Real Estate, which is marketing Cassia View, said: "It's almost a total makeover. The refurbishment was undertaken as it adds more value to the property."
Renovations started in May.
Post-makeover, the average price is about S$980 psf.
The bulk, or 67 of the 72 units, are three-bedroom units with areas of between 1,100 and 1,200 sq ft.
The two-bedroom apartment has an average floor area of 900 sq ft, while a penthouse averages about 2,300 sq ft.
To date, buyers have taken up more than 57 units in the single tower located next to Kong Hwa School.
Overall, the units are expected to fetch S$85 million - or S$15 million more than if it were sold at last year's rejected offer price for the development en bloc.
Demolishing and rebuilding the property would have resulted in a S$30 million price tag, said Mr Liang.
Buyers, too, end up paying less for a refurbished apartment. A three-bedroom unit is priced between S$1 million and S$1.3 million.
One unit can cost up to S$1.6 million if it was built from scratch in that area, said Mr Liang.
"The refurbishment is a win-win situation for both buyers and the developer. Everyone is happy with this solution," he said.
The first resident moved in in August.
The condo's revamped look wowed student Ke Liuqing, 23, who moved in last week.
Currently sharing the apartment's $$1,000 monthly rental fee with a friend, the Chinese national said in Mandarin: "The location is a draw. It's near my school in Mountbatten and the fact that everything is newly renovated makes it even better."
Chesterton Suntec International's head of research and consultancy, Mr Colin Tan, said the project's appeal stemmed from buyers being more open to refurbished apartments.
"Usually, refurbishment works because buyers don't really discriminate against renovated apartments and there is no stigma against old units," he said.
"Some people also prefer such completed homes because they are ready (to move into)."
Location is an important factor and Cassia View's accessibility works in its favour, MrTan added.
But it seems Cassia View is a unique case.
Mr Tan could recall only one project which underwent a similar process: Orchid Park condominium.
One of its eight blocks at the Yishun St 81 property was revamped and sold. Units in that block were previously rented out.
"Typically, it makes sense to refurbish if there are more units as the developer would enjoy economies of scale from doing so," Mr Tan said.
Built by Far East Organization, the 99-year Orchid Park was completed in 1994.
A check on the Urban Redevelopment Authority's website showed that the apartments were sold for S$481 to S$711 psf, depending on the size of the units.
According to online portal Property Guru, the average transacted price last month was S$647 psf.
When contacted, Orchid Park's management committee declined to comment.
This article was first published in The New Paper.