Increasing bulk deals for luxury apartments

 September 15, 2010

Property funds offload units as prices rise again

Bulk deals involving high-end apartments are gathering pace again. Some property funds which invested in Singapore’s upmarket residential sector are taking advantage of a price recovery in this segment to exit their investments.

In the Draycott Park area, a German core fund managed by Morgan Stanley is understood to have recently sold 23 apartments it owned in the Draycott Eight condo for slightly over $157 million or about $2,300 per square foot (psf) of strata area.

The buyer is understood to be a fund managed by Alpha Investment Partners, which is part of Keppel Land group.

The German fund incurred a small loss on its late-2007 purchase price of $2,600 psf. Market watchers say the $2,300 psf sale reflects a discount of perhaps 10-15 per cent to what the units could have fetched if they had been sold on an individual basis. But the divestment reflects the fund’s ongoing plan to monetise assets globally.

Savills Singapore is understood to have brokered the deal, but it declined to comment.

The 23 apartments transacted, most of which are currently leased, are in the same block. Another Morgan Stanley-managed German core fund owns the remaining 23 units in the block, which were purchased at the same time in 2007 at the same $2,600 psf price. For now, the plan is to hold these units, BT understands.

Draycott Eight comprises three 24-storey blocks with a total 136 units. The project, developed by Wing Tai, was completed in 2005 and its site has a balance lease term of about 86 years.

In the Balmoral Road area, Real Estate Capital Asia Partners (Recap), a Singapore-based investment fund, is said to have recently sold 20 apartments at the Sui Generis freehold condo for around $95 million or $1,935 psf. The buyer is understood to be a Singaporean investor.

Recap earlier sold one unit, a 2,594-sq-ft ground floor unit, in June for $4.9 million or $1,889 psf.

The sales represent a nice profit for Recap, which bought 21 units in the project for about $1,260 psf or $65 million in August last year from the project’s developers, United Engineers and Kajima. Sui Generis received temporary occupation permit (TOP) recently.

Recap is headed by Suchad Chiaranussati, who is married to a niece of City Developments executive chairman Kwek Leng Beng.

Meanwhile, Hasetrale Holdings – the controlling shareholder of Napier Properties, developer of the 8 Napier project opposite the US Embassy – has acquired back the 19 freehold units that Napier Properties had sold to an MGPA fund three years ago. This was done in July through Napier Properties director Mark Wee and Hasetrale buying Botanic Investments, the company through which MGPA bought the 19 units in late 2007 at an average price of $3,550 psf.

Botanic had paid a 20 per cent deposit and was due to pay the rest of the purchase price when the project received TOP in June this year. Napier Properties still has some units to sell in the 46-unit project and rather than risk MGPA attempting a subsale below its purchase price, Hasetrale struck a deal to buy MGPA’s stake in the 19 units via Botanic Investments, BT understands.

In another bulk purchase, Arch Capital, linked to the Ayala Group of the Philippines, recently bought all 34 units in Royal Oak at Anderson – formerly known as Anderson Green – for about $200 million or an average price of $2,337 psf.

Some investors who bought apartments in bulk are seeking to sell the units individually to secure higher prices than if they were to divest en bloc.

The ARA Asia Dragon Fund, which purchased 53 units at the Grange Infinite condo in early 2008, has begun to sell the units at an average price of about $3,200 psf, on individual unit basis. The fund’s average purchase price was earlier reported to be in the $2,600-$2,700 psf range.

Above Outram MRT Station, a local investor entity is said to have picked up 30 units earlier this month at Dorsett Residences at an average price of slightly above $1,700 psf during the project’s launch. The units have since been advertised for sale. Most of the units have apparently already been flipped and asking prices for the remaining units are said to be slightly over $2,000 psf.

Source : Business Times – 15 Oct 2010