Although no formal bids were submitted during the close of its tender exercise last week, Shunfu Ville has received expressions of interest from two developers, reported The Straits Times.
In fact, negotiations are ongoing with the interested parties, said Tan Hong Boon, Regional Director of Capital Markets at JLL, the property’s marketing agent.
Launched for collective sale in September, the 358-unit residential project had an asking price of at least $688 million.
Experts believe that potential buyers of en bloc sale sites are concerned of the Additional Buyers’ Stamp Duty (ABSD).
Levied at 15 percent on the site’s purchase price, the ABSD must be paid by developers if they do not complete the residential project and sell all the units within five years. The five-year period begins to run from the time the Strata Titles Board or High Court approves the sale for such sites.
However, developers would have to face various delays – three months for the legal completion of the sale; four to six months for residents to move out; and two to three months to demolish the existing building, said Lee Liat Yeang, real estate partner at Rodyk & Davidson.
The risk of a developer paying the ABSD would also increase with the large number of units that the 408,927 sq ft Shunfu Ville site can support. Assuming a minimum average size of 753 sq ft, the massive site can support up to 1,500 units.
Nonetheless, Shunfu Ville is not the biggest site on the market. That title belongs to the 661,000 sq ft Normanton Park plot, noted Dr Lee Nai Jia, DTZ’s Regional Head of Research.
“Whether all units can be sold is a bit hard to project given current market conditions. But as some of the Government Land Sales sites are in good locations, developers are likely to prefer those,” he said.
“For an en-bloc sale to occur, the site would have to have a wow factor – very accessible to the MRT, near good schools.”
Last Friday, the Strata Titles Board approved the en bloc sale of Thong Sia Building in Orchard Road, the year’s only major collective sale so far.