Buying opportunities in Balmoral area

By Tay Hock Meng

/ The Edge Property |

July 24, 2015 10:00 AM SGT

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Last December, listed property developer Hiap Hoe Ltd announced that its controlling shareholder Hiap Hoe Holdings, the investment firm of the Teo family, acquired all the shares in Hiap Hoe SuperBowl JV Pte Ltd which owns Treasure on Balmoral, its 48-unit freehold condominium block. The sale worked out to $185 million or $1,789 psf for the development.

This has had an impact on prices of neighbouring new condominiums launched in the Balmoral area, leading to transactions drying up for much of the first six months of the year. For example, next door to Treasure on Balmoral is Three Balmoral, a 40-unit freehold boutique condominium project by Tong Eng Group. The 12-storey project contains only one-bedroom-plus study units with sizes starting from 614 sq ft and three-bedroom units above 1,500 sq ft.

Sales of Three Balmoral started in Oct 2011, and only seven of 20 units launched have been sold to date, according to URA data. The latest recorded sale was on June 15, for a 1,539 sq ft three-bedroom unit on the eighth floor that was sold for $3.4 million ($2,209 psf), according to URA Realis. The price psf is the lowest seen in the project to date as the earlier recorded transactions from Oct 2011 to April 2013 ranged from $2,388 psf to $2,608 psf, observes Ssamuel Eyo, managing director of Singapore Christie’s Homes.

Hiap Hoe Ltd, which is a public listed company, was pressured to sell under the conditions of the Qualifying Certificate (QC) which requires all foreign companies (which includes listed companies) to sell all the units in their residential developments within two years of completion to avoid paying a penalty for any unsold units. The privately held Tong Eng Group on the other hand is not subject to the QC, and is therefore in no hurry to sell off the units. The group also has the holding power to ride through the current period of slow sales, adds Eyo.

Located on the opposite side of the road from Three Balmoral is another freehold condominium by Tong Eng Group. Called Goodwood Grand, the freehold project contains a condominium block of 65 units and eight strata bungalows. The project was launched for sale in December 2013. Of 31 units released, 26 units have been sold, with the latest transaction recorded in May at a median price of $2,563 psf, according to URA data.

Likewise, Goodwood Grand’s price level is also being affected by another listed group, GuocoLand, which has been selling the remaining units at its 210-unit Goodwood Residence located off Bukit Timah Road. The project was completed in 2013, and the developer has sold 27 units, with three-bedroom units sized from 1,948 sq ft to 2,142 sq ft sold at prices ranging from $2,181 psf to $2,614 psf; and four-bedroom units from 2,454 sq ft to 2,928 sq ft offloaded at prices of $2,413 psf to $2,678 psf, based on caveats lodged with URA Realis from January to June 2015 to date.

“The price psf range of Goodwood Residence which is trading at $2,400 psf to $2,600 psf serves as a rough ballpark pricing for many of the newer developments with larger unit layouts of three- and four-bedroom types,” notes Aldric Tan, senior associate director of CBRE Realty Associates.

CBRE’s Tan attributes the lack of transactions for both Three Balmoral and Goodwood Grand to the absence of a proper showflat on site as construction of both projects are already well underway. “Without a proper showflat, buyers can’t visualise the unit layout and orientation,” he explains. “And people are more reluctant to commit to a purchase without seeing an actual showflat.” If there are serious buyers, Tong Eng is willing to negotiate with them on pricing “on a case-by-case basis” and willing to offer discounts from 3% to 5%, notes CBRE’s Tan.

On the opposite side of Balmoral Road diagonally opposite Goodwood Grand is Belmond Green, a 211-unit freehold condominium developed by CapitaLand and completed in 2004. The latest resale was for a 1,335 sq ft three-bedroom unit on the ninth floor that changed hands for $2.35 million ($1,723 psf), according to a caveat lodged on June 8. The unit last changed hands in 2006 for $1.3 million ($996 psf), hence the seller saw the price of the unit appreciate almost two fold in under a decade.

According to CBRE’s Tan, Belmond Green’s resale prices are affected by the recent transaction prices at Hallmark Residences, a recently completed project located behind it on Ewe Boon Road. At Hallmark Residences, a 75-unit high-end condominium by MCL Land, the two latest transactions were for two ground floor units that were sold for $3.13 million ($1,773 psf) and $2.92 million ($1,739 psf). The lower price psf could be due to the private enclosed space of the ground floor units or the developer willing to shave off the price to clear the last few units, suggests Tan. As of end May, there were only three unsold units at Hallmark Residences, based on URA data.

Meanwhile the lower price psf of Belmond Green - where four units had changed hands this year at prices ranging from $1,635 psf to $1,723 psf - may be proving attractive to buyers shopping in the resale market, notes Bruce Lye, managing partner of SRI5000, a division of SLP Realty.

Belmond Green is not as old as some of the other developments in the area, for example Palm Spring, Crystal Tower and Ewe Boon Regent which were built in the 1970s to 1990s. So Belmond Green appears relatively new in comparison, he adds. “On an a quantum basis, units at Belmond Green look more affordable compared to those of Hallmark Residences which are larger in size and have a higher price psf given that the project is new.”

This article appeared in the City & Country of Issue 683 (June 29) of The Edge Singapore.

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