EL Development has signed a deal to acquire the freehold Diamond Tower in the Balestier area for about $49.6 million through an en bloc sale.
The price for the freehold tower works out at around $652 psf of potential gross floor area, inclusive of a $300,000 development charge payable to the state.
Diamond Tower has a total land area of 27,323 sq ft and was zoned for residential use with a 2.8 plot ratio (ratio of maximum potential gross floor area to land area).
“We intend to build an 18-20 storey apartment block with about 100 units, mostly one and two bedroom units but we’ll also have some three bedders,” said Lim Yew Soon, managing director of EL Development.
The breakeven cost for a new apartment project based on the current construction costs works out to around $1,200 psf.
EL Development may enter into a joint venture with construction group, Teambuild, for the acquisition of the site.
The collective sale of Diamond Tower was marketed by Urban Front Real Estate, and it was offered through a tender exercise that ended last month without a deal being sealed.
“We submitted our offer after that and are buying under a private treaty deal,” said Mr. Lim.
The proposed sale of Diamond Tower will be subject for approval by the Strata Titles Board, as the owners of the apartment block have not unanimously consented to the sale.
Property developers in Singapore have been hungry for more land sites, following the strong home sales over the past few years.
Some property consultancy firms said that while bigger developers with huge budgets are concentrating on the Government Land Sales Programme to replenish their landbanks, smaller and mid-sized developers with limited budgets are aggressively looking for more land through private sources.
“They are interested in smaller collective sale sites as well as redevelopment plots comprising a few landed homes. There are also investors/developers who may have bought land in the past and who are willing to divest now,” said Shaun Poh, senior director for investment sales at DTZ.
Mr. Lim noted that property developers like them are “not that choosy location wise” these days, and a more important aspect is to find land sites with pricing that is “more acceptable”.
“Districts like 9, 10, 11 and 15 are very popular but sites in these areas command very high price premiums; so we’ll consider even other districts.”
“For us, the site should be at least 20,000 sq ft and it should also be a regular shaped plot of land so we can build a project with a decent-sized swimming pool,” said Mr. Lim.