38 units at The Draycott up for sale

Business Times, Published March 25, 2014

By mindy tan [e-mail]

THE investment holding company of the family (Tan Chwee Boon Pte Ltd) that developed The Draycott has put up 38 units for sale by expression of interest.

The portfolio has been independently valued at $1,900 per square foot, which translates to an absolute price of $198 million.

The total strata area for the 38 units is about 104,429 square feet, and represents around 31 per cent by share value and strata area of the whole development. Of the 38 units, 30 are located in the tower block and face Goodwood Hill.

The development comprises a total of 133 units. Completed in the 1980s, the 34-storey development was one of the tallest condominium buildings then. It is located along Draycott Park and next to Ardmore Park.

From an en bloc perspective, an investor who pays, for example, $200 million for the 38 units would indirectly be buying into the redevelopment potential for the land at the rate of around $1,790 per square foot per plot ratio (psf ppr), said JLL.

By comparison, Hampton Court, also located along Draycott Park, was sold to Swire Group at about $2,526 psf ppr in December 2012. Westwood Apartments was also sold at a similar rate in 2007 in an en bloc sale. These two examples point to an attractive 40 per cent arbitrage potential if an en bloc sale is timed propitiously, said JLL.

The portfolio's valuation of $1,900 psf also offers a discount when compared with individual sales of other projects in the vicinity. Three units at the nearby Ardmore Park were sold at an average of $3,490 psf in the second half of last year while a low floor unit at Four Seasons Park was recently transacted at $2,323 psf.

"The market is experiencing a low point now, with the cumulative weight of the suppressive measures at its peak, especially with foreigners needing to pay 18 per cent stamp duty. As a result, prices of high-end homes around Orchard Road have eased as much as 15 to 25 per cent from the high in 2007," said Karamjit Singh, head of investments and residential at JLL.

"Astute long-term investors who believe in market cycles would find this a timely investment. When the market for high-end homes recovers, possibly in the medium term, an en bloc sale along with the other owners of The Draycott would be an ideal exit strategy."