Ravi Chandran
Horizon Towers en bloc tender closed on 12 Sep, with not even a single bid received for its collective sale effort. The failure of the en bloc tender gives the owners of the prime property 10 weeks to seal a deal by private treaty.
Horizon Towers was launched for sale by tender on 5 July 2018 with the closing date originally scheduled on 7 August 2018. On the same evening, the Government announced the fresh round of residential market cooling measures effective 6 July 2018, increasing the rates of the Additional Buyer’s Stamp Duty (“ABSD”) and reducing the mortgage loan-to-value limits across the board. In addition, for residential land purchases, there would also be a non-remissible ABSD of 5 per cent.
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In view of the changes, the Collective Sale Committee (“CSC”) of Horizon Towers, in consultation with their marketing agent and lawyers, made the decision to extend the tender closing date to 12 Sep. This decision was made following feedback from developers that they remain interested in the prime site but would require more time to observe and re-assess the market going forward, re-evaluate the project in the lights of these new measures and monitor the sales of new projects.
Responding to the failure of the en bloc tender, the development’s marketing agent JLL, sent a letter to the owners of the condominium saying it will in consultation with the CSC and lawyer, look at the possibility of another public tender by early-2019 – if no buyer is found after the private treaty period’s expiry on 20 November.
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“We have up to March 2019 at the latest to secure a sale contract,” the letter noted, and said that owners have until May 21, 2019 to conclude a sale and apply to the Strata Titles Board (STB) for a sale order. It added: “While there are interested parties … these parties have been holding back their land acquisitions and are continuing to observe and reassess the market as a result of the latest round of residential market cooling measures introduced two months ago.”
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JLL added that although sales volume will continue to be affected in the short term, it expects the market “to regain its dynamism in due course given the still strong fundamentals and the demand-supply situation”.
Horizon Towers’ unsuccessful en bloc tender is surprising considering it enjoys unparalleled location and physical attributes and possesses all the ingredients needed for a luxury masterpiece development with spectacular all round city views. The site has an existing “as-built” approved gross plot ratio (“GPR”) of around 3.28228. As it also has a high development baseline, no development charge is payable even with the additional 10 per cent bonus gross floor area for the balcony.
Notwithstanding the new market cooling measures, at the reserve of $1.1 billion, which translates to a land rate of $1,786 psf/pr at GPR 3.6105 after factoring in the 10 per cent bonus gross floor area plus a lease top-up premium estimated to be in the region of $220 million, Horizon Towers remains an attractive value proposition.
Built in the late 1970’s, the 99-year leasehold Horizon Towers comprises 211 units in two towers located on an elevated site with double road accesses. Nestled in the very prime District 9, the site exudes exclusivity amidst the tree-lined serenity of Leonie Hill and Leonie Hill Road.
The sprawling 1.9 ha site is zoned “Residential” in the 2014 Master Plan with an allowable height of up to 36 storeys. It has an “as-built” gross plot ratio (“GPR”) of around 3.28 as confirmed with the Urban Redevelopment Authority (“URA”) and may be redeveloped into a luxury high-rise residential development with marvelous city views all round.
The site of the failed en bloc tender is probably the largest high-rise residential redevelopment offering in the Orchard Road area in at least two decades.
The unit land rate of Horizon Towers compares favourably with the recent 99-year Government Land Sale site at Cuscaden Road sold for $2,377 psf/pr, the freehold collective sale sites of Park House in the same district, which achieved a record-breaking unit land price of $2,910 psf/pr, the Nassim Road site at $2,744 psf/pr, and the earlier Pacific Mansions site at River Valley Close at $1,987 psf/pr, as well as the Cairnhill Mansion and the adjoining sites at $2,311 psf/pr and $2,132 pf/pr respectively.
Horizon Towers was completed in 1984 but has a remaining lease of 60 years, as it sits on a 99-year leasehold site starting from 1979.
Horizon Towers’ first en bloc attempt in early 2007 failed. 87 per cent of owners had then agreed to the sale of the property to to a consortium led by Hotel Properties, but a protracted dispute between minority owners and the members of the collective sale committee resulted in the deal being overturned in 2009. Some minority owners then took the chairman and a member of the collective sale committee to court over costs and expenses incurred during the dispute, and the case was finally concluded in the High Court in October 2013.
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