The owners increased the asking price from the previous $2.48 billion after the development was found to be undervalued by more than $300 million.
Mandarin Gardens condominium is set to break a new record as its owners have increased the asking price for the 1,006-unit development at East Coast to $2.79 billion from $2.48 billion previously, reported Today Online.
Pandan Valley set the previous high with its $2.6 billion asking price.
More: Pandan Valley Seeks Record $2.6b En Bloc Asking Price
The move comes after the site on which the 1.07 million sq ft development is located was found to be undervalued by more than $300 million, said Mandarin Gardens’ Collective Sale Committee (CSC) spokesperson Leonard Jayamohan.
CSC chairman Vincent Teo revealed that the disparity in land value was discovered following a check with the Urban Redevelopment Authority (URA) on Mandarin Gardens’ development baseline record.
“The drastically increased baseline we received resulted in a corresponding reduction of the differential premium, which enables us to increase the reserve price, and at the same time reduce the per sq ft per plot ratio (psf ppr) for the developers,” he said in a notice sent to residents.
Its managing agent C&H Properties has cut the 99-year development’s price psf ppr to $1,191 from $1,236.
International Property Advisor CEO Ku Swee Yong said this is the first time he has encountered a development raising its price due to the discovery of an inaccurate land value estimation.
Using nearby condominium Seaside Residences – which was launched at $2,000 psf last year as a benchmark, Mandarin Gardens’ psf price of $1,191 provides developers with sufficient margins, he noted.
Each owner, on the other hand, stands to gain an average of $2.8 million if the sale goes through.
Although it appears to be a winning proposition for both sellers and developers, the price adjustment could prove to be a futile exercise given that $2.79 billion is an enormous price tag, explained Ku.
“Under the current market conditions, what is the point?” he said.
“The single investment risk is too high for developers to take. Also, how many banks are willing to lend against such a large investment?”
More: Understanding The En Bloc Process (August 2018)
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
