Wing Tai Holdings made an announcement on July 28 that its subsidiary, Wincove Investment, has withdrawn from the en bloc purchase of Holland Tower. This deal, which was initially announced on March 15, has been cancelled due to the non-fulfilment of certain conditions.
The reason that Wing Tai Holdings is said to have called off its collective sale deal for Holland Tower was that the planning conditions required by the developer to rebuild the site were not met. On Friday, Wing Tai said that the contract for acquisition of the 14-storey apartment building at 10 Holland Heights was rescinded as certain conditions were not fulfilled. It added that the calling off of the purchase has no material impact on the group’s net asset value.
Where is Holland Tower located
Holland Tower is a 14-storey apartment block located at 10 Holland Heights, just off Queensway.
It consists of 19 units, with the majority being three-bedroom units measuring 1,873 sq ft. Situated on a 21,878 sq ft freehold elevated site, the property falls within the Holland Park Good Class Bungalow Area in prime District 10.
The site is zoned as “Residential” under the URA Master Plan 2019.
Rules when developing in GCB Areas
Developers usually face restrictions when it comes to building in Good Class Bungalow (GCB) Areas. Unless approved by relevant authorities, developers are typically only allowed to construct GCBs on the land after tearing down an existing building.
Once approval is obtained, developers can redevelop the site to its previous gross floor area, maintaining the same building height control. The Holland Tower, for example, sits on a 2,033 square metre site with a gross floor area of 4,059 square metres and a gross plot ratio of around two. The building comprises 19 spacious apartments ranging from 1,862 square feet to 2,949 square feet each.
However, certain setback requirements still apply in GCB Areas. If a new building is within 25 metres of an adjoining GCB, it can only be built up to two storeys.
These restrictions can be burdensome for developers, which is why it’s possible that Wing Tai requested additional waivers and made them a condition precedent in the Holland Tower deal.
If the condition precedent is not fulfilled, Wing Tai has the right to rescind the agreement and receive a full refund of the deposit. In such cases, neither party can make claims against the other. Homeowners may find it challenging to sue developers for backing out of an en bloc deal too.
Why did Wing Tai Holland Tower En Bloc Stopped
Holland Tower En Bloc has been granted a “special waiver” for apartment redevelopment. However, there are several stringent setback conditions, including height and gross floor area (GFA) restrictions.
Developing a new condominium block of 14 storeys within a Good Class Bungalow Area requires a minimum setback of 34m, as stipulated by URA. Furthermore, URA does not permit further intensification of the gross floor area or the number of dwelling units. These restrictive development controls make it challenging for developers to implement their intended development plans for the site.
Additionally, due to its proximity to Queensway, a major arterial road, there is also a need for a 15m setback requirement.
Holland Tower has a built-up area of 43,691 sq ft, which is in line with its existing gross plot ratio of 2.0. The transacted price for the property was $76.3 million, resulting in a land rate of $1,764 psf per plot ratio.
However, estimating the overall cost is difficult due to the site constraints and restrictions. The breakeven cost has been suggested to be around $2,800 to $2,900 psf, with an average selling price of the new project ranging from $3,200 to $3,300 psf.
What about the Cooling Measures
The latest cooling measures implemented by the government, including a doubling of the additional buyer’s stamp duty (ABSD) for foreigners, have impacted demand for luxury condominiums in the Core Central Region (CCR). The number of non-landed residential properties purchased by foreigners has significantly decreased since April.
Some developers have even postponed the launch of their luxury developments in response to these measures. However, a luxury development in Central of Singapore called TMW Maxwell has gone ahead with its launch.
Historical Examples of En Bloc Being Called off
A similar situation occurred in 2018 when Oxley Holdings called off an en bloc sale for Ampas Apartment. Despite paying an initial deposit of S$4.75 million, which was 5% of the S$95 million purchase price, the contract was rescinded due to the inability to meet a condition precedent. The sale was contingent on being granted outline planning permission for a new development with at least 120 units. However, the government only permitted 112 units based on its 2012 guidelines. The High Court dismissed the owners’ claim to keep the S$4.75 million deposit.
In December 2021, the government implemented cooling measures to prevent the property market from overheating, leading to the cancellation of an en bloc deal for High Point condominium. Shun Tak Holdings, a Hong Kong-listed company, forfeited its S$1 million tender deposit for the S$556.7 million sale when the deal was unilaterally called off.
This turn of events at Holland Tower is likely to have a negative impact on the already sluggish collective sale market. The en bloc market was already expected to be cooling off this year with new measures on floor space and stamp duties.
