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News Release

Singapore

Rare investment portfolio of 38 units at The Draycott up for sale

Freehold development in the prestigious Ardmore Park / Claymore district with potential for en bloc sale


SINGAPORE, 24 March 2014 – JLL has been appointed as the exclusive agent for the sale of 38 units within The Draycott, an iconic residential development in the prestigious Ardmore Park/Claymore district. The seller is an investment holding company owned by the family that developed the project.


The Draycott is arguably one of Singapore’s most iconic condominium projects, with its distinctive cylindrical architecture. Completed in the 1980s, the 34-storey development was one of the tallest condominium buildings then. It is prominently located along Draycott Park and next to Ardmore Park, well regarded as Singapore’s most prestigious residential enclave, and also near The Tanglin Club and The American Club.


The development comprises a total of 133 units, with the 38 units in the portfolio up for sale representing around 31 per cent by share value and strata area of the whole development. The total strata area of the 38 units is some 9,711 sq m or 104,429 sq ft. The portfolio includes 30 units within one column in the tower block, and faces the lush greenery of Goodwood Hill. The state-owned Goodwood Hill spans a massive area of over two million square feet of grounds (equivalent to about 27 football fields put together), bound by Scotts Road, Stevens Road and Balmoral Road, populated by lush mature trees and colonial houses.


“When The Draycott was built in the 1980s, it was the new icon of luxury and prestige’, said Mr Karamjit Singh, Head of Investments & Residential at JLL. The Draycott set a new standard with its characteristic classic design, towering over its neighbours in its expansive grounds and ultra-prime location.”


“Most of the other high-end condominiums in around Orchard Road that were built in that era, such as Pin Tjoe Court, Westwood Apartments and Ardmore Point, have since been redeveloped after they were sold through en bloc sales between 2006 to 2007. The Draycott is one of the few condominiums remaining in the area, which should make it lucrative to sell collectively, especially when the demand for land for in the luxury end of the market recovers,” added Mr Singh.

 
“En bloc sales happen in cycles,” explained Mr Singh. “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 in around Orchard Road have eased as much as 15 to 25 per cent from the high in 2007. From here on, we believe that things can only get better, especially with the assessment of policy risks turning from negative to positive. 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.”

 
An independent valuer has valued the portfolio at S$1,900 psf over the strata area of 104,429 sq ft, which translates to an absolute price of S$198 million. From an en bloc sale perspective, an investor who pays for example, S$200 million for this development would indirectly be buying into the redevelopment potential of the land at the rate of around $1,790 psf ppr. In December 2012, the land of Hampton Court, located also along Draycott Park was sold at the rate of S$2,526 psf ppr to the Swire Group. 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.

 
This portfolio’s valuation of S$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 an average of S$3,490 psf in the second half of last year. Meanwhile, a low floor unit at Four Seasons Park was recently transacted at S$2,323 psf.

The other strong factor supporting an investment into the luxury end residential market this year is the narrowing gap between where their prices have softened, in contrast to properties in the lower end or mass market segment. According to the Urban Redevelopment Authority’s property price index, homes Outside Central Region (OCR) have risen 67 per cent since early 2007. According to data gathered by JLL, prices of select luxury condominiums in and around Orchard Road have shown to have softened between 15 to 25 per cent during the same period.

Said Mr Singh: "Homes in and around Orchard Road are clearly undervalued when benchmarked against their counterparts in markets like London or Hong Kong. Prime homes in London tend to hover around S$5,000 to S$6,000 psf, with even One Hyde Park in Knightsbridge, London costing as high as £6,000 psf or about S$12,000 psf at the extreme. Hong Kong's prime high-rise condominiums on the other hand, trade for around S$6,000 psf for The Albany and S$5,000 for Kennedy Heights."

Amenities at The Draycott include a swimming pool, gymnasium, children's pool, barbeque area, children's playground, male and female changing rooms. Ample covered carpark lots are also available for both residents and visitors.


The Expressions of Interest exercise is scheduled to close at 3pm on Tuesday, 29 April 2014.

 

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