Why did Wing Tai pull out of the Holland Tower contract in its entirety?

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Wing Tai Holdings announced on July 28 that its wholly owned subsidiary Wincove Investment has withdrawn from the purchase by en bloc of Holland Tower for $76.3 million which it had made public four and a half months prior the 15th of March.

This Singapore-listed property developer has cited “non-fulfilment of certain terms” for the reasons behind withdrawing from the deal. Wing Tai declined to comment further when asked.

Holland Tower is a 14-storey apartment block that has only 19 units comprising they are mostly 1,873 square feet three-bedroom units. The property is located on a 21,878 square feet freehold elevated site located at 10. Holland Heights, a quiet road that is located just from Queensway.

According to the URA Master Plan 2019, the site is designated “Residential” which is located in the Holland Park Good Class Bungalow (GCB) Area, which is located in District 10 in prime location.

Setback limitations
It is situated in an area known as the Holland Park GCB Area, the Holland Tower site was given the status of a “special waiver” to allow apartment redevelopment. However it’s subject to strict setback restrictions like the height and gross floor area (GFA). Because it is located close to Queensway which is an area classified as a Category 2 road and is in Land Transport Authority (LTA) language means major arterial road. There is a setback of 15m also.

To build a new condominium block that is 14 stories, URA stipulates a minimum setback of 34m in a GCB Area. URA also prohibits an increase in areas of gross floor, or the amount that dwellings are permitted.

Due to the strict development control that are in place, it could be difficult to follow a developer’s development plan for a new project, as per an experienced property experienced.

Holland Tower has a built-up area of 43,691 square feet according to the existing Gross plot ratio 2.0. “Developers might modify the site in its current built-up area subject to the approval of the appropriate authorities.” SRI Capital Market managing partner Low Choon Sin commented in the press release of March 15.

It was SRI Capital Market’s Low The company, which is the sole marketing agency for Holland Tower has brokered the deal. CTLC Law Corporation was the appointed legal counsel on behalf of the owner’s Holland Tower.

When asked, SRI Capital Market declined to comment on this story.

“Luxurious and iconic development for residential homes’
The ideal project for the site could be a luxurious boutique condominium that consists of a majority of large-format apartment units. Wing Tai planned to “leverage its excellent location advantages to build a luxurious and renowned residential project with amazing views unblocked from the greenery that surrounds Holland Park and the Singapore city skyline” according the the executive Director Tan Hwee Bin in the group’s press release on March 15.

Some experts believe that its plan may be scuppered by site restrictions and limitations.

The $76.3 million transaction price to purchase Holland Tower translates to a land value of $1,764 per square foot in plot proportions. “The cost is harder to determine because of site limitations and constraints,” says a property consultant who would not be identified. “However taking that a typical development site located in the top Holland region, the break-even cost could be around $2,800-2,900 psf with the median selling price for the new project within the range of $3,200-$3,300 per square foot.”

Foreign buyers with high net worth or Permanent Residents (PRs) generally prefer condominiums located in areas like the Core Central Region (CCR).

The cooling measures are being re-examined
But, the government’s recent cool measures announced on April 27 which included an extra buyer’s tax (ABSD) to foreigners increasing to 30% to 60%% up to 60% and a reduction in the demand.

Based on Huttons Data Analytics, the number of non-landed residential properties bought by foreign buyers has decreased dramatically between 112 and 66 units by May, reducing to 27 units, or 2.5% of all such transactions in June.

Certain developers were reacted by postponing launch of their luxury developments within the CCR. City Developments (CDL), for example, had originally planned to unveil their 246 unit Newport Residences, an redevelopment of the old FujiXerox Towers located on Anson Road, on April 29. But, following the cooling measures taken in April 27 CDL announced it was going to postpone the Newport Residences’ preview would be “postponed indefinitely”.

Exiting from En bloc deals
It’s not the first time that a developer has pulled out of an en bloc acquisition. Hong Hong Kong-listed Shun Tak Holdings, for example, pulled out of its en bloc acquisition from High Point 2 1/2 years before, due to the introduction of cooling measures that went into effect on Dec 16 2021. Most notable was the rise by ABSD for foreigners ranging from 20% to 30%% up to 30%%.

The previous week, on the 9th of December 2021 Shun Tak announced it had won the tender for the group deal to purchase High Point for $556.7 million. In the announcement the developer announced its plan to transform the property to become a luxurious residential project that will be completed in 2027.

Shun Tak did not proceed with the 5% down payment on the High Point en bloc deal due the 23rd of December, 2021. The developer even canceled its tender deposit of $1 million.

In the Holland Tower’s instance, Wing Tai may have already made five% deposit. On the basis of the $76.3 million price of the purchase 5, the 5% is $3.815 million.

There is also a possibility that the collective sale committee at Holland Tower submitted an application for the Strata Title Board (STB) to have a sales warrant sent to the purchaser which is in this case Wing Tai.

When the sales contract is issued to the developer The next 5% payment is due. Because Wing Tai has cancelled the agreement and will not continue with the subsequent payment of 5% payment.

“However in the event that the sales conditions weren’t satisfied, the deposit would normally have to be refund,” according to a property consultant.

The latest episode of Holland Tower is likely to put a damper on the market for collective sales that is already stagnant.