Hampton Court sale to lift luxury-segment prices

IT looks like foreign investors are returning to the luxury residential market. According to caveats lodged with URA Realis last month, 12 units at Hampton Court, a four-storey freehold residential block located at the corner of Draycott Park and Draycott Drive, were sold for a total of $155 million, or an average of $3,757 psf last month. Given that all the caveats were lodged on the same date (Dec 18) and there are only 12 units in the project, property consultants reckon it's a block purchase by a single entity.

Word on the street is that the buyer of the units at Hampton Court is Hong Kong-based property group Swire Properties, which famously sold the most expensive apartment in the world recently. According to a Bloomberg report in November, Swire sold a 6,683 sq ft unit in its 12-unit luxury project, Opus, designed by Frank Gehry, to an undisclosed buyer for a whopping HK$455 million ($72 million), which works out to HK$68,083 psf. The apartment is said to have been sold prior to measures taken by the Hong Kong government to cool the property market, including a 15% tax on foreign and corporate buyers of residential property. The group is said to have sold another unit at Opus for HK$430 million in August.

The price of just those two apartments at the 12-unit Opus amounts to $140 million, which is just $15 million shy of the $155 million Swire paid for all 12 units at Hampton Court in Singapore, located next to Tanglin Club. According to sources, Swire is likely to be subject to the 10% additional buyer's stamp duty (ABSD) levied by the Singapore government on foreigners and corporate entities buying residential property from Dec 7, 2011. This means that the total buyer's stamp duty for the Hampton Court units amounts to $20.15 million.

The previous owner of Hampton Court is said to be the Quek family of Thong Teck Realty — the developer of Thong Teck Building located on Scotts Road — who are also related to the late Quek Bak Song, an ex-chairman and co-founder of the former Overseas Union Bank who passed away in 1980. Hampton Court is a redevelopment of the late Quek's former bungalow. Over the years, the units at the project had been held by various family members, including Quek's grandsons and daughter, until the recent sale.

The Quek family had put Hampton Court for sale by tender in late 2011, but the tender was unsuccessful as it closed on Dec 8, just one day after the government announced the imposition of the ABSD. CBRE was the marketing agent for the tender exercise then, and is believed to have brokered the recent sale in a private treaty deal.

Hampton Court sits on a freehold site of 33,425 sq ft. Under the current URA Master Plan 2008, the site has a plot ratio of 2.1 and can be redeveloped into a new 24-storey luxury residential tower containing 23 units, assuming an average size of 3,000 sq ft each. Based on the purchase price of $155 million, the unit land price works out to $2,526 psf per plot ratio (ppr), which is just $1 psf ppr more than the previous record price of $2,525 psf ppr paid by Malaysia's YTL Land for the former Westwood Apartments on Orchard Boulevard in an en-bloc deal in late 2007.

The break-even price for Hampton Court is expected to be around $3,500 psf, estimates Alan Cheong, head of research at Savills Singapore. "Should Swire Properties decide to sell the units in the development, the estimated sale price could be at least $4,000 psf," he says.

Swire's purchase is its first in Singapore. While the company hasn't disclosed its intention for the property — whether to keep it for investment and lease out the units or redevelop the site — based on its track record and property development capabilities, it is likely to do the latter, reckons a property consultant. "It is likely to develop a new attractive project," he says.

This will bode well for the rest of the luxury residential segment. Transaction prices in the Draycott and Ardmore Park area are currently in the $2,500 to $3,500 psf range, points out Savills' Cheong. "The price paid for Hampton Court will re-invigorate interest in the area and, in the process, elevate prices further," he says. The latest transaction in the area was for a 2,896 sq ft, four-bedroom unit at Draycott Eight that changed hands for $7.18 million ($2,480 psf). The 99-year leasehold luxury condominium comprising 136 units is located right next door to Hampton Court. It was developed by Wing Tai Holdings and completed in 2005.

Hampton Court's recent transaction price — both in terms of unit price psf and land price psf ppr — will also give YTL's residential project on Orchard Boulevard a boost. The former Westwood Apartments will be redeveloped into a freehold luxury residential project with a mix of 77 two- to five-bedroom units. The condo is designed by renowned Italian architect Antonio Citterio, whose projects include the Bulgari Hotel in Milan and Bali. This is his first residential project in Asia.

YTL's project on Orchard Boulevard is targeted for launch in 3Q2013, and Savills' Cheong estimates selling prices to start from $4,000 psf. This is comparable to prices achieved in the neighbourhood, for instance at China Sonangol's TwentyOne Angullia Park (a redevelopment of the former Parisian condo), where five units were sold last year at $3,950 to $4,338 psf.


This story first appeared in The Edge Singapore weekly edition of Jan 14-20, 2013.