En Bloc Analysis: Hawaii Tower
A client of mine recently requested that I do an analysis on Hawaii Tower and what are its chances of going through a collective sale. Hopefully, this will give you a good understanding of how I shortlist developments that have potential for an en bloc.
Is the Land Under-Utilised?
Hawaii Tower sits on a relatively large plot of land with a very good plot ratio of 2.8. It’s Gross Floor Area (GFA) of 50,030sqm allows the land to accommodate up to 500 units which is approximately 3.7 times the current development size. This means that developers looking to redevelop this plot of land can expect to maximise the usage of the land.
Its freehold status also means that developers would not be subjected to any top-up premium.
Hawaii Tower sits on a prime location overlooking East Coast Park. It is accessible via the Marina Coastal Expressway and Nicoll Highway. The upcoming Katong Park MRT Station which will be completed in 2024 is just 500m away. It will enhance the accessibility of the surrounding developments to the Central Business District (CBD).
Nearby schools include:
- Dunman High School
- Chatsworth International School
- Chung Cheng High School
- Canadian International School (CISS) — Tanjong Katong Campus
- Tanjong Katong Primary
Nearby shopping malls include:
- Parkway Parade
- Katong Shopping Centre
- Leisure Park Kallang
- Katong V
- NTUC Fairprice (Jalan Tiga)
All in all, Hawaii Tower sits on an excellent location with good accessibility to various parts of Singapore especially once Katong Park MRT station is open.
Recent Transactions Within and Around Hawaii Tower
The most recent transaction within Hawaii Towers was in 16 Nov 2021 for a 2239 sqft unit for $3.7m. This translates to a per square feet (psf) price of $1653. There were a total of 3 transactions in 2021, averaging at a psf price of $1657psf.
Just beside Hawaii Tower is Meyer Mansion which is already 75% sold. The average $psf for units sold thus far is $2643.
Comparing Hawaii Tower with Surrounding Developments
Apart from Hawaii Tower, we have Peach Garden and Amber Point which are 2 other developments that are relatively older.
- Amber Point
Amber Point is a freehold development completed in 1991. There are currently 100 units and has the potential to be redeveloped to 228 units (2.28 times). The most recent transaction is in 10 March 2022 for a 1668 sqft unit at $2.83m. This translates to a psf price of $1696.
- Peach Garden
Peach Garden is also a freehold development completed in 1975. There are approximately 41 units. It seems that there isn’t much potential for redevelopment and for that reason, the chances of Peach Garden undergoing a collective sale will be quite slim. The most recent transaction is in 18 February 2022 for a 2766 sqft unit at $4.428m. This translates to a psf price of $1601.
Judging from this, I would say the potential for Hawaii Tower experiencing a collective sale is relatively high. However, the freehold status of the land also means that a collective sale may not happen in the near future since a top-up premium would not apply to developers.
Recent Government Land Sale/Collective Sales in District 15
The site at Jalan Tembusu which was launched for sale under Government Land Sale (GLS) is the most comparable to Hawaii Tower in terms of its land size. However, it is a 99-year leasehold land that does not offer the same sea view that Hawaii Tower offers. In addition, land acquired under (GLS) also tends to be cheaper than if it were to be acquired through a collective sale.
How Much is Hawaii Tower Worth Now?
To put things into perspective, Casa Meyfort (now known as Meyer Mansion) was en bloc-ed for $319.9m. As a projection, the land that Hawaii Tower sits on could be worth over $945m. To be conservative, at a sale price of $900m, each of the 135 owners can stand to gain approximately $6m (since unit sizes are the same throughout).
How Soon Will Hawaii Tower go Through En Bloc?
The fact that the land Hawaii Tower sits on is currently under-utilised, there is a fair chance developers can maximise the land. Ultimately, developers are for-profits. If they were to consider re-developing any land, the future price they sell at will still have to make sense.
At the estimated current breakeven of $2469 psf ppr, it may seem a bit far-fetched given that this breakeven price is what we are experiencing with current Core Central Region (CCR) projects.
The current new launch sale price around D15 averaged at $2542psf. Liv@MB sold almost 80% of its units at an average of $2387psf.
The 2 sites at Jalan Tembusu and Thiam Siew Avenue which will be launched in 2022–2023 will see a psf price of approximately $2367 and $2640 respectively. If this upward projection of new launch prices continue, an en bloc sale at Hawaii Tower is certainly on the horizon.
My take is that unless the reserve price is lower than $900m, Hawaii Tower will only undergo an en bloc 5–10 years later.
If Hawaii Tower were to be put on the market for en bloc, it would be their fourth attempt. All 3 attempts were in 2007. The first attempt started at $700m and increased to $800m in its second attempt. The last attempt launched in late 2007 at $800m petered out as developers were no longer land starved at that point.
It is unsure how residents at Hawaii Tower will feel about another go at a collective sale. Given that almost 85% of residents are Singaporeans/PRs, getting 80% consent for a collective sale would not be too difficult if the reserve price can be met.
The current balance inventory of unsold units in District 15 stands at 227 units (as at 22 May 2022). With approximately 1400 new units to be launched from the Jalan Tembusu and Thiam Siew Avenue site, we will have to monitor the take-up rate before anything concrete can be said about Hawaii Tower.
Disclaimer: This post is merely my prediction of what might unfold and does not constitute to anything concrete. As with any prediction, it is nearly impossible to achieve 100% accuracy. For this reason, higher risk is associated with en bloc speculation. Please always do your due diligence before committing to any investments related to en bloc speculation.
I hope this article serves purposeful in helping you make a more well-informed decision, regardless of whether you’re purchasing a property for own-stay or investment. As always, feel free to share your opinion in the comment section and I will take time to address them when I can. Till next time!