Commonwealth Towers: Average price $1,600 - $1,700 psf?

After so many rounds of cooling measures, the heat is still on if the response to Commonwealth Towers is anything to go by. Apparently, more than 1,500 people turned up at the preview.

This is going to be one densely populated piece of land. The land area is a little more than 130,000 square feet which is decent enough but what is the plot ratio? 5.38!

Imagine that this was where Queenstown Test Centre was located. People went there to take their driving theory tests years ago. I remember. I took my test there too.

There will be 845 units with 11 units per floor in two towers. I wonder how many lifts they have per tower? My guess is 3 lifts per tower. This means 141 households share one lift, more or less. I think there might be problems if the experience shared by people who stay in the condominium across the road (i.e. Queens) is anything to go by.

Well, maybe Commonwealth Towers will be generous and will have 4 lifts per tower, the ratio improves to 106 households per lift. Still, people who stay in HDB 5 room flats in point blocks should smile since, in their case, 96 households share two lifts.

The location is good but I just don't know about living in such a densely packed project. Oh, if you are interested, you want to consider buying units facing away from the MRT tracks. Commonwealth MRT station is an above ground station.

Oh, what about the price?

It is estimated that the average price could be in the range of $1,600 to $1,700 psf! So, for a 441 sq ft one bedroom unit, I would not be surprised if the price is even $1,800 psf which means a price tag of $793,800. Almost $800K and this could be the price for the low floor units!

Mind boggling!

I don't know about you but I am perspiring from the heat. More cooling measures, please.

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CapitaMalls Asia: Being offered $2.22 a share.

I have been a CapitaMalls Asia shareholder since middle of 2011 and when I found out that the parent is offering to delist the company, I had mixed feelings.

The positive is that at $2.22 per share, the offer price is fair. The NAV/share is $1.84. So, this offer is a 20% premium to book value. NAV grew 10% year on year. So, being paid $2.22 a share, it is like getting paid in advance for growth that is likely to happen in the next couple of years.

The negative is that I will lose the chance to buy more of a stock which I believe was going through a period of price weakness, given the concerns about China. So, I was looking forward to accumulating with a greater margin of safety (i.e. buying at a bigger discount to NAV). Well, not going to happen now.

With an IPO price of $2.12 a share in late 2009, privatising CapitaMalls Asia with an offer price of $2.22 a share makes sense. It is like borrowing money from the public and paying an interest of only 1.05% per annum over a 4 and a half year period.

This is, perhaps, a good time to remember what Warren Buffett once said.

The idea that an IPO, offered with significant commissions, with all kinds of publicity, with the seller electing the time to sell, is going to be the single best investment that I can make in the world among thousands of choices is mathematically impossible.

Buffett is the reason why I have not bought into any initial public offerings in many years.

Anyway, I will probably channel the funds from this divestment into a war chest and wait for Mr. Market to feel depressed again. There is no hurry to buy anything.

Read press release: here.

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