En bloc sale market picking up: analysts

The en bloc sale market has been feverishly picking up activity this year.

Apart from more en bloc properties being offered for sale, analysts say that the average prices for the sites have also increased by more than 50 per cent compared to a year ago.

However, the offer prices have yet to surpass the levels seen by the market at the peak of the property boom in 2007.

Since the start of this year, some 20 collective sales have been announced.

Analysts say that 9 deals have been closed so far, worth a total of S$880 million.

This compares with 34 collective sales deals completed last year totalling S$1.7 billion.

Analysts say that average transaction sizes have increased, from S$52 million in 2010 to over S$80 million this year as property developers are bullish on the economy.

Donald Han, vice chairman of Cushman and Wakefield, said: “Bottom line (is) so long as the economy grows within the 4 to 6 percent, I think generally the confidence will be there in terms of investors coming into Singapore, looking to investing in this part of the world.

“It’s going to be a fairly active market. I think we’re beginning to see the sort of response as what we saw in the first quarter. Confidence will start coming back again, and if we’re beginning to see more cooling measures then that puts a hinder on project sales movement.

“Then developers might hold back again. So it’s a touch-and-go scenario depending on government measures, if any.”

Two sites were launched for collective tender on Wednesday.

Vista Park, a large leasehold residential redevelopment site off Pasir Panjang Road, has been put up for sale with a guide price of S$338 million. The tender will close at 3.00pm on June 30.

Separately, a post-colonial development in River Valley with a unique tenure of nearly a million years is expected to fetch a reserve price in the range of S$72 million to S$80 million. The tender closes at 2.30pm on June 9.

Analysts say the market for en bloc sales currently favours smaller developments as large land banks continue to be dominated by government land sales.

Mr Han said: “I think generally I tend to be a bit more bullish on the smaller ones because the more bite-sized (they are), the number of new players in the market will tend to be a bit more, compared to new entrance for large-sized projects.”

Analysts say the collective sale market for this year will be focused more on locations at city fringes such as Balestier and Katong. This is because the land banks offered for sale in these areas will likely be smaller in size.

Mr Karamjit Singh, managing director, Credo Real Estate, said: “Various en-bloc sites have different fortunes. Smaller ones are more successful because for smaller developers, en-bloc sites are their main source of land supply. Bigger developers, on the other hand, are more keen on government sites.”

Source : Channel NewsAsia – 11 May 2011

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