En bloc sales market set to cool further in 2013: analysts

The moribund property en bloc sales market looks set to cool down further. Experts expect total transactions in the collective sales market to decline to around S$1.5 billion in 2013.

Global real estate services firm, Jones Lang LaSalle expects en bloc activities in Singapore to slow down from S$3 billion in 2011 to S$2 billion in 2012 and likely to go even lower than 2012 numbers this year.

However, property analysts said developers are still on the lookout for land to develop and they will likely go for smaller plots.

En bloc sales activities reached fever-pitch in 2007 — hitting a value of close to S$12 billion. But the recent slew of property cooling measures — like restricting the loan tenure, the additional buyer’s stamp duty, and the latest changes in property tax structure — has somewhat cooled down the segment.

Several developments, like Villa Des Flores in the prime district 11 area — which has been put up for collective sale for the third time since its initial launch in June 2012 –, has remained unsold.

Karamjit Singh, head of investments & residential at Jones Lang LaSalle, said: “With caution in the air, developers tend to be a bit more circumspect with land acquisitions, but that does not necessarily mean the en bloc market is totally dead. Overall, we expect volume to slow down compared to the last two years.”

Property experts said there is still demand for en bloc sites in niche areas. For instance, an en bloc deal was just completed for Ultra Mansion in the Novena district. The 48-unit development was sold for over S$149 million to a Hong Kong-listed real estate developer.

Meanwhile, property consultant Jones Lang La Salle said it is looking to close two residential en bloc sales transaction soon.

Christina Sim, director of investment for capital markets at Cushman & Wakefield, said: “Properties in well located hubs, properties near MRT stations and properties basically below the S$200 million mark or even the S$100 million mark, it is still very saleable and there is still a shortage. I feel that developers still need to land bank and they still need to find suitable sites for development.”

Although the government has released more land sites under its land sales programme, experts said they may not be suitable for the smaller developers because of their larger plot sizes and high reserve prices.

Also, consultants said developers are now moving into the retail and commercial en bloc space as well. San Centre, a 12-storey office building along Chin Swee Road, is now up for collective sale by tender.

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