Enbloc sales in Singapore are gaining momentum, according to property consulting firm Jones Lang LaSalle.
It said overall collective sales have hit S$975 million year-to-date, with the residential segment contributing 90 per cent of the total.
In the third quarter, there have been more than 10 collective sales with a residential component.
This is almost double the previous quarter’s number. There were no residential enbloc sales in the first quarter.
Jones Lang believes that the rising popularity of enbloc deals could be because of improving fundamentals of the property market and the widening price gap between new and resale homes.
It said that the median price of new sales was 48 per cent higher than the median resale price during the first three quarters of 2010.
This may have encouraged owners of older properties to band together and attempt a collective sale of their estates.
Jones Lang said that in the current collective sale market, investor interest appears to be focused on the central, city fringe and East Coast locations.
However, it notes that successful enbloc sales have been predominantly recorded in so-called “upgraders’ locations” – including Balestier and Toa Payoh (District 12), Geylang and Eunos (District 14) and Serangoon, Serangoon Garden and Hougang (District 19).
In line with the increase in the popularity of residential collective sales, there is evidence that transaction values and prices are firming up.
The largest collective sale transacted so far this year was the sale of Meng Garden, which sold for S$137 million or S$1,380 per square foot per plot ratio.
This is within the range of pre-crisis prices in the same vicinity.
Jones Lang said that as long as economic conditions continue to improve, collective sales prices will continue to trend up.
It said that the volume of collective sales will be maintained during 2011. Capital values are expected to show moderate growth after the recent government measures to cool the property market.
Source : Channel NewsAsia – 3 Nov 2010