No signs of en bloc fever dying down

A booming property market spurred homeowners and property developers to jump on the collective sale bandwagon this year, leading to record asking prices for landmark properties and transaction volumes that were the highest in three years.

Even then, this year is just a scene-setter, analysts say.

With the world awash in cheap money, local and foreign developers keen to build their land banks, and with Singapore’s urban rejuvenation catching the fancy of global property investors, the residential collective sale market next year may match or exceed the 2007 transaction value of $12.3 billion, analysts say.

Residential en bloc transactions in the first 11 months of this year amounted to $862.3 million for both landed and non-landed properties, almost a five-fold jump from the $176.3-million worth of collective sales seen last year, according to data from the Urban Redevelopment Authority (URA).

The deals this year were a lot smaller than what may be possible next year analysts say.

The most expensive en bloc sale this year was Meng Gardens Apartments off Killiney Road. The property, which was sold to boutique developer TG Development for $137 million, will be re-launched as SkyPark in the coming months.

The lineup for next year, by comparison, has several properties with an asking price of more than $500 million. Pine Grove, the Ulu Pandan property that has secured the required 80-per-cent approval from owners for a collective sale, is understood to have set an asking price of $1.7 billion.

If the en bloc attempt, its third, is successful, the 893,000-sq-ft property will be the biggest collective sale in Singapore, exceeding the 2007 sale of Farrer Court, with residents receiving a cool $2.1-million to $2.75-million each for their homes.

Hawaii Towers is another property to watch out for next year. With an asking price of $700 million, the sea-view property should attract some serious bidding, industry watchers say.

Another sea-view site that may get sold next year is the 677,493-sq-ft Laguna Park at East Coast, which has an asking price of $1.13 billion. The property, which was in the media spotlight in 2008 due to a series of spats between owners who wanted to cash out and those who did not, is trying its luck a second time. But the going may not be easy this time either.

A Laguna Park resident, who declined to be named, said the management committee is in the midst of collecting the required number of signatures even though several owners believe that the asking price of $1.13 billion is “too low” for the property.

Other notable properties that industry insiders are keeping an eye on include Farrer Court’s neighbour Tulip Garden, which is also making its third en bloc attempt and has a price tag of $650 million. The management committee of Thomson View, which is on its second try, is collecting signatures from owners, said property manager Chan Kok Hong of CKH Strata Management.

The developers who had all but fled the en bloc market after the 2008 to 2009 financial crisis made a comeback this year, albeit with small, restrained bets.

Tuan Sing Holdings purchased the ageing Serene House for $99.1 million through its wholly owned subsidiary Shelford Properties, property consultancy Colliers International said last week. The developer’s last acquisition was the 84,421-sq-ft luxury residence Mont Timah in Bukit Timah, in which it purchased a 70-per-cent stake in October last year.

“The robust housing sales resulted in continued developers’ hunger for development land – notice Tuan Sing’s entry back to the market after so long,” said Mr Colin Tan, head of research and consultancy at Chesterton Suntec International.

Marketing agents started hawking properties to developers earlier this year when it became apparent that property prices here were headed only one way: Up. “Most of them did this around February onwards when home sales started to pick up,” said Mr Nicholas Mak, executive director of research at SLP International.

The changes to collective sale regulations that kicked in at the end of April did not deter homeowners from hitching their wagons to the en bloc gravy train.

According to the Ministry of National Development, the new regulations were meant to streamline the en bloc process, which at times can be long and drawn-out.

The new rules include a two-year restriction period in the event of a failed attempt at sale. In that two-year window, a required requisition rate of 50 per cent of share value, or total number of owners in the property, is needed to convene another extraordinary general meeting (EGM) for a second try at an en bloc sale.

Subsequent attempts require an increased requisition rate of 80 per cent to reconvene further EGMs. “The new en bloc rules make homeowners take the en bloc process more seriously when they know there is more at stake,” said Mr Mak.

While analysts do expect collective sales to at least double next year, some of them say the oncoming supply of land sites under the government land sales (GLS) programme next year may pose a challenge by giving developers an alternative to buying properties en bloc from private owners.

The GLS programme will release as many as 30 residential land sites, including both the confirmed and reserved lists; 10 of those on the confirmed list are situated near MRT stations or amenities. But most analysts reckon that while the GLS may temper the en bloc fervour, it would not be a party-pooper.

“En bloc sale sites are still in very prime locations, you don’t get GLS sites in such areas any more,” said Ms Christina Sim, director of investment sales at Cushman and Wakefield.

“A lot of GLS sites are in outer central region areas. For developers who are land banking, I think there is a market for the mid-to-high-end range of properties.”

Ultimately, the en bloc market here, especially for upscale redevelopment projects, will float on the powerful tide of global liquidity next year.

“With mostly foreign buyers who have much cash to spare purchasing such properties, there is still a lot of market potential in this segment.” said Ms Sim.

Source : Today – 20 Dec 2010

Join The Discussion

Compare listings