Collective or en-bloc property sales in Singapore have come to a standstill and the market is unlikely to recover unless sellers lower their price expectations and stop aiming for huge windfalls, real estate services firm Colliers International said on Friday (Aug 22).
This is because government policy measures to curtail speculative real estate activity and to foster financial prudence have taken much of the froth out of the property market in recent years, the firm said.
Moreover, government master plans from 2003 onwards have not had the same magnitude of plot ratio increases as before, reducing the premiums developers are prepared to pay for residential or commercial properties to more moderate levels.
Colliers said not a single attempt at a collective sale succeeded between January and July this year.
Just three in 10 collective sales launched in 2013 were successful, while the average success rate for the three-year period between 2011 and 2013 was 37.6 per cent, it added.
Arguing that there is a need for property owners to lower their asking prices, Colliers cited the case of the Villa Des Flores condominium at Whitley Road, which failed to find buyers after three attempts because the sellers were unwilling to lower the indicative asking price of S$160 million to $165 million.
Colliers, however, added that the collective sales route is still relevant and can still be meaningful for owners of older properties, despite the changes in the real estate market in the last 20 years.
“Sellers must accept that making a sudden windfall from chance is a thing best filed in the annals of history… The way forward for collective sales should be that of a practical method of disposal for an ageing asset that is past its functional prime,” it said.
Source : Channel NewsAsia – 22 Aug 2014