Small enbloc plots reap success in 2010

The collective sale market has had a mixed 2010 but two trends have emerged – prime areas are losing favour, while small plots are big hits with developers.

While there has been plenty of action – more than 30 deals were completed totalling about $1.7 billion – almost half the sites up for grabs through tender are still unsold, with many of those in prime spots.

The focus has shifted from prime areas like Districts 10 and 11 – traditionally en bloc strongholds – to so-called ‘mid-prime’ zones.

An analysis by Credo Real Estate of the 35 completed en bloc sales – through both tenders and private treaties – shows that two out of three took place in Districts 19, 12 and 15.

One factor is likely the attractive price tag offered by these projects, with the average deal size at around $50 million.

Mr Steven Ming, Savills executive director of investment, said that smaller sites of less than $100 million are selling well and are sought after by small- to medium-sized developers.

Another factor could be the growing attractions of up-and-coming places like District 19.

Credo managing director Karamjit Singh said that District 19 has emerged as an exciting new residential district in the light of infrastructure developments such as the North East and Circle MRT lines, Kallang-Paya Lebar Expressway and the presence of several international schools.

Balestier’s image has improved after several new condos were built, added Mr Singh. Its central location is another advantage.

Successful en bloc sales this year also included landed homes. A cluster of 16 terraces in District 15’s Fort Road fetched $86 million while two adjacent bungalows in nearby Margate Road went for $38 million. En bloc deals in prime areas suffered partly because of their absolute high asking price, experts said.

There are still 17 tenders that closed this year without buyers, according to Credo Real Estate. Out of this total, eight have asking prices of more than $100 million, while seven are in the prime districts 9, 10 and 11. Mr Kevin Lim, Urban Front Real Estate’s executive director of investment sales, said sales in prime districts started slowly this year and that may have made developers think twice about further investment while mid-prime projects are showing more promise.

Sellers in these prime areas are possibly holding out for more, having seen the steep run-up in prices over the year. They are also acutely aware that a rocketing market means they could be priced out when they start looking for a new home.

Meanwhile, some owners are negotiating private treaties or deciding whether to go for a second tender process. Newton View, Marine Point, Asimont @ Barker and Balmoral Condominium are among the projects without a buyer.

Another reason for buying reluctance is that larger en bloc sites with bigger price tags – they are usually in the prime areas – are often in competition for capital with government land sales (GLS) sites. Some developers are often more inclined to pursue GLS sites as the sale process is faster and fuss-free.

Consultants said that while en bloc sites generally require at least 12 months to be launch-ready, GLS plots can take as little as nine months.

While the average value of each sale has been relatively small this year, Mr Lim expects larger collective sales in the mid- to high-end segment to enter the market next year as optimism picks up.

‘But if the Government introduces more cooling measures, then sentiment will be dampened and the collective sales market will definitely be affected,’ he added.

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