The residential en-bloc market is seeing some interest, with four collective transactions conducted so far this year generating a total value of S$1.5 billion — exceeding the combined value of en-bloc deals done last year.
Property experts that TODAY spoke to, however, said conditions are unlikely to return to the peak of 2007, when global economic growth and immigration fuelled a spike in real estate prices. The past three to four years were “relatively quiet” on the property front, and are a low base of comparison, they said.
While the number of units sold through en-bloc transactions in the first half of this year were the highest since 2011, they are less than half the number transacted then. However, en-bloc sales for January to June have already surpassed the whole of last year — with 650 units sold at a total value of S$1.521 billion, compared with 582 units sold at S$1.158 billion last year.
It is estimated that there are between 30 and 40 residential properties islandwide preparing for collective sales, but many may not come to the market, as the en-bloc process can drag out over years, and often involves a legal process.
There is a strict process for en-bloc sales, and developers would prefer Government land sales, which are more direct. Recent transactions were mostly Housing and Urban Development Company, large freehold sites, but there is a limit to the cut in profits that developers can make, as it is still a very price sensitive market. However, it is not surprising to see a renewal of interest, given the surge in sale figures for newly-launched projects. The upward trend is expected to continue into the next year, as developers are relatively upbeat, and there is some price stabilisation in the market.
In recent bids for Government land sales, there has been very keen competition with most mixed sites drawing over 10 bidders. The increased demand for land is driven by developers who want to beef up their land banks. Turning to en-bloc projects is an obvious alternative solution. However, developers are still price sensitive, and the state is likely to step up Government land sales to respond to increased demand for land sites.
From 2012 to last year, only 1,402 en-bloc units were sold, with a total value of S$3.479 billion — with zero transactions in 2014. This compares to the “boom” period of 2005-2007, which saw 12,710 en-bloc units sold, with a total value of S$22.3 billion.
Some of the projects in the pipeline include Amber Park in Katong, Floral Regency in Hougang and Brookvale Park in Sunset Way, which tend to be older units with bigger plot ratios.
Ms Lynn Lee, a 36-year-old administrator, who owns a 30-year-old apartment unit in a residential estate in the western part of the island, is among those considering an en-bloc sale. “As the estate gets older, maintenance costs go up,” said Ms Lee.
In addition, the recent news about owners of the 191 private terrace houses at Geylang Lorong 3 having to move out upon the expiry of the property lease in 2020 has fuelled concern about residential leases, she admitted. “As we’re sitting on a 99-year leasehold property, we thought: ‘Why not just try for it’,” she said.
Owners’ expectations will go higher when they anticipate a pick-up in the market. However, for developers it is still a price-sensitive market at the end of the day.
Adapted from: TODAY, 29 June 2017