Chalk up another sign Singapore's housing market is recovering: redevelopment deals are back.
After slowing to a trickle the past three years as housing prices fell, four redevelopment deals - where a group of owners band together to sell entire apartment blocks at a hefty premium - have already been struck this year, with a combined value of S$1.5 billion. The process, also known as "en bloc" sales, allows developers to knock down and rebuild in a city where new residential land sales are tightly controlled by the government.
The renewed hunger for land comes as home sales climb after some property restrictions were eased in March. A residential plot last month fetched a record price in a government land sale, with a Chinese consortium bidding S$1 billion. In the biggest en bloc sale this year, Eunosville, a complex of 10 residential blocks with 330 apartments, was sold to Hongkong Land Holdings Ltd's MCL Land for S$765.8 million.
Eunosville owners will get about S$2.3 million per unit. That's a 76 per cent premium to the last sale price at the complex.
"We expect to see more collective sales this year as developers move quickly to replenish their land banks, which for many now lie at multi-year lows," Eli Lee, a senior analyst at OCBC Investment Research said in a note to clients. "Buyer sentiment appears to have improved after the latest tweaks to the property curbs in March. We believe these changes are supportive of the physical market."
En bloc sales could reach about S$3 billion this year, with about 40 deals in the pipeline.
That would be the busiest year since 2011, the tail end of a five-year housing boom that prompted the government to impose an ever-stricter regime of curbs to cool the property market.
The last boom for redevelopment deals was in 2007 when 126 sales were struck, with a total value of S$12.3 billion.
Adapted from: The Business Times, 17 June 2017