Collective sales in Singapore are gaining momentum, with en bloc sale transactions hitting S$975 million year-to-date, according to property consultancy firm Jones Lang LaSalle (JLL).
About 90 percent of the total transactions came from residential segments, with more than 10 residential deals recorded in the third quarter.
“The rise in popularity of collective sales this year could be attributed to improving fundamentals of the Singapore property market and the widening gap between new sale and resale prices for residential property,” said Ms. Stella Hoh, Head of Investment at JLL Singapore.
“Median prices for new sales average at 48% above that of resale transactions during the first three quarters of 2010. These factors seem to have encouraged owners of older properties to band together and attempt a collective sale of the estate,” she added.
Investor interest seems to be focused in areas around Central, City fringe and East Coast, but successful en bloc transactions have been predominantly recorded in locations like Balestier and Toa Payoh in District 12, Geylang and Eunos in District 14 and Hougang, Serangoon and Serangoon Gardens in District 19.
Recently, JLL closed the en bloc sale of Glenville located at the Upper Serangoon Road for S$39.51 million, setting a benchmark price of S$740 psf ppr for the Serangoon area.
So far, the largest collective sale transaction recorded this year was Meng Garden, sold for S$137 million or $1,380 psf ppr. This became a significant quantum and still competitive compared with the latest transaction in the area in Q3 2007.
Although mixed-use en bloc transaction value comprises only 5 percent of the total transaction volume to date, Ms Quek Soh Hoon, head of commercial investments at JLL, said: “While historically the focus has been on the residential sector rather than mixed use developments, large plots of freehold land such as Paramount Hotel and Shopping Centre (tender closing on 23 November 2010) are still generating interest among investors.”
“As long as economic conditions continue to improve, we expect that collective sales prices will continue to trend up. Collective sales volumes will be maintained during 2011 in line with moderate growth in capital values expected off the back of recent government measures even as the price gap between new sale and resale prices remains large,” she added.