UPDATED: Singapore has been witnessing lacklustre demand for collective sales sites, with only one deal closed since the start of 2014, a significant decline from the 16 transactions in 2013, revealed JLL data.
Analysts attribute the drop in demand to various factors, including property cooling measures, the complexity of en bloc sales, ample supply of government land sites and weak home-buying sentiment, reported The Straits Times.
Notably, around 10 attempts to sell en bloc were scuppered over the last two years, including the S$1.39 billion collective sale of Spring Grove condominium at Grange Road. Meanwhile, the collective sale of Amber Park in Katong in July this year closed with no bids. Thong Sia Building on the Orchard shopping belt is the only en bloc sale registered so far this year.
According to Donald Han, Managing Director at Chesterton Singapore, finding buyers for projects with large total sums will be an “uphill task”, as developers want to minimise risk.
“Unless the price of the en bloc property is going below market rate, even cheaper than government land sale sites, they may not find it a compelling proposition.” In fact, developers are not expected to respond enthusiastically to the S$840 million collective sale of Normanton Park, which will be launched on Thursday.
JLL revealed the ideal price for an en bloc sale ranges from S$50 million to S$300 million. “Beyond S$300 million or S$500 million, the number of developers which are prepared to (invest) and capable of investing goes down dramatically,” JLL international director Karamjit Singh said.
Analysts noted that the sheer size of some developments, like Laguna Park and Normanton Park, each spanning over 660,000 sq ft, places developers at significant risk in a market plagued by slow sales.
“The Additional Buyer’s Stamp Duty (ABSD) is a big challenge for large sites because the developer has to complete the project and fully sell it within five years, or face a penalty of 15 percent of the land price,” said Alice Tan, Knight Frank Singapore head of research.
However, deals under S$100 million, such as Derby Court in District 11 and Riviera Point in District 9, have had no takers either. Han reckons that the attempts to go en bloc were unsuccessful because the sites were in prime areas, where demand is lacking.
CBRE, on the other hand, said the extent to which a property developer may intensify the use of a site is also a deciding factor in buying smaller plots.
CORRECTION: After verifying our information with several regular sources, the first version of this article mentioned that Katong Omega Apartments was put up for collective sale last year. However, information regarding this has been contradictory: while 15 of its units were said to have been sold in January 2014, any further indication of the development going en bloc has yet to be revealed. We have edited the article accordingly, and apologize for this oversight.
Cheryl Marie Tay, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email cheryl@propertyguru.com.sg
