Aerial view of the Shunfu Ville site. (Photo: JLL)
Despite Qingjian Realty’s $638 million acquisition of Shunfu Ville on Thursday (19 May), other en bloc deals are unlikely to follow anytime soon, given the prevailing tough market conditions, reported The Straits Times.
In fact, the mixed-use Thong Sia Building off Orchard Road was the only collective sale which took place in 2015, while there wasn’t a single one in the year before. This was not due to lack of attempts, as units owners at Amber Park and Normanton Park were among those who have tried the en bloc route in recent years, but failed.
According to experts, pricing has been the main hurdle, as most developers are cautious of buying large and expensive sites, in light of sluggish sales and the rule requiring them to build, complete and sell units within five years of purchasing the land. Failure to do so means paying extension charges and Additional Buyer’s Stamp Duty.
“While the Shunfu Ville sale could spark some life back into the market, the supply of realistically priced collective-sale opportunities is a key challenge,” said Karamjit Singh, International Director at JLL, the marketing agent involved in the Shunfu sale.
Even the most recent transaction shows that only a few developers are willing to purchase large and pricey sites. When Shunfu Ville was first put up for sale last year, it only drew two expressions of interest, one of which was from its eventual buyer, Qingjian Realty.
After it was relaunched for sale in January 2016, it again attracted only two offers, despite its reasonable price of around $747 psf per plot ratio, which is comparable with recent sales in the vicinity.
Besides the site’s selling price, buying interest is also affected by the development’s size and other attributes, as well as the developer’s market projections, added Desmond Sim, CBRE’s Research Head for Singapore and Southeast Asia.
Thus, experts advise those eyeing a collective sale to price their property reasonably, or wait for a more opportune time to do the transaction.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
