En-blocs struggle as market rebounds

Next to winning the Toto, having your apartment go on en bloc is the next best thing every Singaporean dreams of.Those dreams may now be getting a little closer as major developers have rushed back into the market from the middle of this year. Developers snapped up $4.51 billion of property to add to land banks in the three months to September, which was more than the preceding year combined. Not surprisingly, it is still well below the mid term peak of $12.8 billion reached during the height of the market boom in third quarter of 2007.

Is en-bloc fever on the way?
So will en-bloc ‘fever’ strike Singapore again or will this be a more subdued pick-up? Unfortunately for property owners, a combination of the new en-bloc laws introduced in October 2007 and a more aggressive program of government land sales are limiting the developer interest in en-bloc deals. “There is interest but developers are only willing to pay current value and not a premium. Owners are still being unrealistic in terms of pricing as most of them want the 2007 peak price whereas developers want to pay about 20 % less than that,” said Knight Frank executive director Nicholas Wong. “The government is releasing more land now partly because they want to satisfy the demand of developers and also partly to cool the market. There are a few en-bloc sales on the market and some have received offers, such as Dragon Mansion and Laguna Park, but these have been below the minimum reserve set by the owners.” Tay Huey Ying, the director of research at Colliers International said private sector sales for the quartertended to be for smaller developments whilst government land sales were for bigger plots. “In the private sector, boutique-sized developers acquired at least 13 smallish residential or commercial/residential land plots, amounting to some $217.51 million. Public sector land sales were more brisk in the absence of larger-scale development sites in the private sector amid the strong showing in the mass-market and mid-tier residential segments. A total of 7 sites, worth $708.91 million, from across the major sectors were sold by the Government in 3Q 2009, nearly 13 times the $54.04 million awarded to developers in the preceding quarter,” said Tay.

And with the economy still struggling and mass residential projects still selling, perhaps it was no surprise that land sales for residential as opposed to industrial or commercial dominated the market. “Residential investment sales tripled in 3Q 2009 to dominate the investment sales pie, accounting for $2.79 billion, or 61.9% of total investment sales. The hospitality, industrial and commercial sectors contributed $591.06 million, $568.78 million and $270.05 million, respectively, to investment sales,” said Tay. Condo owners hoping for a quick en-bloc may be waiting a lot longer.

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