CNA : More en bloc sale activity expected as developers cater to mid-market segment

More en bloc sale activity expected as developers cater to mid-market segment
By Chris Howells | Posted: 27 April 2010 2207 hrs

SINGAPORE: Analysts expect more en bloc sales activity from the city fringes and East Coast areas as developers cater to a growing mid-market segment.

They were responding to proposals tabled in Parliament on Monday to smooth out the collective sales process.

The new rules also seek to address the role of the Strata Titles Board and balance the interest of property owners.

Collective sales have bounced back this year after a poor showing last year when only one deal was done.

So far, four developments have been sold with another deal at Margate Road expected to be completed this week.

These five sales combined are worth S$275 million versus the lone S$101 million deal done for the whole of 2009.

Going forward, market watchers expect between 20 and 40 en bloc deals to take place this year.

Donald Han, managing director, Cushman & Wakefield, said: “I think what we're seeing now is more on the fringe of the central areas is looking more promising right now. Those we call the rest of the central core area. The East Coast area is looking interesting right now.

“Mainly there is a combination of investors, developers who are eager to come in and develop the mid-end segment of the market."

Observers said such developments will likely attract small-to-mid sized developers that are currently being priced out of the government land sales programme where land prices rose up to 20 per cent last year.

Observers said they're currently seeing appetite for en bloc sales worth under S$100 million on average and land sizes of around 15,000-50,000 square feet.

Karamjit Singh, managing director, Credo Real Estate, said: "There's also a vacuum to satisfy larger developers demand for land in mid and prime sectors of the market because government land sale programme basically satisfies developers' demand in mass market locations."

Market watchers expect overall land prices to rise around five to 15 per cent this year.

They said good conditions and demand for property will drive developers into the collective market. - CNA/vm