ST : En bloc market still active

Nov 8, 2010

PROPERTY WATCH

En bloc market still active

Eight collective sales sealed since cooling measures on Aug 30

By Esther Teo


THE measures to cool the property boom have taken some of the heat out of the en bloc market but there is still plenty of interest, say industry experts.

They believe the steps that were announced on Aug 30 have made developers more cautious, resulting in lower bids and fewer successful tenders.

Eight collective sales - they include Pastoral View in Bassein Road and Glenville in Lim Tua Tow Road - totalling $369 million have been completed since Aug 30.

But at least five sites where tenders closed after that date have struck out with buyers.

The five are Maison Royale in Surrey Road, Newton View, Selegie Centre, Amber Glades near Marine Parade and 13 shophouses in Owen Road. All are freehold developments.

Experts said most of the owners are either negotiating private treaties or deciding whether to go for a second tender process.

The Straits Times understands that Selegie Centre and Maison Royale both had three interested parties but neither received a bid.

Jones Lang LaSalle's head of investments, Ms Stella Hoh, said the collective sale market has started picking up momentum.

'However, the cooling measures would have at least an impact as the bids offered by developers depend on what they think the demand will be from end buyers, who are affected by these new rules,' she added.

Collective sale sites going for under $100 million seem to be the one area where buyers - usually boutique developers - are still prepared to put their money down.

This could be due to their more affordable prices and the relative ease of garnering the 80 per cent support level from owners compared with larger developments, experts said.

Seven of the eight successful sales since Aug 30 involve smaller sites priced at less than $100 million.

Robin Court and an adjoining bungalow in Robin Drive even bucked the trend of lower bids to sell at $77.33 million, more than the $66 million to $74 million expected, said Mr Karamjit Singh, managing director of Credo Real Estate.

Guillemard Court drew an even better response. It received seven bids and one expression of interest before selling for $41.6 million, almost 30 per cent above its indicative price of $33 million, said marketing agent Deans Realtors.

Director Alwyn Low said this could be due to its accessibility - the Dakota MRT station is just 600m away - and the ease the rectangular-shaped plot presents for building.

Results like that bode well for smaller sites, according to Mr Kevin Lim, Urban Front Real Estate's executive director of investment sales.

Mr Lim told The Straits Times: 'Interest is still high as we're receiving enquiries from many developers. If the pricing is good, (they) will still purchase... but smaller sites seem to be more saleable as their quantum price is smaller, which means developers would take on lesser risks.'

Bigger sites can be expected to hit the market next year, after the dust has settled from recent changes to en bloc rules, which have extended the sale process for some larger developments, added Ms Hoh, of Jones Lang LaSalle.

Jones Lang LaSalle said in a report last week that collective sale transactions have hit $975.6 million so far this year.

And residential collective sales - at $883.6 million year-to-date - account for more than 90 per cent of the total, with sales predominantly in upgrader locations such as Balestier and Toa Payoh in District 12, Geylang and Eunos in District 14 and Serangoon and Hougang in District 19.

In contrast, there was only one successful collective sale last year - that of Dragon Mansion for $100.8 million.

Jones Lang LaSalle added that the rise in popularity of collective sales can be due to 'improving fundamentals of the Singapore property market and the widening gap between new sale and resale prices for residential property'.

esthert@sph.com.sg