Analysts see possible en bloc market revival in 2021

There were only two collective sales deals registered this year: Yuen Sing Mansion in Geylang which was transacted in August, and adjoining sites Fairhaven and Sophia Ville were sold early this month.

With the property market remaining resilient amid economic uncertainties brought about by the COVID-19 pandemic, property analysts expect the muted en bloc sales market to see a revival in the second half of 2021, reported Channel News Asia (CNA)

Cushman & Wakefield’s Associate Director of Research Wong Xian Yang noted that there were only two collective sales deals registered this year.

Yuen Sing Mansion in Geylang was transacted in August, while adjoining sites Fairhaven and Sophia Ville were sold early this month.

Meanwhile, Roxy Pacific acquired 15 terraced houses within the Guillemard Road area for $93 million in November, marking this year’s biggest private residential transaction.

A consortium also acquired a plot with 11 houses near Haig Road for $32.8 million a few days later.

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Wong said the sums are relatively small compared to the collective sales frenzy of 2017 and 2018, when total transaction values stood at $8.3 billion and $10.3 billion, respectively.

Despite this, analysts believe that the stirring of activity could be one of the multiple signs of an en bloc sale revival.

Developers’ falling inventory, for instance, could prompt them to shore up their land banks.

“Current unsold inventory has continued to fall and currently stands at 26,600 units as at Q3 2020,” said Wong as quoted by CNA.

“The start of the previous en bloc cycle was in Q2 2016, when inventory fell to 23,300 units… That can sort of serve as benchmark to the point at which developers would start looking for land.”

Professor Sing Tien Foo, the director of the Institute of Real Estate and Urban Studies at the National University of Singapore, further noted that most of the existing launches are from the 2017 to 2018 en bloc cycle. 

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Notably, developers are given five years within which to sell all the units within their projects for them to get back a portion of the stamp duties they paid. This means developers have until 2022 or 2023 to sell their projects, he said.

Recent tenders for Government Land Sales (GLS) sites have also been hotly contested, with the plot at Tanah Merah Kechil Link attracting 15 bidders. 

Since the supply from the latest GLS programme is still conservative, this could push developers to turn to collective sale sites as an alternative source, said Ong Teck Hui, Senior Director of Research and Consultancy at JLL Singapore.

And with sites under GLS “a bit concentrated in a few areas”, developers may also go to the en bloc market for more “variability” in location, said Lee Sze Teck, Head of Research at Huttons Asia.

But given that Singapore faces more economic uncertainty now, Ong believes that any likely interest in the en bloc market would not match “the extent of the fervour seen in 2017 and 2018”.

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