Freehold development off East Coast to go en bloc via auction

Freehold development off East Coast to go en bloc via auction
Freehold development off East Coast to go en bloc via auction

Collective sales via auction is a rarity in Singapore since most are done via tender. This will be the first since 1997.

A three-storey apartment building off East Coast Road is set to be put up for en bloc sale via a public auction on 24 February – the first since 1997, reported The Business Times (BT).

Collective sales via auction is a rarity in Singapore since most are done via tender.

In fact, this is just the second collective sale that will be held via a public auction, with the first done in January 1997, when DBS Land was outbidded by Far East Organization for Scotts Tower.

Joy Tan, Head of Auction and Sales at Edmund Tie, described a public auction as a more transparent process for the prospective buyers and the owners in a collective sale.

She revealed that redevelopment sites in Hong Kong are usually sold at public auctions.

“If successful, we will have more alternative modes of sale for en bloc sites,” she said as quoted by BT.

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Located at Marshall Road, the freehold building houses six walk-up apartments and comes with eight car park lots.

All six unit owners of the building consented to the collective sale via an auction, believing that it would be a faster and more transparent process, said Tan.

The building carries a guide price of $12 million.

In the event the bids were below the guide price, “we will get mandate or instructions from the owners”, said Tan.

One of the owners, S. Lee, told BT that one of the six owners broached the idea of selling via collective sale sometime last year since this would usually yield a higher price than when selling individually.

“One or two of us are retired and want to downgrade to a smaller flat,” said Lee, who has lived there for around 30 years.

The land occupied by the development is zoned residential under the 2019 Masterplan with a plot ratio of 1.4. With an area of 7,418 sq ft, the squarish site has a 23.4m frontage and 29.2m depth.

Generally, consultants advise sellers on the mode of sale after taking into account factors like the quality of assets and owners’ expectations, said Ian Loh, Head of Capital Markets for Land and Building, Collective Strata Sales at Knight Frank Singapore.

“At auctions, people can see who’s bidding and what the price is, but if there is no bid, everyone would know; the negotiating power of the seller may be weakened,” said Loh as quoted by BT.

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“Generally speaking, I feel not all properties are suitable for en bloc sale – (and this is) if prices are too high, for instance.”

He noted that buyers at a tender exercise are “at liberty to submit offers for owners’ consideration; these may be below the reserve price, and owners can then think through and decide”.

Government land sales, for instance, are conducted by tender.

In January 1997, Knight Frank handled Scotts Tower’s en bloc sale by public auction amid a collective sales boom.

Expected to fetch around $90 million, the property was sold for $96.8 million to Far East following lively bidding.

It was then reported by BT that each of the 32 apartment owners pocketed slightly over $3 million, which was way higher than the estimated price of $1.2 million had they sold their units individually.

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