En Bloc in Singapore: What Is It?
But first, what exactly is “en bloc”, and why can it be so lucrative for those lucky enough to be involved?
The term en bloc (also known as a collective sale) is French in origin and means “in a lump, or block”, “as a whole”, or “all together”. En bloc sales differ from regular property transactions in terms of scale. In a regular transaction, you only sell one property to another individual at market value. In an en bloc in Singapore, the entire private development is sold when a large majority of the owners agree to the sale, selling their homes simultaneously to a particular buyer.
Usually, this buyer is a property developer buying a private development, which is the collective sale type that this article will cover.
Many homeowners in Singapore hope and pray that their property will have en bloc potential and be selected for a collective sale, and for good reason. En bloc sale prices are usually well above market rate as developers tend to be willing to pay top dollar for a choice site. So, unsurprisingly, a successful en bloc sale can be like winning the property lottery.
Why Do En Bloc Sales in Singapore Command so Much Money?
En Bloc Sales: How Does It Work?
|Who is making the en bloc purchase?||Either a property developer or the government|
|Sales process||Can take up to two years|
|What is sold in the en bloc?||Every unit in the condo + the land|
|How much can you sell for?||The en bloc committee will typically set a reserve price that is set at a premium above the current market price. |
The buyer (i.e. property developer or government) will try to match the reserve price or negotiate with the en bloc committee.
|When is an en bloc confirmed?||When the en bloc committee gets a consensus to sell from the owners. |
For condos < 10 years since TOP, you need ≥ 90% of all owners to agree to sell.
For condos ≥ 10 years since TOP, you need ≥ 80% of all owners to agree to sell.
2023 Housing Market: Where Is the En Bloc Market Heading towards?
ABSD Rates for Entities Buying Any Residential Property
|8 Dec 2011 to 11 Jan 2013||10%|
|12 Jan 2013 to 5 Jul 2018||15%|
|6 Jul 2018 to 15 Dec 2021||25%, plus an additional 5% for housing developers|
|On or after 16 Dec 2021||35%, plus an additional 5% for housing developers|
How to Identify Top Condos with En Bloc Potential 2023
1. Rising Land Value
If your neighbourhood is undergoing lots of development, such as a new MRT station or a major transformation, the land value in the area could be rapidly rising, which is a sign of good investment potential from the developers’ point of view.
2. Inefficient Use of Land
Old blocks or condo estates that don’t fully utilise their land area have higher chances of being one of Singapore’s top condos with en bloc potential, as they can be demolished and turned into denser residential developments. If you’re living in a block of flats with only eight floors where there could be multiple 30-storey condo towers, it’s an attractive investment for a property developer.
3. Old Property
Developers gravitate towards older properties because the value per square metre of land is lower, and residents who live in older properties tend to be a bit more agreeable to collective sales. Furthermore, developers only need to obtain at least 80% of the owners’ agreement for properties 10 years and older versus 90% for properties below 10 years old.
4. Robust Property Market
En bloc sales in Singapore involve a lot of money, so they are more likely to happen if developers think they can profit from buying and redeveloping the land. The performance of the market will play a part in how often developers bid for new sites and how much they’ll offer.
Tip: To spot future property trends and identify top condos with en bloc potential in 2023, refer to the Master Plan 2019 to see the government’s plans for land use development over the next 10 to 15 years.