2017 and 2018 were good years for en bloc sales, with more than 60 projects put up for collective sale in a sudden spike from previous years.
The en bloc frenzy has since slowed down following new property cooling measures in 2018 which have raised Additional Buyer’s Stamp Duty (ABSD) for property developers from 15% to a whopping 30%, making it much more expensive for developers to acquire en bloc plots.
Even then, since 2019, the property market has been grappling with an oversupply of private homes, with 26,483 uncompleted private residential units in the pipeline as of the third quarter of 2020. Due to falling demand, the government has been actively cutting the supply of private residential housing by reducing the number of confirmed sites under the Government Land Sales (GLS) programme since mid-2019.
As we move into 2021, more than two years after the property cooling measures took effect, do en bloc sales look set to rise again?
En Bloc Sale Activity in Recent Years
In the two years before the new cooling measures were put in place in 2018, en bloc sales activity hit fever pitch.
In 2017, 27 en bloc residential deals were made, valued at $8.13 billion. This was surpassed in 2018, when 35 en bloc residential deals were made, with sales totalling over $10.8 billion. The 2016 to 2018 en bloc cycle totaled 65 deals worth $19.1 billion and came close to beating the high of $21.8 billion achieved in the record-breaking 2005 to 2007 cycle.
However, en bloc sales came to a screeching halt in 2019, with just a handful of collective sales being made that year.
Due to the COVID-19 pandemic, 2020 has been rife with obstacles for developers. The bulk of GLS sites were sold in the first quarter at relatively high prices which did not reflect the impending economic recession. Understandably, developers have since been wary about acquiring land.
Wondering if your property has en bloc potential? Read this guide on en bloc sales in Singapore.
Could 2021 Be the Year En Bloc Sales Make A Comeback?
As 2020 draws to a close amidst encouraging news about the availability of COVID-19 vaccines, will 2021 see en bloc sales come back with a vengeance? There are some signs that that might indeed happen.
In December 2019, the government decided to cut back on confirmed GLS sites in the first half of 2020, with just three Confirmed List sites yielding 1,775 private residential units being released. In the second half of 2020, private housing supply was further reduced by 22.8%, or by 405 less, with the three Confirmed List sites released yielding just 1,370 private residential units.
The government’s decision to reduce confirmed GLS sites was made to counter an oversupply of residential units on the market. Even though housing demand seems resilient amid the pandemic recession, it is not yet enough to clear the supply glut.
But the cautious approach taken by the government to limit confirmed GLS sites could ironically encourage developers to turn to en bloc sales instead.
At the moment, it remains to be seen if developers will throw caution to the wind or remain conservative.
However, according to PropertyGuru’s Property Market Outlook 2021 report, there are some early signs that en bloc sales could make a comeback in 2021. In November 2020, RL East, a subsidiary of Roxy-Pacific Holdings, acquired a freehold site on Guillemard Road for $93 million.
The 15-terrace house site was first put up for en bloc sale with a reserve price of $99 million in 2018 without success, signalling a newfound willingness of the developer to reconsider a previously rejected site.
The government’s reduction of private housing land sales in 2021 and the resilient demand for residential housing in spite of the economic downturn may encourage developers to revisit sites that have been unsuccessful thus far at securing an en bloc deal.
74 Past Unsuccessful En Bloc Sale Sites
Here are some sites that owners have previously tried to put up for en bloc acquisition without success. Many of these have actually cut their asking prices in their second and subsequent collective sales attempts, making it even more attractive for developers.
Did you know: HDB flats may also go on collective sale! Read about the HDB Selective En Bloc Redevelopment Scheme (SERS) here.
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