The real estate market may be a hit with its new launches, but the intensity has yet to reach the collective sales market.
The two residential sites released for sale in December last year are unlikely to find new owners. A bid launched in January for Mayfair Gardens at Rifle Range Road has ended, but no winner was declared and the Collective Sale Agreement (CSA) has expired. The Green Lodge at Toh Tuck Road has also failed to find a new buyer and its CSA is expiring.
CSA is an essential document in the collective sale process. When the 80 percent consent level is already secured for a CSA, property agents have to look for buyers within 12 months and submit an application to the Strata Titles Board for an order for the sale. If the CSA expires before an agent files an application, home owners have to call for an extraordinary general meeting and restart the sale process.
According to an industry source, there were several bidders for Mayfair Gardens but all the offers were below the asking price of about $210 million. On top of this, developers have to pay $40 million to restore the lease from a 72-years period to 99 years. This means that the cost would be close to $857 psf ppr.
Mayfair Gardens’s CSA was released in March last year and it has already expired. All the deals made for the property were unsuccessful because of the “price tag”.
The story is similar for the Green Lodge freehold site. Several bids were made during the tender but failed to meet the asking price. Adding to a state charge of about $9.5 million, the price tag would be $683 psf ppr or almost $135 million.
The majority of its owners agreed to sell the property in April last year, and according to another market source, the CSA for the Green Lodge is close to expiring. Property agents are unlikely to have ample time to find a new buyer and file an application with the Strata Titles Board.
Aside from Mayfair Gardens and Green Lodge, Laguna Park at Marine Parade also failed to find new buyers last year. The sales committee for Laguna Park called off the collective sale in November last year after it received lower-than-expected bids.
These cases reflect the challenges faced by the en bloc sector in the present market, where the gap in price tags have become a big problem for sellers and buyers.
According to Jeffrey Goh, investment sales assistant executive director of HSR, many home owners did not consider reducing the asking price and are in no hurry to sell the properties. They witnessed how new property launches received overwhelming responses, and this has “given them a lot of excitement”.
However, Karamjit Singh, managing director of Credo Real Estate, believes that Mayfair Gardens and Green Lodge are “not necessarily representative of the fate of en blocs to come”.
For properties where enough consent from owners has been obtained, the asking price may not be in line with market conditions, said Mr. Singh.
“But we are about to see a new wave of en bloc launches by tender in the months ahead, and these will be projects that would have got started end of last year or early this year,” he said.