Not a single development was sold via the collective sale route in the first seven months of 2014, according to Colliers International’s latest white paper.
The report attributed the stalemate in the residential collective sales market to the combination of factors such as a subdued private residential market due to cooling measures, and measures which constrained developers’ project completion and project sales periods.
Due to falling residential sales and prices, developers have been rather hesitant to pay top dollar for en-bloc sites and collective sellers’ also have expectations in terms of profit.
Additionally, there is also an impending surge of new private residential property supply in the coming years.
“It has also become a norm that the gestation for collective sales is lengthy and in some instances, hopeful collective sellers may need to go through the collective sales process for a development more than once, each time lowering their expectations. While this can be arduous, the chances of a successful sale increase if sellers are prepared to take a more rational view of prevailing market conditions,” the report said.
With ABSD enforced, developers’ attention are now on bite-sized residential land parcels that offer quick turnaround time and GSL sites where the tender process is comparatively less labourious than the en-bloc process.
For example, the 330-unit Eunosville located on Sims Avenue was launched for collective sale in June 2013 with a minimum price of $688 million. Even though the site garnered interest from three developers when the tender closed in August 2013, developers were quoted saying more time was needed to assess the market, given the relatively larger scale of the project. Hence, the property was launched for collective sale again in December 2013 at a similar price but failed to find buyers.
“As a result, the number of sites sold for at least $100 million apiece shrank significantly from nine sites in 2011 to only three and two sites in 2012 and 2013, respectively.”
More recently, Spring Grove (pictured) was launched for sale by tender, and owners are expecting offers in excess of S$1.39 billion.
Image by Knight Frank