Over 30 en bloc sites fail to secure buyers

Romesh NavaratnarajahDecember 17, 2018

Windy Heights resized

The owners of Windy Heights in Kembangan are undergoing a re-signing process to cut the reserve price to $750 million.

Singapore’s en bloc residential market has slowed down, with over 30 sites failing to secure buyers after the government introduced fresh property curbs in July, reported Channel NewsAsia.

“After the cooling measures, developers turned very cautious and are (now) very selective in acquiring new en bloc sites,” said Huttons Asia’s head of investment sales Terence Lian.

More: Fewer En Bloc Transactions Expected For The Rest Of 2018

Consequently, about 15 collective sale sites have cut their selling prices in a bid to entice buyers, revealed the property consultancy.  

One of them is Park View Mansions in Jurong. Last Wednesday (12 Dec), the development spanning 191,974 sq ft reduced its asking price by 22 percent to $250 million from $320 million previously. If the owners at the 160-unit project succeed in attracting a buyer, they could each receive about $1.44 million to $1.6 million in sales proceeds.

Other en bloc sites that have cut their prices is Gilstead Mansion close to Novena, which reduced the guide price by $3 million to $65 million, while owners of the Windy Heights freehold condo in Kembangan are undergoing a re-signing process to cut the reserve price by around 7.0 percent from $806.2 million to $750 million.

Some collective sale sites have maintained their prices, but a large number of these have failed to attract buyers. These include the Spanish Village freehold condo along Farrer Road that was launched for sale in October for $882 million.

Before the new curbs were imposed, the en bloc residential market was vibrant, but it slowed down significantly after the new curbs were implemented and the Urban Redevelopment Authority (URA) announced it would raise the average unit sizes for private condos outside Singapore’s central region starting on 17 January 2019.

“With all these measures coming in, it means the gross development value (GDV) may be lower. Because the area per unit is larger, and they have to consider more things like function rooms, which eats into the efficiency of the development,” noted Knight Frank’s research head Dr Lee Nai Jia.

Thus, the GDV of developers’ projects will likely fall. These firms also have to cut their asking prices to maintain their profit margin. “If (a) particular area favours smaller units and (buyers) cannot accept the supply of bigger units, (developers) will be more cautious and may lower their asking price for the sites.”

Despite the weaker market sentiment, some en bloc sites have increased their selling prices. For example, Mandarin Gardens in Siglap Road raised the figure by nearly 12.5 percent to $2.79 billion after the owners realised their land was undervalued. Pine Grove close to Ulu Pandan Road also increased its price by $140 million to $1.86 billion to ensure enough owners support the en bloc sale.

“In the case of Pine Grove and Mandarin Gardens, they may find their product is very unique and so they want to push up prices… But it might be a bit difficult because there are other options – many options – available in the market,” noted Lee.

Looking ahead, real estate consultancy CBRE expects collective sales volume could fall by 10 to 20 percent year-on-year in 2019.

More: Understanding The En Bloc Process (August 2018)

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg

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