There had only been six launches in the en bloc market since January, prior to the COVID-19 outbreak in Singapore, with only one deal closed. Photo: Three adjoining property blocks at 2, 4 and 6 Mount Emily Road
The start of the COVID-19 pandemic saw the slowing collective sale market in Singapore grind to a halt, with no successful en bloc sale of residential sites recorded.
Based on checks with property analysts, there had been six launches since early January prior to the arrival of the COVID-19 outbreak in Singapore, with only one deal closed, reported TODAY.
This is in stark contrast to the five deals closed out of the 40 en bloc launches registered in 2019, noted Lee Sze Teck, Head of Research at Huttons Asia.
With the cooling measures unveiled by the government in July 2018 increasing land cost for developers and affecting the collective sale market, analysts described the COVID-19 pandemic as the last straw that broke the camel’s back.
“The (July 2018) cooling measures killed off the (demand for en bloc sites)… COVID-19 extended cautiousness among some developers to acquire more land,” said Nicholas Mak, Head of Research and Consultancy at ERA as quoted by TODAY.
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Analysts expect the market to remain quiet until 2022, when the excess supply of around 28,000 units would have been absorbed, said Ismail Gafoor, Chief Executive Officer of PropNex.
Mak also pointed to the availability of an effective COVID-19 vaccine as another factor that could help revive the en bloc market.
Analysts noted that all of this year’s launches tended to be small projects.
These are Green Court in Geylang, which was going for $28 million; Fairhaven and Sophia Ville condominiums, which have a combined indicative price of over $64 million; Wing Fong Court which was going for $108 million and Wing Fong Mansion in Geylang which was priced at $176 million.
Tivoli Lodge in Geylang was also on the market for $17.3 million, while three adjoining property blocks at 2, 4 and 6 Mount Emily Road carry an asking price of $24 million.
Of these, only Tivoli Lodge, Green Court, Fairhaven and Sophia Ville are still available for sale, while the rest have ended their tenders with no successful bid.
Yong Choon Fah, Senior Director of Capital Markets at JLL, which is Fairhaven and Sophia Ville’s marketing agent, shared that they received “a good level of interest”, with over 30 parties requesting for their Information Memorandum.
Ian Loh, Head of Capital Markets for Knight Frank Singapore, which is Green Court’s marketing agent, said they also received a lot of enquiries, with interest coming from developers, contractors and co-living operators.
According to Mak, the slowdown in the collective sale market was a cyclical phenomenon. In fact, the en bloc market was quiet in 2014 and 2015 before it began seeing more activity in 2016.
During the en bloc market’s peak in the first half of 2018, several sites were going for more than $1 billion. Pacific Mansion emerged as the most expensive collective sale site to be sold at $980 million.
While demand for collective sale sites has been muted this year, some analysts said owners have not lowered their asking prices.
“Replacement homes are still expensive, hence the asking prices for such en bloc transactions are still at pre-COVID-19 level. However, buyers are not willing to bite because of the pandemic and recession. Hence the price expectation between buyers and sellers is widening,” said Christine Li, Head of Research at Cushman and Wakefield as quoted by TODAY.
Owners usually look at whether prices of new launch units or resale units have declined before making any adjustments to their asking prices, said Lee.
And since private home prices have only declined by 0.7% in the first half of 2020, owners of en bloc site do not see the need to lower their asking prices as well.
However, Mak revealed that the owners of Fairhaven have lowered their asking price at $44.7 million.
This is down from its 2018 reserve price of $57 million and closer to its 2015 selling price of $45 million.
“They are realistic. However, they have a base price which they will not compromise,” said Mak as quoted by TODAY.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
