“The last en bloc cycle started in 2016. 2021 marks the fifth year from 2016 and most, if not all developers would have sold out their units,” says Huttons.
With the number of uncompleted unsold units continuing to trend downwards, Huttons Asia sees a potential en bloc cycle next year.
“The peak in number of uncompleted unsold units for the current market cycle was 36,839 units in Q1 2019. This is 15.3% lower than the previous peak of 43,473 units in Q2 2008,” revealed Lee Sze Teck, Director of Research at Huttons Asia.
Urban Redevelopment Authority (URA) estimate showed that there are 11 unsold units in uncompleted projects that will meet the five-year Additional Buyer’s Stamp Duty (ABSD) timeline this year and 420 units in 2021.
“With new sales regaining their momentum in recent months and the six-month ABSD extension, developers should not face much problems to sell out their units,” said Lee.
Subject to certain conditions, a six-month extension to the ABSD timeline was given by the government to developers to help them tide over the difficulties brought by the COVID-19 pandemic.
Lee added that it was reported in June that the developer of 38 Jervois “managed to sell its remaining 16 units in a bulk sale, beating the August 2020 ABSD timeline”.
As such, he believes developers will start buying land, kickstarting the en bloc cycle next year.
“The last en bloc cycle started in 2016. 2021 marks the fifth year from 2016 and most, if not all developers would have sold out their units,” he noted.
Projects that will reach the five-year ABSD timeline next year include Seaside Residences, Grandeur Park Residences, Le Quest, Martin Modern, Harbour View Gardens, Parc Botannia, The Tre Ver, Margaret Ville, 3 Cuscaden and Jui Residences.
Le Quest, Harbour View Gardens, Margaret Ville and Parc Botannia are already fully sold, well ahead of the ABSD timeline.
During the 2016 en bloc cycle, the number of uncompleted unsold units fell to 20,000.
The number of uncompleted unsold units stand at 27,977 as of the second quarter of 2020. Developers sold over 3,800 units in 1H 2020 and total developer sales for July and August is expected to stand at over 2,000 units.
Even if monthly sales slows to 600 to 700 units for the remaining four months of 2020, developers may be looking at shifting 4,400 to 4,800 units in the second half of 2020 or 8,200 to 8,700 units for the entire 2020, said Lee.
“If the sales momentum continues in 1H 2021, the number of uncompleted unsold units will dip below 20,000 units by 1H 2021,” he said.
“A quick run-through on some large developers revealed that their unsold inventories are running down and they could potentially be looking at buying more land,” added Lee.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com