Sounds familiar? I bet that you would have heard either ONE or BOTH at least once this year.
Jervois Green, Royalville and Brookvale Park. Two of them are sold en bloc whereas the latter is now up for tender.
What is En Bloc Sales?
An En Bloc Sale, also known as collective sales, is a sale of two or more property units to a single common purchaser. Basically, an en bloc sale means that owners, in exchange for collectively parting with their property are each offered a golden handshake, or what we call a windfall. This windfall will be possible if 80% of the residents consents to the sale(90% if the development is less than 10 years old). But for some, the golden handshake is also kind of a slap in the face.
How does En Bloc Sales happen?
There are 3 ways.
Firstly, Due to good market sentiments, the owners sees an opportunity to cash out collectively at a premium price. As compared to when they sell individually. So they get together like minded owners to vote and negotiate to sell the whole development.
Secondly, An outside buyer may approach a group of owners to negotiate and get them to sell the whole development. This can be a individual or a property developer.
Thirdly, A middleman company may approach the owners to buy the development, then sell it to a third party to make a profit.
Biggest Successful En Bloc Sales in Singapore till date
2007 was the year of en bloc sales. In total, there were 88 deals done within that year. It amounted to a whopping S$11.5 billion!
And Guess what? A development was successfully en bloc that contributed slightly more than 10% of the total sales amount in 2017!
You guessed it right, its Farrer Court. A total of 618 apartments in Farrer Court was bought collectively at a whopping S$1.339 billion!
That’s like a sales price of S$2.122 million to S$2.238 million per apartment. For comparison, these individual apartments transacted at the range of S$500,000 to S$600,000 before negotiation on the collective sales even started.
And now, standing on this site is D’Leedon. A luxurious high end residential development by CapitaLand.
D’Leedon consist of 1,715 units and the unique building facade can be easily seen and identified.
Some noteworthy en bloc sales that occurred before 2007, before Farrer Court:
- Leedon Heights (Now known as Leedon Residences) Sold for S$835 million
- Grangeford Apartments (Now known as Twin Peaks) Sold for S$625 million
- Gillman Heights (Now known as The Interlace) Sold for S$548 million
- Anderson 18 (Now known as Nouvel 18) Sold for S$478 million
10 years later in 2017.
The biggest successful en bloc sales was in August. A HUDC in Tampines; Tampines Court was sold at a a staggering S$970 million. Still short of the record S$1.339 billion by Farrer Court but close enough.
List of Successful En Bloc Sales in 2017
|Total price ($m)||PSF ppr ($)||Developer|
|1||May||One Tree Hill Gardens||Freehold||39||65||1,664||Lum Chang|
|2||May||Rio Casa||99||396||575||706||Oxley consortium|
|4||Jul||The Albracca||Freehold||23||69||1,409||Sustained Land|
|5||Jul||Serangoon Ville||99||297||499||835||Oxley consortium|
|6||Aug||Tampines Court||99||702||970||676||Sim Lian|
|7||Aug||208 Yio Chu Kang Road||99||14||8||–||Oxley|
|9||Sep||Nanak Mansions||Freehold||110||201||1,409||UOL associate|
|10||Sep||Jervois Gardens||Freehold||34||72||1,373||SC Global|
|11||Oct||Amber Park||Freehold||214||907||1,515||Hong Leong|
|13||Oct||Florence Regency||99||389||629||842||Logan Property|
|14||Oct||Changi Garden||Freehold||200||249||888||Chip Eng Seng|
|16||Nov||Casa Contendere||Freehold||38||72||1,638||Tee Land|
|17||Nov||Mayfair Gardens||99||208||311||1,244||Oxley Holdings|
|18||Nov||How Sun Park||Freehold||55||81||1,092||Singhaiyi, Huajiang|
|21||Dec||Jervois Green||Freehold||27||53||1,601||Mike Ho|
Too much boring data? Read this instead:
How does En Bloc Sales affect Residential Prices
When a big development goes en bloc, the residents staying will be disrupted. Be it the owners themselves or the tenants. For a big project like Tampines Court, easily 970 families will be affected. For owners, with new found cash on hand, they might decide to buy immediately or rent a place temporary. As for the existing tenants, they will all have to look for another place to stay. And in economics, this is where demand comes in.
High Demand, Low Supply. How would the sales and rental prices be like?
A way developers can replenish their landbanks is by Government Land Sales (GLS) launched by the Urban Redevelopment Authority of Singapore (URA) The former Zouk at Jiak Kim Street which was concluded last week was one of the highly anticipated GLS.
The other way developers can get land is via collective sales. An for every collective sales or en bloc tender, there will be a minimum price set. This minimum price will easily be higher than the current transacted resale prices in the vicinity. Otherwise it does not make sense to go through all the trouble via en bloc. Home owners can instead just sell their individual apartment separately in the resale market.
And this brings us to the next point.
New Launch Condominium Vs Resale Condominium
You might be wondering:
If the potential property developer were to successfully win the en bloc and launch a new condominium development there, how would they price it?
No questions asked. It will definitely be higher! But here’s the secret:
For our example, we will use Martin Place Residences (being the older development) Vs Martin Modern (newly launched in July 2017).Both of these condominiums are excellent luxurious project located in the prime district 9.
A quick search on SRX shows a typical 2 bedroom apartment in Martin Place Residences of 1,044sqft transacted at S$2.180 million or S$2,088 psf.
Whereas a typical 2 bedroom apartment in Martin Modern of 764 sqft transacted at S$1.877 million or S$2,457 psf.
And here’s your answer,
In terms of absolute quantum, the prices are similar and even more affordable for the new condominium launch.
In fact, it looks like Martin Place Residences is ~S$200k more expensive!
Yet, if you look closer, Martin Modern is easily ~300 sqft smaller and in terms of per square feet (psf) it is much higher.
And this is the point where I emphasize on efficient layout, quality finishing & styles, full fledged facilities, etc.
Not all new condominium launches are designed and built equal; there are top of line developments with efficient layouts and quality finishing. Yet there are also downright crappy developments that don’t justify the prices that they command.
That’s all we have on successful en bloc sales in 2017. Do follow my news blog on the upcoming Comprehensive New Condo Launch in Singapore 2018!