In recent months, we’ve witnessed a series of major blockbuster en bloc deals, such as the most recent transactions for Amber Park and Normanton Park.
Property developers have clearly indicated their hunger to acquire sites for redevelopment and are willing to fork out record prices to do so.
The whopping price tag of S$906.7 million for Amber Park collective sale, awarded to a joint venture between subsidiary property arms of both City Developments Ltd (CDL) and Hong Leong Group, was the highest amount ever paid for a freehold plot via en bloc.
The other record struck was for Normanton Park collective sale, which is situated near Science Park. It was acquired by Chinese-turned-Singaporean firm Kingsford Development for a staggering amount of S$830.1 million – just a couple of days ago.
While the market percepts that the appetite may not be strong for bigger sites among property developers, the en bloc of Normanton Park has shown that size is clearly no longer an impediment.
Market watchers mentioned that the true reality is that real estate developers are hungry to replenish their land banks and the cutback in plots for sale under the Government Land Sales (GLS) programme in recent years have urged them to explore site acquisitions via en bloc sales.
In addition, there are clear signs of property buyers are gradually starting to flock the market once again as the property price index for 3Q2017 has shown it 1st rebound after 15 consecutive quarters of decline.
It was noted that the larger acquisitions via en bloc will come with additional costs such as the topping up of the lease (for leasehold sites) and also differential premiums.
However, it has also reflected the amount of confidence that some property developers have in Singapore’s property market – that they can release a new launch project in future and sell all of its units within the 5 year timeline (from the day the en bloc sale order has been granted) – as part of the stipulation set by the government, in order for developers to exercise a remission for the 15% additional buyer’s stamp duty paid initially.
To date, a total of 17 residential en bloc deals have been concluded since January 2016, which could yield a range of 10,000 – 11,600 new private homes and around half of them are likely to be launched for sale in 2018.
Apart from the en bloc fever, property developers have also shown signs of hunger for land via the recent trigger of the Jiak Kim Street GLS site.
Property consultants are keeping a close eye on the new launch projects situated at Stirling Road and Toh Tuck Road – which have both set a relatively high price point for land sales via government tender, as they will set a benchmark for future bidding for prime land parcels.
It was added that if the property market responds strongly to the above-mentioned new launch projects, the fever for en blocs and land sales may continue to scale new heights. Otherwise, developers will likely be more watchful of their future bids.