En bloc sales hit $7.4b to set new record

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Published December 1, 2006

En bloc sales hit $7.4b to set new record

Deals sealed so far this year outstrip last year's $1.99b

By KALPANA RASHIWALA

(SINGAPORE) A total of about 65 collective sales transactions adding up to about $7.4 billion have been sealed since the start of this year - an all-time high, figures from CB Richard Ellis show.

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The tally so far this year has far surpassed the $1.99 billion for the whole of last year. Strong sentiment has prevailed this year in the high-end residential market as developers achieved record prices for their luxury residential projects. This has spurred them to look for replacement land, especially in the prime district.

Market views are mixed on whether the strong showing will continue next year.

Jones Lang LaSalle's regional director and head of investments Lui Seng Fatt says that for the next nine months, momentum in the en bloc sale market will be similar to what's been seen so far this year. He expects developers will continue to achieve strong sales for their high-end projects in Districts 9, 10, 11 and 15. This will come on the back of strong demand from foreign buyers as well as those who have sold their homes through collective sales and who are looking for replacement homes.

'As a result, developers will continue looking for sites in these areas and collective sales are the major source of supply,' Mr Lui reckons.

DTZ Debenham Tie Leung director (investment advisory services) Tang Wei Leng says there's a 'good chance' next year's collective sales will match this year's record.

But collective sales will be more broad-based next year. 'This year, we've seen a lot of transactions in the Orchard Road belt. We're likely to see collective sales fanning out to the outer parts of the prime districts - for example, Holland Rd and Bukit Timah, as well as to selective locations in the East Coast, for example, Meyer Rd area.

Areas that will benefit from infrastructure development like the Eastern Region Line and new expressways are also likely to emerge as new hotspots for en bloc sales, Ms Tang suggests.

CB Richard Ellis executive director Jeremy Lake predicts that the pace of collective sales is likely to slow down next year. 'Most developers have bought sites in 2005-06 and will turn their focus on launching (new projects) on these sites. Secondly, there are fewer sites that are available for sale compared to a year ago.'

Mr Lake suggests that there may be a stronger interest in sites outside the prime areas, 'especially if the current sales momentum and price appreciation from the high-end market filter down to the mid and mass-market segments in the coming months'.

Commercial collective sales could be another hotspot next year, he predicts. UIC Building, Shenton House and Riverwalk Galleria are among the prominent candidates, say industry sources.

This year's collective sale deals have been predominantly in the prime districts, with a strong concentration near the Orchard Rd vicinity - for example Nassim Park, Lucky Tower, Beverly Mai, Angullia Mansion, Pin Tjoe Court, Ardmore Point and Habitat One.

Other hotspots were Cairnhill location and the Leonie/Grange Rd area.

Benchmark after benchmark was set for prime freehold residential land as the year rolled along - starting with Eng Lok Mansion, in March ($1,218 psf per plot ratio) and rising to $1,369 psf ppr by October for Ardmore Point.

Market watchers generally expect new price benchmarks to continue being achieved next year.

Despite the record collective sales this year, only about half of the sites that were launched for sale were successfully sold, CBRE noted. 'The success of a collective sale will depend on location, owners' price expectations and site attributes. Developers will be very selective in their choice of sites. Their decision will also hinge on take-up rate and price points of new launches,' said Mr Lake.