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Thread: Small firms bought bulk of en bloc sale sites

  1. #1
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    Default Small firms bought bulk of en bloc sale sites

    http://www.straitstimes.com/Money/St...ry_234013.html

    May 5, 2008

    Small firms bought bulk of en bloc sale sites

    Some may be forced to call off deals because of financing woes, says BNP report

    By Joyce Teo, Property Correspondent


    A REPORT by a major bank has flagged potential financing concerns for small property developers that swooped in on the collective sale boom in the second half of last year.

    BNP Paribas said that given the current turmoil in the financial market, some of these small operators might face financing problems as they move to finalise deals struck in the property market heyday last year.

    In fact, some may be forced to cancel the deals and walk away, it warned.

    The report by the French bank said that most of the collective sales done in the second half of last year were by small private developers, contractor- cum-developers and non-core developers.

    They included Soilbuild, Hiap Hoe, Lian Beng, KSH Holdings, Koh Brothers, Popular Holdings, Aspial Corporation and Eastern Holdings.

    'In the near future, we are concerned that some smaller players that have secured big and expensive en bloc sites may walk away from the deals as securing financing is not easy at this time, especially for non-core developers,' said the recent report.

    Already, a small private firm, Bravo Building Construction, said to be backed by a one-time big property player, has bailed out of three collective sale deals.

    In all three deals, it has had to give up its deposit, which ranged from 1 per cent to 10 per cent of the sale price.

    The biggest of the three deals was the $516 million purchase of Tulip Garden, for which Bravo had to forfeit its $25.8 million deposit.

    A property consultant, who declined to be named, said the smaller buyers last year were mostly listed firms and thus unlikely to renege on their deals.

    'Some small privately owned firms are looking for joint-venture partners for their development sites or to divest the sites,' said Credo Real Estate's executive director, Mr Tan Hong Boon. 'But they will sell only if they can get a reasonable market price.'

    Mr Nicholas Mak, the director of research and consultancy at Knight Frank, said: 'The last time developers defaulted on deals was when there was a prolonged downturn.

    'But we have yet to enter a price decline situation. The jury is still out on whether the property market will suffer a downturn.'

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  2. #2
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    Default Re: Small firms bought bulk of en bloc sale sites

    Does it mean that more enbloc sales contracts will be rescinded soon? That will be great news.

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