En-bloc fever is back

Why has en-bloc fever taken hold and what are its implications for Singapore's residential property market going forward?

Sep 11, 2017

Vipin Kalra
Chief Executive Officer
BankBazaar International

WE believe en-bloc sales are making a comeback as a result of growing optimism in the property market and the push from developers seeking land for residential development. Going forward, we expect to see more collective sales and a rise in demand for residential property.

While this is good news for property developers, it is also a great opportunity for property owners to secure their future. The financial windfall from en-bloc sales can be used for further investment (in the property market or otherwise) and also to cushion retirement savings.

Pauline Goh
CEO, Singapore & South-east Asia
CBRE Pte Ltd

THERE has been a noticeable cutback in sites on the government land sales (GLS) programme, resulting in more bidders than available land parcels. The past few GLS tenders have seen about 10 bidders each. For every winner, there are at least nine or more bidders who remain hungry and continue to be on the lookout for land. If their core business is in Singapore, they are hard pressed to look for other sources of land and collective sales is the next best alternative.

Competition for land will remain keen but despite paying relatively high prices for land, developers are still hard pressed to keep prices within a palatable range, particularly as these en-bloc sites are located in the Rest of Central Region and Outside Core Region. Developers will need to be mindful that a large proportion (74 per cent) of all new private homes sold in the first half of this year were priced below S$1.5 million.

Olive Tai
Co-founder and Managing Director
beautiful.me & Synagie.com

EN-BLOC fever has taken hold because property developers are thinking ahead when the market is expected to rebound in the next two years; it is not a sign of recovery. Developers have depleted their land bank and with the government not releasing land parcels for now, it is cheaper to buy land from existing private developments or mature HDB blocks whilst the property sector remains soft. What this means is that developers are confident that within the next two years, the government will start easing curbs, normalising prices back to pre-2013 margins before some of the cooling measures were imposed.

Mark Billington
Regional Director
ICAEW South-east Asia

THE residential property market is showing mixed signals and the current en-bloc fever comes as a surprise. While the spike in en-bloc sales may also lead to an increased demand spilling over to the primary market, we cannot be certain that this will be sustained for the rest of the year. In addition, the recent increase in development charge rates for non-landed residential properties should also cool en-bloc sale fever.

As forecasted in the ICAEW Economic Insight Q2 2017 report, we do foresee brighter prospects for Singapore's residential property market in 2018 with the easing in housing restrictions and this spike might possibly be the first signs of recovery for the struggling sector.

Teo Hong Lim
Executive Chairman and CEO
Roxy-Pacific Holdings Limited

WITH better sales sentiments, developers are on the lookout to replenish the land bank for future projects, leading to more successful en-bloc launches. We believe this should lead to a further increase in short- to mid-term buying interest especially from beneficiaries of en-bloc sales. This should bode well for developers with upcoming launches, such as ourselves, as we look to execute our predominantly freehold land bank this year and next. Our past projects have done well due to clear differentiation and strategic locations, and we are optimistic that our upcoming launches will be as well received.

Francis Koh
Managing Director & Group CEO
Koh Brothers Group Limited

WITH aggressive GLS bids and developers' dwindling land bank, the en-bloc market is heating up amidst recovering demand in the residential market. As with many other developers, Koh Brothers is also on the lookout for suitable acquisitions to prudently replenish our land bank where we can employ our proven model and niche in unique lifestyle-themed developments, such as that of Westwood Residences EC, Singapore's first bike-themed development that will achieve TOP this quarter.

Concurrently, we are also exploring yield-accretive real estate development and investment opportunities in overseas markets.

Damien Dhellemmes
Country President, Singapore
Schneider Electric

AS with most densely populated urban cities, land space is in perennial demand in Singapore that is compounded by a scarcity of land, hence its (perceived) high value. With a growing population expected to reach over six million by 2030, this calls for action pertaining to land management, and developers can jump on this opportunity by redeveloping existing residential properties.

Schneider Electric believes that green buildings driven by innovative technologies are the answer to sustainable and efficient urban cities, attributed to reduced energy use and carbon emissions. With green buildings, not only will Singapore's future generations enjoy smarter, greener and healthier living environments, they are cost-effective and achieve high returns on investment by virtue of lower operational and maintenance costs.

Leong Boon Hoe
Chief Operating Officer
List Sotheby's International Realty

THE recent resurgence in en-bloc sales arises from several factors : low interest rates; limited supply of development land; tweaking of property restrictions in March 2017; confidence arising from the resulting robust new home sales since the beginning of 2017; and developers' need for replenishment of their land bank.

The local property market will see the rejuvenation of the suburban residential estates, adding more pipeline supply of private homes and generating a higher demand for new and resale homes. Together with the government land sales programme, there is greater assurance of adequate housing supply in Singapore.

There is also a likelihood that sellers with surplus funds may turn to overseas residential properties for investment, thereby boosting the buying level.

Christophe Duchatellier
CEO, Asia-Pacific
The Adecco Group

THE increase in en-bloc sales seems to be largely sentiment-driven as economic prospects have improved and some of the property cooling measures have been tweaked. As some of these sites are redeveloped, it is expected to lead to more jobs in the property and construction sector in the short to medium term. Very importantly, it is also an opportunity to further Singapore's Smart Nation and sustainable living initiatives by leveraging green construction designs, incorporating smart home technologies and using smart materials in the redevelopment of these sites. An added advantage of this will be the creation of higher value-add jobs in the sector and, with appropriate training, an upskilling of existing workers.

Hari V Krishnan
PropertyGuru Group

PROPERTYGURU understands that land is scarce, with only 17 per cent set aside for housing purposes. Given that the Government Land Sales (GLS) programme has tapered off supply in the past few years, real estate developers have turned to collective sales to build their pipeline of projects. A series of high profile successes - such as Eunosville, which sold for S$765 million - has also encouraged homeowners of older condominiums to use this avenue to cash out of their properties.

We also note that home buyers, seeing a constant stream of successful collective sales, recognise that a market rebound is on the horizon. PropertyGuru's Consumer Sentiment Survey H1 2017 indicates that purchase intent stands at 47 per cent, suggesting that buyers think the market has bottomed out and are no longer sitting on the sidelines. It's therefore no surprise that recent new launches are seeing strong sales performance.

However, we need to bear in mind that financial prudence continues to be imposed through measures like the Total Debt Servicing Ratio. As such, projects built on these en-bloc sites will still need to be priced right in order to move.

Edwin Khew Teck Fook
The Institution of Engineers, Singapore

A COMBINATION of rising demand and limited supply of land parcels is fuelling the en-bloc fever. The easing of cooling measures has also further amplified optimism in the real estate market. With collective sales pushing up prices of surrounding developments, analysts expect that property prices will be on an upward trajectory in the medium term. Looking at the current launch market of en-bloc sales, the wave of optimism will continue to be advantageous for developers. Limited land supply and increasing en-bloc tenders will drive future residential sales up. Increased activities in property development can only mean more projects and work for engineers, architects, surveyors, contractors and those supporting the built environment sector, which will contribute to economic growth.

Carl Freer
Watstock Intelligent Trading

IN my honest (and brief) opinion, it's basically still-low interest rates, strong home sales for newer units and the limited supply of land for development.

I also believe there is a surge in foreign investment interest including from the Middle East.

Robin C Lee
Group COO
Bok Seng Group

THERE are two main motivators behind the resurgence of en-bloc interest - one is the significant upside in selling price doing it collectively and the other is the old age and poor condition of the property. As most developments in Singapore are not that old, extra money seems to be the fillip. The decade gap between the last en-bloc wave and this one has simply (and substantially) boosted the supply of properties and owners both 10 years older than before. As such, the motivation to sell has become stronger even though some of the asking prices are lower than in the last wave. No doubt, we will see plenty of new private properties coming onstream in the next few years but gone will be the estates with lush greenery and open landscape, these being replaced instead with densely built developments.

Zaheer K Merchant
Regional Director (Singapore & Europe)
QI Group of Companies

THE so-called en-bloc fever is partly attributable to significant investments by foreign investors who, having done comparisons with other major cities around the globe, consider that Singapore's land prices are relatively inexpensive. This is especially so in view of the fact that the Singapore dollar has remained steadily strong throughout the years. One of the implications is that this phenomenon will bolster residential property prices up to a certain point, after which we can expect property cooling measures to kick in again. For now, the en-bloc fever looks set to be positive for the market and the economy as a whole, buoyed by supportive buyer sentiments.

Lim Soon Hock
Managing Director

OF late, the Singapore property market has been full of surprises and can best be described as unpredictable. There is no logic or rationale for the sudden frenzy in en-bloc sales. It is an aberration. The fundamentals do not point to any sustainable trend. One plausible reason is the dearth of such sales in the last few years since the government's cooling measures kicked in. So long as the measures remain, the residential property market will be subject to the whims and fancy of buyers and sellers.