Owners moving fast to catch collective sales wave

Vista Park and How Sun Park are just a whisker away from getting 80% approval - within a couple of weeks of their EGMs

Oct 07, 2017

Lynette Khoo

EVEN though the success of en bloc deals is not guaranteed, more property owners are giving their consent to collective sales - and they are acting fast.

The collective sales committee (CSC) for the 209-unit Vista Park condominium in Pasir Panjang, for instance, is expecting the requisite 80 per cent approval from owners within three weeks of the first extraordinary general meeting (EGM) that was held on Sept 28.

How Sun Park, which consists of 20 townhouses along How Sun Road in the Bartley area, is expected to cross the 80 per cent mark within seven days of its first EGM last Sunday.

Owners of Vista Park are asking for around S$345 million, with an estimated development premium of S$62 million for a top-up to a fresh 99-year lease.

Owners at How Sun Park are asking for around S$72 million. This site may be subject to a S$12.7 million development charge based on its development baseline.

These are among 40 to 50 developments said to be in varying stages of the collective sales process, all seeking to capitalise on developers' appetite for land.

Teakhwa Real Estate is marketing both Vista Park and How Sun Park. The company's managing director Sieow Teak Hwa, said: "I always tell my owners - speed to market and reasonable reserve price are the two keys to get a successful en bloc sale."

With many en bloc sites coming onstream, developers can be more selective or choosy, and the government may also release more land under its government land sales programme next year, he told The Business Times.

Vista Park's collective sales committee (CSC) chairman Martin Tang noted that residents who opposed going for collective sale in two past attempts are now giving the green light, as they see the market turning the corner.

"It is a good time to support the en bloc process and preserve whatever value their properties have," Mr Tang said.

He added that the recent news that 191 private terraced houses in Geylang Lorong 3 will be returned to the government when their leases run out at the end of 2020 have also served as a reminder for residents of older private leasehold properties.

The 209 units in Vista Park are nestled between Kent Ridge Park and other private housing estates off Pasir Panjang Road. With a plot ratio of 1.4, the maximum gross floor area (GFA) is 446,948 sq ft; the land rate works out to S$910.6 per square foot per plot ratio (psf ppr), or S$887 psf ppr if the 10 per cent bonus balcony GFA is included.

As for How Sun Park, the maximum GFA, based on its plot ratio of 1.4, is about 76,920 sq ft. The land rate for this site works out to S$1,101.7 psf, or S$1,059.5 psf if the 10 per cent bonus balcony GFA is included.

Including the collective sale of Normanton Park on Thursday, there have been a total of 16 collective sales this year, chalking up S$5.83 billion - up from only three worth S$1 billion for the whole of last year.

More projects are making progress in their collective sales attempts.

Owners of former HUDC project Ivory Heights have appointed SLP International as their marketing agent; Edmund Tie & Company is working for owners of Royalville condominium in Bukit Timah; owners of freehold condominium Windy Heights have appointed Knight Frank, while Savills Singapore is working for owners of freehold development Minbu Villa.

ZACD Group executive director Nicholas Mak noted, however, that not every en bloc sale is eventually completed.

For example, five of the 108 residential developments reportedly sold en bloc in 2007 failed to complete the process for various reasons. The Strata Titles Board can dismiss a sale if it was conducted in bad faith, he said.

JLL's senior consultant Karamjit Singh said he believes the en bloc market can be sustained till mid-2018 before starting to pull back.

Given that market sentiments have turned positive, the risks associated with acquiring en bloc sites have become secondary to developers.

"By the middle of next year, concerns of oversupply, policy changes and the widening gap between public housing and entry-level private homes arising from elevated land prices should peak. And developers will start going slow with land purchases," he said.

Most developers would each also have secured at least one or two sites by then. "Foreign developers are becoming more comfortable with the en bloc process as they see their local peers and more locally run foreign developers getting into it," he said.

JPMorgan property analyst Brandon Lee said he believes the en bloc upcycle is sustainable, but two things could derail it.

First, hikes in the development charge (DC) will erode margins and dissuade developers from en bloc deals; or they could lower the price expectations of property owners in collective sales and minimise the probability of attaining unanimous approval.

Second, the launch pipeline could significantly increase over the 2019-2020 period if a significant number of prospective en-bloc deals are awarded, he said.