The Tanamera joins en bloc hopefuls

Feb 04, 2023

ANOTHER en bloc hopeful has joined the fray: Owners of The Tanamera condominium in Bedok are now gunning for a collective sale exercise, and will begin the process of collecting signatures from the requisite 80 per cent of unit owners soon.

If a collective sale tender for The Tanamera is launched, the reserve price, pending finalisation, could be in excess of S$500 million, marketing agent Knight Frank told The Business Times on Friday (Feb 3).

Located at Tanah Merah Kechil Road, the 99-year leasehold condo sits on a site spanning 236,778 square feet (sq ft). It has a gross plot ratio of 2.1 under the Urban Redevelopment Authority’s Master Plan 2019 and houses 288 residential units.

The en bloc sale process started in the fourth quarter of 2022, said Knight Frank.

On Saturday (Feb 4), owners of the condo will attend an extraordinary general meeting to agree on the terms of the sale, it added. Only then can they begin collecting signatures.

Desmond Teo, chairman of the condo’s collective sale committee, highlighted the owners’ keen interest in joining the en bloc market.

“It is an ideal time for (us) to come together now to sell, especially with the success seen at the recent launch of Sceneca Residence,” he said. The Sceneca Residence project, sited just 200 metres away from The Tanamera, sold 60 per cent of its 268 units when it started taking sales bookings on Jan 14.

“With our decaying tenure, it makes sense for owners to sell sooner rather than later,” added Teo. “Who knows when the chance will come again if we miss it this time round?”

Although prices at The Tanamera have risen by around 60 per cent since 1995, Knight Frank noted that the increase is moderate compared to the price growth of other projects in the area. This includes Bedok Court, where prices surged by around 150 per cent in the same period.

“Selling collectively presents an opportunity for owners at The Tanamera to potentially attain a higher selling price than selling individually, as well as replace (their unit) with another property that holds the promise of greater price gain,” the consultancy said.

Even so, Knight Frank’s head of capital markets (land and collective sale) Chia Mein Mein emphasised that en bloc sales today are not always as lucrative as those in the past, which were “sometimes equated to winning the lottery with super-normal gains for sellers”.

This is particularly so from the mid-1990s, when plot ratios in the Master Plan were growing, adding enhancement to private land plots, Knight Frank noted in a report on collective sales issued on Friday. But in the past 15 years, plot ratio increments in the Master Plan revisions have been “few and far between”.

“Although developers are still hungry for development land, the collective sale cycle of 2021/2022 which continues to prevail in 2023, was very different from that of in 2017/2018 due to lower success rate, higher development risks and higher sellers’ expectations,” said Chia.

Knight Frank research shows that 30 per cent of collective sales in 2021 to 2022 were successful, in contrast to the 60 per cent success rate estimated for deals in 2017 to 2018. Sites sold in the 2017/2018 cycle were also larger, averaging above 120,000 sq ft, compared to those in 2021 to 2022, which came in under 85,000 sq ft.

Developers now face increased risk, Chia said. Construction costs have gone up, government intervention has slowed market momentum, and buyers may be holding back in the face of higher mortgage rates.

Developers are also under pressure to sell out their projects within five years, in order to qualify for a remission of a significant portion of the Additional Buyer’s Stamp Duties paid when purchasing the land plot.

Meanwhile, sellers’ expectations remain high with prices of private residential homes at new benchmarks, she said. More realistic pricing expectations may be in order to be able to break the current deadlock in the collective sale market. Still, owners who had bought their units in earlier years – “before each subsequent epoch of private home price increases over time” – can bag significant gains.

When the Watten Estate Condominium was sold in October 2021 for S$500 million, owners who had bought units there between 1995 and 2020 benefited from an average estimated gain of over 300 per cent on a per-square-foot (psf) basis, Knight Frank said.

The collective sale price for Watten Estate Condo, on a psf basis, was also about 80 per cent more than other non-landed homes in the same postal sector at the time.

In another example, Flynn Park owners who had bought units in the development between 1995 and 2020 enjoyed profits of an estimated 270 per cent (on a psf basis) when the site was sold for S$371 million, also in October 2021, Knight Frank noted in its report.

A new 271-unit project being built by Hoi Sun Hup and Sunway Realty on the Flynn Park site, Terra Hill, is expected to be launched in the first quarter. At the Watten site, UOL and SingLand are jointly developing a 200-over unit project. Both sites are freehold.

https://www.businesstimes.com.sg/pro...-bloc-hopefuls