April 5, 2009 Sunday

Collective sale impetus fizzles out

By Joyce Teo and Jamie Ee Wen Wei

The once fever-hot collective sale market is now stone-cold, and property experts predict it will take at least five years for transactions to reach the pitch seen before.

At the height of the property boom in 2007, 116 collective sales were completed. This figure was whittled down to just eight last year, after the onslaught of the global economic crisis.

There was no collective sale done in the first three months of this year.

Industry players expect the market to stay dormant in the coming months as developers remain mindful of the lukewarm response to new residential launches and have also to contend with high construction costs and tighter credit measures.

Mr Steven Ming, Savills Singapore's director for investment sales, said: 'At this point, developers are not on an acquiring mode, not until they have cleared their inventory of apartments bought over the last few years.'

Most collective sale sites put up for tender late last year have closed without any bids.

They include Spanish Village in Farrer Road, Villa delle Rose off Holland Road and Elizabeth Towers in Mount Elizabeth.

Two months ago, developer Jewel 1 pulled out 20 days before a planned $44 million purchase of Cairnhill Heights. It cited 'difficult, uncertain and deteriorating market conditions' for its decision.

Property experts, however, said low- to mid-range properties may be the one bright spark in the property market.

Mr Ming said the popularity of recently launched 'mass market' condominiums like Caspian and Mi Casa showed that there was still a healthy demand for cheaper, suburban projects.

Mr Karamjit Singh, managing director of Credo Real Estate, noted that the eight collective sale projects which found buyers last year were of lower value.

The experts agreed that any return to the collective sales peak in 2007 was not possible for now.

Mr Ming said: 'Right now, I don't see any return of significant interest in en bloc sales, not until the economic outlook becomes more certain.'