Total value of en bloc sales expected to top $10b in 2007: analysts

By Daryl Loo, Channel NewsAsia | Posted: 12 March 2007 2310 hrs

SINGAPORE : The total value of properties sold en bloc could top $10 billion this year, according to analysts.

This will surpass the record set last year when collective sales amounted to $7.4 billion.

And analysts believe the strong momentum for such sales will continue as a result of a strong economy and competitive property prices.

The en bloc sales fever doesn't seem to be letting up.

Analysts are predicting the momentum for collective sales to carry on through the year.

"Last year was by far a record year. There were about 75 deals or so amounting to close to $8 billion. So far we are about one-third there this year, so the momentum is very strong. We have already surpassed the whole of 2005 and looking at the momentum, it seems poised to surpass the whole of last year as well," says Karamjit Singh, MD of Credo Real Estate.

According to property consultant Knight Frank, total sales so far this year have already reached $1.8 billion.

This is nearly 45 percent higher than the $1.25 billion recorded for the first quarter of 2006.

The demand is driven by the strong economy, a surge in demand from overseas buyers, and the fact that local property is seen as being affordable compared to other major cities such as London, New York and Hong Kong.

And analysts said even proposed changes to rules governing en bloc sales are unlikely to dampen the enthusiasm for collective sales.

This is because the new rules are likely to affect mainly mixed developments, whose deals take up just three percent of the total.

For such mixed developments, it will be harder for a sale to be completed.

"The large mixed development projects, while not impossible, are not easy as well. The main problem lies in devising the apportionment method, or the method to distribute the sales proceeds," said Karamjit.

"Given that they are not homogeneous in nature, you'll usually have retail, office, and apartments. So it becomes very difficult and challenging to satisfy all components."

Law Minister S Jayakumar said earlier this month that the rules for en bloc property sales were being reviewed, including mandating a majority vote based on the total number of units in a development.

Knight Frank also warned that a proposed change of more power for the Strata Titles Board (STB) to increase sales proceeds for minority owners with valid objections could result in frivolous objections.

Foo Suan Peng, executive director of Knight Frank said: "STB may have seen some inequality in terms of distribution, but I think the result of this rule change will entice a lot of frivolous and opportunistic objections. People will try and get higher sales proceeds. I think STB has to be clear about this.

"STB has to show that for frivolous objections, they have to bear the cost of the objection if they are not successful. Then I think this will check the frivolous objections for those who just want to capitalise on the rule change."

The new rules for en bloc sales will undergo a public consultation and are expected to take effect by the end of this year. - CNA /ls