Originally Posted by
Laguna
With the few successful enbloc recently, I am now reading news of many properties starting the enbloc processes. Perhaps now is in the region of 50 properties already...it is getting very very hot....
The formation of Sales Committee is simple, but the collection of >80% is not an easy task now. For those not yet collected 80%, everyone is looking at least 30% more than the agreed reserve price for the rest to sign. And finding a buyer to match the price would be even much more difficult.
The best time to collect the 80% is when the market is quiet or down, with more realistic reserve price and selling when the market has just pick up and hopefully can achieve 30% more than the reserve price.
Now, the developers know, there are so many enbloc going on, they can afford to wait and pick and choose.
The biggest competitor of enbloc of private properties, is the Government Land Sales. The process for GLS is clean cut and time to market is fast as compare to enbloc, which easier took about 10-15 months to clear especially when there is minority objection.
I was very interested to buy into enbloc properties and I did. And of course, I profited from them as well either by selling in the open market or with enbloc. Profit from enbloc was very substantial as compare to the individual unit market price.
The biggest mistake I made in buying enbloc properties is the over-estimation of the project bite size or project risks.
I spoke to one very bigger developer before on the potential enbloc of the older properties along Marine Parade area with full seaview. His reply as below..(please note this was before all the cooling measures especially the ABSD on unsold units.)
Indeed sea view units command a range of premium anywhere in the world.
I agree fully with you on the upside of the east coast. Imagine what price the HDB flats there will fetch if the government is prepared to privatize them! This in turn will fuel the transformation of this entire stretch into a world-class cosmopolitan area. A dream that can turn into reality over the next 50 years?
Bite size in an uncertain period is typically what developers go for, making it really challenging for anyone, even with partners, to make an offer for the large plots along the east coast. With the increasing trickle of city centre and city fringe older developments offering themselves, there are also attractive for developers. This makes it even more difficult for management to convince boards on investing in very chunky plots despite the attractiveness of such plots.
In short, those at the East Coast area, like Lagoon View (Sales Committee formed), Laguna Park (Sales Committee to be formed this month), Mandarin Garden, Neptune Court (not yet fully privatised), Bayshore, Bayshore Park etc etc with huge land size would have the problems of bite size, same go for Tampines Courts and even Pearl Bank. On top of this, all these land, the most is only about 20% - 30% with good unblocked seaview after clearing the tree line. So, what sort of additional premium for the seaview will command?
Now, look at all the HDB along Marine Parade road, do you think Govt would SERS them? Answer is on the wall. These are about 40-50 years old....I cannot imagine there were people paid $1m for a HDB 5-rooms with seaview there….all these 5-rooms are with small window to the seaview….wasting assets
It is definitely not the time to buy into enbloc properties even though I have the buy list….Perhaps, I might be able to catch the next cycle….
A side note…
For Tampines Courts, I read it the agent fee is 1% (or $17,000) an unit based on the reserve price and legal fee is 0.28%....whereas EunosVille is $5,000 flat agent fee…and lawyer fee is around 0.2%.
The market rate for agent fee should be around 0.3-0.4% but some comes with performance bonus….