En bloc fever picks up

Published 12 May 2011
By Stella Lee

Two sites were launched for collective tender yesterday with the en bloc sale market feverishly picking up activity for this year as confidence in the Singapore economy remains buoyant. Compared to last year, average transaction sizes for collective sales have increased by more than 50 per cent.

Vista Park, a large leasehold residential 319,000 sq ft redevelopment site off Pasir Panjang Road has been put up with a guide price of S$338 million.Since the start of this year, 20 collective sales have been announced here with nine closing at a total of S$880 million. This compares against the 34 collective sales totalling S$1.7 billion last year, according to Cushman & Wakefield.

Analysts say that the average transaction size grew from S$52 million last year to more than S$80 million this year as property developers are bullish about the economy.

Mr Donald Han, vice-chairman at Cushman & Wakefield said: “Bottom line: So long as the economy grows within the 4 to 6 per cent I think generally the confidence will be there in terms of investors coming here looking to invest in this part of the world. It’s going to be a fairly active market.”

Vista Park, a large leasehold residential 319,000 sq ft redevelopment site off Pasir Panjang Road has been put up with a guide price of S$338 million. This translates to a land price of S$862 per square foot per plot ratio based on the potential gross floor area of almost 447,000 sq ft. Tucked away in a tranquil neighbourhood, the site is close to the Ayer Rajah Expressway (AYE) and within walking distance from the Pasir Panjang MRT Station, which is expected to be ready by the fourth quarter of this year.

Additionally, a post-colonial development in River Valley with a unique tenure of close to 1,000,000 years is expected to fetch a reserve price in the range of between S$72 million and S$80 million.

More than 80 per cent of the owners have signed a collective sale agreement to sell the property. They expect offer prices of between S$72 million and S$80 million or between S$1,057 and S$1,175 per square foot.

Analysts say the market for en bloc sales currently favours smaller developments as the bulk of the land sales programme will continue to be dominated by the Government land sales.

“I think generally I tend to be a bit more bullish on the smaller ones, because the more bite-sized it is, the number of new players in the market will tend to be a bit more than compared to new entrance for large projects,” said Mr Han.

Mr Karamjit Singh, managing director, Credo Real Estate, said: “Various en-bloc sites have different fortunes. Smaller ones are more successful because for smaller developers, en-bloc sites are their main source of land supply. Bigger developers on the other hand are more keen on Government sites.”

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