Experts expect 5 to 10 en-bloc deals in second half of year

Source : Channel NewsAsia – 16 Jul 2009

Observers say more en-bloc sales are on the cards as a result of improved sentiment and rising demand for land.

One market player, Credo Real Estate – a leader in the collective sales market – said at a seminar on Thursday that it expects five to 10 cases in the next few months, with more to follow in 2010.

The seminar on en-bloc property sale was Credo’s second in a week on the back of rising enquiries. Representatives from about 18 residential developments attended the seminar.

In the last two months, Credo received 10 calls about potential collective sales. There were also existing clients hoping to re-initiate the sales process.

Among them was the 528-unit Laguna Park in the east, which could be launched for collective sale next month.

Observers say the project is likely to attract consortiums rather than individual developers, given the scale of the development and its S$1.2 billion price tag.

Credo said that with the current conditions, owners should lower their asking price by 20 to 25 per cent, compared to prices during the boom time in 2007.

Karamjit Singh, managing director of Credo Real Estate, said: “But that gap can also quickly narrow if the pace of recovery picks up because where the outlook remains positive and end unit prices move up 10 per cent, land values move up even more than 10 per cent – there is an exponential effect at the pace which land values rise.”

The company said it expects 30 to 40 en-bloc transactions next year, comprising mainly small and medium sized projects. For 2011, it projects about 18 collective sales deal will go through. This pales in comparison to the 87 residential property transactions done in 2007.

The failed sale of Horizon Towers and new rules on the conduct of sales committees and transparency of sale process will also affect transaction volume.

Industry players say the additional requirements will mean that potential en-bloc projects will take a longer time to hit the market.

The cost of putting a project on sale will also increase, given higher administrative costs and legal fees.