The collective sale market has continued to struggle, with experts predicting that nothing is going to change in the short term. There have been several examples where developments have been put up for sale, with the tender subsequently closing having received no bids. This despite going to the market several times, at a reduced price each time.
So which areas have been particularly effected, what is causing this downturn, and is there hope for the future?
The History of Collective Sales
Apart from the boom years of 2005, 2006 and 2007, (and a minor resurgence in 2010, 2011 and 2012) the en bloc market story has largely been one of frustration and disappointment. 2005 saw 20 developments sold (total sales of S$2,153 million), 2006 85 developments (S$7,943 million) and 2007 166 developments (S$11,420 million).
Recent years have seen very slim pickings however: 2013 – 10 developments (S$574 million), 2014 – 0 sales, 2015 – 1 development (S$380 million), with 1 development (Shunfu Ville Collective Sales) so far in 2016 at the time of writing (May).
Amber Park, the Katong Estate condo has been put up for sale three times so far without finding a buyer, or even receiving a bid, but it isn’t alone by any means. Peace Centre and Peace Mansion have both failed to find a buyer on four occasions. Other notable developments that have failed in their attempts include The Wilshire, Newton Imperial, Spring Grove, Riviera Point, Kheam Hock Gardens, Derby Court and Fragrance Court.
Reasons for Failure
Probably the biggest and most obvious reason for the flagging success of collective sales is that they are merely reflecting the current housing market in Singapore. It would be surprising if they bucked the sluggish sales in all other sectors.
There are other reasons however over and above this. The first of these is ABSD (additional buyer’s stamp duty). This legislation, brought in in late 2011 means that any unsold units 5 years after the land was purchased will be liable for a levy – 15% of the purchase price of the land. In specific relation to en bloc, this 5 years starts from the minute the developer buying the site puts down their deposit. Obviously, the process is then out of his hands if that particular en bloc doesn’t have 100% residential consent, with the ensuing process and hearing taking up to 9 months. All the time the clock is ticking down.
This is a particular reason why larger developments have been a lot harder to sell than smaller plots of land, and this is predicted to be the case for the foreseeable future.
For any property looking to go through the en bloc process, competition will be tough – the same with practically all of the housing market. The location will really need to stand out from the crowd and would need to be very close to sought after facilities such as high quality schools and an MRT.
Do take a look at our list of Singapore Condominiums that are under construction and will be releasing for sales in the market soon!
New launch condos that are already selling in the market and will obtain TOP by 2017
Other new launches