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What’s up with en-bloc?


t is the dream of every property investor in Singapore to get that magic call that the owners are organising an en-bloc sale to a developer and everybody will cash out making a fortune. Unfortunately, for many owners in the current environment, the dreams of en-blocking are just that – with one exception. Privatised HDBs seem to be hot property again for developers looking to essentially knock down old HDBs and replace them with new apartments. UOL/UIC completed their second enbloc of 2016, buying the 175-unit Raintree Gardens in Potong Pasir for $334m which works out at $593 psf. The price is 6% above the previously reported indicative price of $315m, and this was the second en-bloc sale of a privatised former HUDC estate in the year. JLL says the average gross sale price for each apartment owner stands at $1.9m. Shunfu Ville at Bishan was the first en-bloc sale in nine years at $639m or $557 psf. Cushman & Wakefield research director Christine Li notes that even though island wide vacancy rate is at historical high for private residential units, there was still investment demand given the ultra low interest rate environment and lack of alternative investment options such as stocks and bonds. “The improved transaction volume in recent months has encouraged some

developers to take on more land to meet the purchaser demand. Some have turned to the en-bloc market as the government supply for residential has been on the decline given the supply glut,” Li says. A lean patch Still, it hasn’t been smooth sailing for all en-bloc developers. Prior to these two transactions, the last en-bloc of former HUDC estate, now D’Leedon, was acquired by CapitaLand in June 2007. CapitaLand has had to pay extension charges to the government because it hasn’t been able to sell all the units, and as of November 2016 around 10% of the development was still unsold resulting in an additional estimated $5m charge. Seemingly wanting to avoid a similar fate, Heeton sold its iLiv@Grange at an estimated loss of $11m to a group of Singaporean private investors for $95m ($1,623 psf per plot ratio). DBS analysts note the price was 26-30% below the initial asking price of $129-135m in late 2013 ($2.2-2.3k psf). “iLiv@Grange obtained TOP in October 2013 and has paid the 1st QC charges in October 2015, estimated $5.8m. Heeton has not sold a single unit and QC charges will double in October 2016,” adds the brokerage. For DBS, the increasing en-bloc sales implies that developers are hungry amidst


Coworking as a ‘tribe’ in TRIBE by TEC

The Executive Centre recently introduced TRIBE by TEC, the company’s first dedicated coworking centre, at 51B/52B Circular Road in Singapore. “TRIBE stands for a group of people who shares the same customs, beliefs, and interests. TRIBE by TEC is designed especially to unite promising professional forces and provide them with the workspace and facilities they need to grow their business,” says Yvonne Lim, The Executive Centre’s regional director for Australia, Jakarta, and Singapore. Eschewing the austerity and formality of a conventional corporate environment, the interior design of TRIBE emphasises warmth and vibrancy. The decors feature tribal elements such as masks, dream catchers, and patchworks. The approach is to form a business eco-system bringing individuals and enterprises together through cooperation and competition. 12 SINGAPORE BUSINESS REVIEW JANUARY 2017

Physical indicators

TRIBE by TEC’s open and communal setting

For 2012 to 2015, take-up, completions, and vacancy rates are year-end annual. For 2016, take-up, completions, and vacancy rates are YTD, whilst future supply is for 4Q16. Physical indicators are for the CBD.

Source: JLL

a dearth of land bank supply in Singapore, and that they have a more positive outlook in the medium term. This is because these land banks have tighter rules including QC charges in seven years if the units are not fully sold and the en-bloc process will likely be longer. Karamjit Singh, international director and head of residential at JLL, comments, “The collective sale market is slowly turning a corner.” According to the firm, the pick-up in collective sale activity is due to a combination of three factors: the switch in the outlook of the residential market from negative to neutral-positive, the shortage of development sites – whether from the government or private sector, and the strong attributes and realistic pricing of the developments that were sold in 2016. If investing in property used to be a case of caveat emptor, it may now be said it is the developers who need to be aware too.

Singapore Business Review (December 2016 - January 2017)  
Singapore Business Review (December 2016 - January 2017)