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Singapore’s Guide To Understanding The En Bloc Process
With news about homeowners becoming overnight millionaires with successful en blocs, many are curious as to what an en bloc means, why do people en bloc, and more importantly, kay poh a bit about recent en bloc transactions.
The current en bloc cycle is in its third year – starting with the successful sale of Shunfu Ville in 2016. However, it has petered down following the tweaks to the cooling measures in July 2018. Owners of older projects, seeing the millions earned by those who had their properties successfully sold, often think about putting their own properties up for collective sale and the chance to earn a hefty return as well. However, the process is onerous and not as simple as it sounds. There are various conditions that the development and residents need to satisfy before the en bloc sale can take effect.
This guide helps you to understand
- What is an en bloc sale
- What are the advantages and disadvantages of an en bloc sale
- What are the recent en bloc transactions
What Is An En Bloc Sale
A simple way of defining an en bloc is the sale of two or more property units to a single common purchaser.
It is equivalent to a collective agreement for the majority of the owners to give up their apartments in exchange for payment. Ideally, that payout is higher than what the individual apartments were purchased for. Thus, in many instances, a successful en bloc sale means a significant profit earned for the owners.
Pacific Mansion in River Valley was sold for close to S$1 billion to a consortium led by GuocoLand.
However, an en bloc sale might still encounter potential roadblocks, especially if the development is more than 10 years old. This is when approval for the owners need to be solicited, and at least 80 per cent of those residents (90 per cent if the development is less than 10 years old) must agree.
Even when approved, complications can still arise as the remaining 20 per cent might resist the sale, such as the en bloc sales exercise of Shunfu Ville. Although successfully awarded to Qingjian Realty, some owners objected to the sale during the court case and filed an appeal to the High Court. One objection queried if the transaction was done in good faith, considering the sale price.
However, lawyers representing the collective sale committee argued that in 2015, the committee launched two public tenders, both at a reserve price of S$688 million. However, the tenders did not attract any formal bids until Qingjian Realty approached with an offer price of S$638 million.
When delivering the final judgement, the Court of Appeal noted that while the “committee was in somewhat of a rush, there was nothing to suggest an absence of good faith or impropriety in the transaction”.
Advantages And Disadvantages Of An En Bloc Sale
Homeowners, especially those who have weighed the costs and benefits of seeking the collective sale route, have taken into consideration the high upkeep costs for an old development.
For example, the lifts may often break down. Other maintenance issues like the ageing pump and sewage systems, which cause persistent chokes, contribute to overall inconvenience where time and money must be spent to fix the problems.
Others might be motivated by the premium offer. These owners are more than happy to collectively sell their units to the developer and in the process, accrue significant profit compared to what they have invested earlier.
There are also some homeowners who want to move to a smaller apartment since their children now live on their own. These homeowners are mainly retirees who find living in a big apartment too costly.
As they might not be able to apply for home loans due to age, if the offer amount is deemed sufficient to foot the payment of the next, smaller apartment, it presents a tempting venture.
However, beneath the stories of overnight millionaires, the process to a successful en bloc is often long and tedious with plenty of legal costs, disappointments, loss of sleep, and sometimes fiery tussles among neighbours opposing the sale for personal reasons.
The regulations are such that if one of the owners chooses not to accept the proposal, there is a possibility that the 80 or 90 per cent threshold is not met, thus throwing success of the sale in doubt.
Pros And Cons Of Selling En Bloc
| Pros | Cons |
|---|---|
| Able to monetise one’s investment immediately. | No amount of cash can replace memories and nostalgia of living in one’s family home. |
| Money can be used to finance the next apartment. | Want to keep the home as a legacy to pass down to future generations. |
| Can finance for retirement overseas. | Families reluctant to move as they want to enlist their children in nearby schools. |
| Tired of costly maintenance upkeep; money can be deployed to higher yielding investments. | New homeowners do not wish to bear the costs of additional stamp duties for selling their units prematurely. |
| Money will come in handy when there are urgent medical needs or other emergencies. | Homes that have existing tenancies might need to bear additional costs for changing the tenancy terms. |
| Proceeds from the en bloc sale can be put into the new development on the existing site. | If the home is held in an estate or will, additional legal costs might be needed if original estate owner/will writer stipulated that the property cannot be sold under any circumstances. |
En Bloc Projects in Singapore: Date, Price and Projects
| Date | Project | Reserve Price (S$) | Bids | Final Price (S$) | Winner |
|---|---|---|---|---|---|
| May 19, 2016 | Shunfu Ville | 688,000,000 | 0 | 638,000,000 | Qingjian Realty |
| August 31, 2016 | Harbour View Gardens | 34,000,000 | 1 | 33,250,000 | Roxy-Pacific Holdings |
| October 06, 2016 | Raintree Gardens | 315,000,000 | 3 | 334,200,000 | UVD (Projects) |
| November 17, 2016 | Cuscaden Mansions | N/A | N/A | 103,800,000 | Not Disclosed (UK Wealth Management Company) |
| December 20, 2016 | Perpetual Apartments | N/A | N/A | 10,200,000 | Not Disclosed |
| May 05, 2017 | One Tree Hill Gardens | 72,800,000 | N/A | 65,000,000 | Lum Chang |
| May 24, 2017 | Rio Casa | 450,000,000 | N/A | 575,000,000 | Oxley, KSH, and Heeton Holdings |
| May 25, 2017 | Goh & Goh Building | 120,000,000 | N/A | 101,500,000 | BBR Holdings |
| May 31, 2017 | Eunosville | 648,000,000 | 7 | 765,781,819 | MCL Land |
| July 11, 2017 | Lotus at Pasir Panjang | N/A | N/A | 121,000,000 | Oxley Holdings |
| July 20, 2017 | The Albracca | 63,500,000 | 12 | 69,119,000 | Sustained Land |
| July 26, 2017 | Serangoon Ville | 415,000,000 | N/A | 499,000,000 | Oxley Holdings |
| August 22, 2017 | Tampines Court | 952,000,000 | 1 | 970,000,000 | Sim Lian |
| August 30, 2017 | Toho Green | N/A | N /A | 8,400,000 | Oxley Holdings |
| September 21, 2017 | Sun Rosier | 235,000,000 | 4 | 271,000,000 | SingHaiyi |
| September 26, 2017 | Jervois Gardens | 68,000,000 | 8 | 72,000,000 | Subsidiary of SC Global |
| September 28, 2017 | Nanak Mansions | 200,000,000 | N/A | 201,080,000 | UOL Group and Kheng Leong |
| October 07, 2017 | The Opus | 768,000,000 | N/A | 906,700,000 | City Developments Limited and Hong Realty |
| October 10, 2017 | Sembawang Hills Estate | N/A | N/A | 25,740,000 | Tee Land |
| October 17, 2017 | Changi Garden | 196,000,000 | 8 | 248,800,000 | Chip Eng Seng |
| October 20, 2017 | Florence Regency | 629,000,000 | 3 | 629,000,000 | Logan Property |
| October 23, 2017 | Dunearn Court | 38,800,000 | N/A | 36,300,000 | Roxy-Pacific Holdings unit RH Central |
| October 27, 2017 | Lodge 77 | N/A | N/A | 29,000,000 | KTC Group |
| November 07, 2017 | Casa Contendere | N/A | N/A | 72,000,000 | Tee Land |
| November 16, 2017 | Tai Wah Building | N/A | N/A | 84,890,000 | Lucrum Capital |
| November 17, 2017 | Mayfair Gardens | 265,000,000 | N/A | 311,000,000 | Oxley Holdings |
| November 28, 2017 | How Sun Park | 78,000,000 | N/A | 81,089,980 | Subsidiary of SingHaiyi Group Ltd |
| November 29, 2017 | Crystal Tower | 138,000,000 | 12 | 180,650,000 | Allgreen Properties |
| December 01, 2017 | Royalville | 368,000,000 | 9 | 477,940,000 | Allgreen Properties |
| December 06, 2017 | Jervois Green | 48,000,000 | 6 | 52,916,768 | Investors led by Mike Ho |
| December 11, 2017 | Apartment 8 | N/A | N/A | 21,529,998 | Oxley Holdings |
| December 13, 2017 | Derby Court | 62,000,000 | 7 | 73,880,000 | Roxy-Pacific Holdings |
| December 13, 2017 | Parkway Mansions | 138,000,000 | N/A | 146,990,000 | Sustained Land |
| December 15, 2017 | Vista Park | 350,000,000 | 5 | 418,000,000 | Oxley Holdings |
| January 12, 2018 | Parkwest Condo | 818,000,000 | N/A | 840,890,000 | SingHaiyi Land and Haiyi Wealth Pte Ltd |
| January 26, 2018 | The Wilshire | 98,070,000 | N/A | 98,800,000 | Roxy-Pacific Holdings and Tong Eng Group family vehicle |
| February 07, 2018 | City Towers | 355,000,000 | 7 | 401,933,798 | Japura Development (a unit of Cheung Kong) |
| February 14, 2018 | Peark Bank Apartments | N/A | N/A | 728,000,000 | CapitaLand Group |
| February 14, 2018 | Cairnhill Mansions | 362,000,000 | N/A | 362,000,000 | Low Keng Huat |
| February 14, 2018 | Riviera Point | 75,000,000 | N/A | 72,000,000 | Macly Group |
| February 19, 2018 | Brookvale Park | 530,000,000 | N/A | 530,000,000 | Hoi Hup Realty and Sunway Developments |
| March 02, 2018 | Hollandia | 163,150,000 | N/A | 183,380,000 | Far East Consortium International, Hong Kong |
| March 08, 2018 | Toho Mansions | 163,200,000 | N/A | 120,428,000 | Koh Brothers |
| March 09, 2018 | Eunos Mansion | 218,000,000 | N/A | 220,000,000 | Fragrance Group |
| March 09, 2018 | Goodluck Garden | 550,000,000 | N/A | 610,000,000 | Qingjian Realty |
| March 14, 2018 | Lotus at Jervois | N/A | N/A | 46,300,000 | Fragrance Group |
| March 15, 2018 | Katong Park Towers | 288,000,000 | 10 | 345,000,000 | Bukit Sembawang |
| March 17, 2018 | Pacific Mansion | 938,000,000 | N/A | 980,000,000 | GuocoLand, Hong Leong, Hong Realty |
| March 21, 2018 | Makeway View | 168,000,000 | N/A | 168,000,000 | Bukit Sembawang |
| March 27, 2018 | Ampas Apartments | 105,000,000 | N/A | 95,000,000 | Oxley Holdings |
| March 29, 2018 | Cairnhill Heights | 80,000,000 | N/A | 72,588,888 | Ocean Sky International, Tiong Seng |
| April 04, 2018 | The Estoril | 220,000,000 | N/A | 222,938,000 | Far East Consortium International, Hong Kong |
| April 05, 2018 | Pomex Court | 37,000,000 | N/A | 37,600,000 | K16 Development |
| April 13, 2018 | Tulip Garden | 753,000,000 | N/A | 906,900,000 | Yanlord Land Group and MCL Land |
| April 16, 2018 | Asia Gardens | 338,000,000 | N/A | 343,000,000 | Sustained Land, Ho Lee and other partners |
| April 19, 2018 | Dunearn Gardens | 488,800,000 | N/A | 468,000,000 | EL Development |
| April 23, 2018 | Olina Lodge | 220,000,000 | N/A | 230,900,000 | Peak Opal (a unit of Kheng Leong) |
| May 04, 2018 | Balmoral Gardens | 92,000,000 | N/A | 82,899,995 | Aurum Land |
| May 09, 2018 | Peak Court Condominium | 106,000,000 | N/A | 118,880,001 | Tuan Sing Holdings and Rich Capital |
| May 17, 2018 | Chancery Court | N/A | N/A | 401,780,000 | Not disclosed |
| May 18, 2018 | Chinatown Plaza | N/A | N/A | 260,000,000 | Royal Golden Eagle (RGE) |
| May 23, 2018 | Landmark Tower | 285,000,000 | N/A | 286,000,000 | JV Company (One of them public-listed, not disclosed) |
| June 12, 2018 | Kismis View and 19 Lorong Kismis | 102,000,000 | N/A | 108,450,000 | Roxy Pacific Holdings and Tong Eng Group family vehicle |
| June 14, 2018 | Park House | 308,000,000 | N/A | 375,500,000 | Shun Tak Cuscaden Residential (wholly-owned subsidiary of Shun Tak Holdings) |
| June 19, 2018 | Kemanan Point | 143,800,000 | N/A | 143,880,000 | Soilbuild Group |
Source: URA, PropertyGuru, RHB Research
From the table above, it’s clear that the ongoing en bloc frenzy is unlikely to slow as developers are actively seeking for sites to build up their land banks.
But in 2018, developers have taken more interest in the potential of seeking en bloc sites in prime districts like 9, 10 and 11. The search for sites in these areas is expected to continue as there is strong demand from a pool of foreigners looking specifically to invest in these districts.
Home buyers looking for Singapore Properties in prime districts 9, 10 and 11 may like to visit Property Guru’s Listings
This year, the highest en bloc transaction was in District 9 where Pacific Mansion in River Valley was sold for close to S$1 billion to a consortium led by GuocoLand. In 2018 alone, there were 20 prime district developments successfully sold through collective sales.
A recent freehold development called Park House located along Orchard Boulevard was sold to a unit of Hong Kong-listed Shun Tak Holdings for S$375.5 million, or S$2,910 psf per plot ratio (psf ppr).
Can we expect another billion-dollar transaction? That depends. The continued escalation of the en bloc craze has prompted the government will step in to regulate the market. In July 2018, the Monetary Authority of Singapore rolled out several property cooling measures to help moderate housing price increases. This included raising ABSD rates by an additional 5.0 per cent for developers purchasing residential properties for housing development. As a result, en bloc plans for many ageing residential developments have been put on hold or had their tender periods extended.
Seedly Contributor:Â PropertyGuru
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