Minister Khaw: En-bloc Fever Receding?

By The Folks @PropTalk - January 22, 2012 No Comments

The en-bloc fever seen in the housing market a few years ago appears to be receding and Minister for National Development Khaw Boon Wan said it could be a sign of a more stable property market.

In his latest blog post -- entitled "En-Bloc Fever Receding?" -- made on Saturday, he said this will be a good development for Singapore in the Year of the Dragon.

An en-bloc sale refers to the collective sale of units in a private development, by way of majority consent.

En-bloc was a major buzzword in the housing market six years ago.

But last year, only some 1,400 private housing units were sold en-bloc, a low number compared to the peak in 2007 when 5,860 units were sold.

Mr Khaw said such sales reached "feverish heights" in 2006 and 2007.

Then, a wave of collective sales swept through the market, peaking during the two years, when some 10,200 units were sold.

Mr Khaw said "this added stress to an already hot property market as housing units were removed.

"Displaced owners or tenants had to look for replacement properties to stay and invest in, pushing up property and rental prices."

Mr Khaw added en-bloc sales have their "pluses and minuses".

They can rejuvenate the city by removing old and dilapidated buildings but if done excessively, en-bloc activity can waste resources, if relatively new buildings are prematurely demolished.

One property watcher agrees the en-bloc market has been relatively quiet in the past two years.

He said one reason is a slowdown in the sale of high-end developments, which are typically built on freehold land acquired through en-bloc activity.

Another reason - the strong supply of government land for mass market properties.

SLP International executive director Nicholas Mak said: "Since a lot of the housing demand is in the suburban region, developers are actually earning fairly decent profits through some of these suburban condominiums, (so) land sales in the suburban region have actually taken away some of the developers' demand for land from the en-bloc sale market."

En-bloc sales of apartments usually spell huge windfalls for their owners.

For example, Henry Park Apartments were sold last month, and each apartment owner stands to gain $2.3 to $2.9 million in profit.

But the road to a successful en-bloc deal is often long and difficult.

In some instances, neighbours have turned against one another to get the requisite 80% signatories.
Source:  Channel News Asia

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