Developers To Pay Higher Prices For En Bloc Sales As New Rules Kick

Source : Channel NewsAsia, 25 September, 2007

Picture : Pearlbank Apartments

En bloc prices are set to go up when the new rules in the Land Titles Strata Bill kick in next month.

According to the Real Estate Developers' Association of Singapore (REDAS), this is because property developers will have to pay more as choice sites get harder to come by.

REDAS celebrates what it calls an autumn harvest and for good reason.

The collective sale market is expected to reach a peak this year, according to a report by Knight Frank.

Developers bought S$8.57 billion worth of private residential properties en bloc in the first half of 2007.

This is more than the S$8 billion for whole of 2006.

By September, the figure topped S$10 billion, though sales also started to slow in the third quarter.

Knight Frank attributes this to US housing credit crisis, growing uncertainty in the investment market, higher asking prices, fewer prime sites and developers' well stocked land bank.

There were 13 deals from July to September, compared to 27 for the second quarter.

There is also the recent changes to rules for collective sales.

Simon Cheong, President, REDAS, says: "Many people are still trying to digest the new en bloc rules, and I think in the process of digesting, definitely I think there will be a pause and because of there are consequences on the new en bloc rules that even the lawyers are trying to understand. But irrespective of this eventually I think it will be the process of the en bloc is a longer process, so as a result it will probably slow down the supply of land."

And REDAS says it is expecting prices to rise as a result.

Simon Cheong says: "I think almost for sure the en bloc prices will be higher simply because to entice more people to sign up, they would want a higher price. So for us as a developer, we're already anticipating, it'd be more difficult to get choice land in the near future, and if you get it, it will be at a higher price."

Mr Cheong is also CEO of SC Global Developments.

With higher replacement cost for land banks, prices of new developments are also expected to go up.

REDAS says it is fairly bullish in its outlook for the property sector in the next year due to the sheer health of the economy, and several factors that are going right for Singapore - the environment, infrastructure and its position as a global city. - CNA/ch