Property Agents In Race Against En Bloc Clock

Source : The Business Times, April 9, 2008

Sites relaunched at lower prices as collective sales agreement deadlines loom

Property agents are expected to keep pushing out a steady stream of relaunched en bloc sales over the next few months, as they attempt a last hurrah before their collective sales agreements (CSAs) inked last year expire.

Asking prices for such sites this time round are about 10-20 per cent lower than last year. Agents hope developers will bite, given their strong participation in recent government land tenders.

'Whatever collective sales that went into the market in the third or fourth quarter of last year and which are not yet sold, you can expect their CSAs to expire around mid-2008 or Q3 this year. So the current second quarter is pretty much the only window of opportunity for the sellers and agents to make a last try,' a seasoned agent in the en bloc sales business says.

Data from Credo Real Estate show there were 14 en bloc sale sites launched in Q3 last year but which are still unsold, while another 30 launched in Q4 last year have yet to find takers. These include The Riverwalk, Elizabeth Towers, Cairnhill Mansion, Grange Heights, Chancery Court, Thomson View Condo, Villa delle Rose, Spanish Village, Estoril and Vista Park.

From the time the minimum 80 per cent consent level is secured for a CSA, agents have up to 12 months to find a buyer and submit an application to the Strata Titles Board for an order for the collective sale.

Says Colliers International executive director of investment sales Ho Eng Joo: 'We can expect to see a rush on the part of owners and agents to take another shot at the market. If you don't do that, the old CSA expires and any fresh attempt at an en bloc sale will fall under new rules that took effect last October - and these are a lot more onerous.'

Colliers yesterday relaunched Amber Glades along Amber Gardens with an indicative price of about $127 million or $1,140 psf per plot ratio, inclusive of development charges. This is about 15 per cent lower than the $1,345 psf ppr sought by Amber Glades' owners in October last year.

In recent weeks, Landmark Tower in Chin Swee Road, Pinetree Condo in the Balmoral area and Royalville in Bukit Timah have also been relaunched at indicative prices ranging from 10-20 per cent below what they had been offered at in Q3 or Q4 last year.

Typically, these sites are being relaunched under the existing CSAs and based on the same reserve prices as last year. However, this time round, owners' asking prices are closer to reserve prices, whereas last year, the asking prices may have been pegged at a significant premium to the reserve prices, market watchers say.

Some agents are also believed to be in discussion with owners who've signed a CSA to see if they are willing to sign a supplementary agreement to lower the reserve price.

Savills Singapore director Steven Ming says: 'The initial asking prices were a bit lofty when the sites were launched last year. That was when the market was still exuberant. As the sub-prime crisis set in, confidence weakened and home sales slowed. Developers have had to factor this in when pricing their bids for en bloc sites.

'They also have to take into account higher construction costs and with the ongoing credit squeeze, the opportunity cost for putting in more equity into the project.'

Knight Frank managing director Tan Tiong Cheng has this advice for en bloc sellers: 'Developers are no longer prepared to pay the price owners had expected last year, but if you can still collect a premium from an en bloc sale than if you were to sell your unit on your own, why not adjust your pricing and collect the windfall? You may also be able to take advantage of a more subdued market to shop for a replacement property.'

Besides the pressure of looming CSA expiry dates, market watchers point to another factor in the impetus for the current wave of en bloc sale relaunches: the strong bidding at recent state tenders, for instance, for a reservoir-fronting condo site in Yishun and a 'white' site at Serangoon Central. 'This has brought back a bit more confidence in the market,' says Credo Real Estate managing director Karamjit Singh.

'Property bigwigs like Mr Kwek Leng Beng and Mr Liew Mun Leong have also come out to say they remain confident about prospects for the Singapore property market, but that we need time for sub-prime to clear before we see activity coming back again. If there were a barometer to measure the mood of the day in the property market, April's measure appears to be slightly better than March,' he says.