En Bloc market R.I.P.

[Blaze]

How is the Laguna Park en bloc going? I know a guy there who has been waiting since 2006 and almost popping champagne bottles. Well he's still sitting and waiting there... That's because property developers are not interested in large en bloc deals that normally take longer time to turn around. With the new government rules, if the developer cannot  redevelop and sell all the new units within five years of acquiring the site, the Additional Stamp Duty applies.

That's it for Laguna Park... With 99-year leasehold (of which 35 years gone) it's too big to en bloc. But that will raise even a bigger question, what will happen to this 60-year leasehold development (and other leaseholds) when time runs out? They will go back to the government without compensation. I'm sure the owners would like to give better inheritance for their children.

If you invest in SG property, make sure it's a freehold development. Or if leasehold, choose a small project that eventually can en bloc. Otherwise it's worthless in the end.


En bloc market: R.I.P in 2012?
04:46 AM Jan 27, 2012

Several potential en bloc deals have been launched recently as homeowners in these developments attempt to capitalise on the current record-high residential property prices. However, I believe they are likely to be disappointed as this year's outlook for the en bloc market looks pretty dim.

In a typical en bloc deal, homeowners of a residential building agree to sell their units collectively to an interested party, usually a property developer that will tear the building down and use the space for a new project. Last year, 49 en bloc deals worth S$3 billion were sealed, a huge jump from the 36 deals worth S$1.8 billion in 2010.

But these aggregate numbers mask certain underlying weaknesses. The en bloc deals last year were overwhelmingly dominated by small deals with an average size of only about S$60 million. The largest of these deals, Henry Park Apartments, was worth only S$176 million. In my view, this highlights property developers' diminished risk appetite to embark on large en bloc deals that normally take a much longer time to turn around.

The series of residential property cooling measures the Government has introduced since September 2009 has heightened the negative outlook on the residential market. Couple this with Singapore's slowing economic and population growth and the expected ramp-up of residential supply next year, and one begins to understand why property developers would seek to reduce inventory risk.

This urgency to turn around projects at a faster pace would also be boosted by the recently imposed Additional Buyer's Stamp Duty (ABSD). The new rule applies not only to purchases of vacant residential land but also to en bloc properties for housing development. But if the property developer manages to redevelop and sell all the new units within five years of acquiring the site, it will not have to pay the ABSD.

Property projects based on en bloc deals generally take longer to turn around given the additional time required to take over the existing developments and demolish them. This is especially true of large en bloc deals, as the potentially greater number of redeveloped units for sale would make it harder for the developers to sell them all within five years and thus avoid paying the ABSD.

[property developer]

Its well and truly dead - all the suckers who bought waiting for an enbloc, pls go shoot urselves

[Not naming names]

That means you, Agent007.

[Agent007]

Why me? I'm innocent.

[outofcash]

I doubt the developers will be buying anything, they can't even afford to pay the Bangladeshi workers their $18 a day for the last 4 months.

The end is near for Singapore property.

from Yahoo...

A group of 200 disgruntled foreign workers went on a seven-hour sit-out on Monday morning in Tampines over a dispute of unpaid salaries.

Instead of starting work at 8 am, Bangladeshi workers from Sunway Concrete Pte Ltd and TechCom Construction gathered in an empty field at Tampines Industrial Street 62.

Sunway is the main contractor and Techcom is the sub-contractor hired by HDB to fabricate building materials for flats.

The workers have not been paid for four months running, since November last year. They were also unhappy about the quality of the food served in the canteen.

“All men same problem, all men no pay for four months,” said K. Ravhkumar. According to the 35-year-old, his usual working hours are from 8am to 10pm.

[batten down the hatches]

We knew a major global recession was coming.  Theres no hiding from the global downturn.  This is the big one this time and not just a problem they have in the west.  Its going global,  Batten down the hatches.

[AAgent007]

No. Wrong again. Bull run just started. Are you blind?

[KorinaChia]

We knew a major global recession was coming.  Theres no hiding from the global downturn.  This is the big one this time and not just a problem they have in the west.  Its going global,  Batten down the hatches.

global reccessions= higher cost of living...

[Phantom of the Opera]

Yes the en bloc scene has been rather like an opera and the fat lady has been singing for quite a while.
Ditto Mandarin Gardens which is well into its leasehold period. It will quite simply never en bloc, being too big. There are far too many apartments for sale in Singapore today.

We are also heading towards a global recession. Property prices in Greece has fallen +60%

[Agent007]

Yes, the biggest global recession ever is coming.   

But asia is different, we are not the west remember, so it just will go up and up (I hope. I am so over leveraged and its going to be impossible to sell, Nobody is buying now and  will get worse later if what the news reports say is true, lets hope it wont happen) May be tough to sell a dog box that costs 50 times an annual salary though.

Still if all us sellers stick together, hold on tightly to our prices and just deny that this is happening, then we should be okay but if anyone craps it and sells at a low price then it will start a panic.  Then we are all stuffed. It only takes a couple of panic sales to push it to the cliff edge.

In the meantime I have just one word to say - AIRPORT !