Flynn Park, 18-22 Yew Siang Road, was sold en bloc earlier in September 2021 for S$371million, making it the biggest collective sale of the year.
Savills Singapore arranged for the buyer, a joint venture between Sunway Developments Pte. and Hoi Hup Realty Private Limited. Ltd purchased all 72 apartments for S$1,355 per plot ratio (or S$1,318 per ppr when you include the 7% bonus floor area from balconies).
Belgravia Ace sales can be seen in the success of Belgravia phase one and two. Tong Eng properties live up to their expectations, and Belgravia Ace is not an exception.
Many other properties that are older have been put up for sale or seen their majority owners do so. One of them is the 50-storey International Plaza, the commercial-and-residential building in Tanjong Pagar, which has a record reserve price of S$2.7b – marking it as Singapore’s largest en-bloc deal in its number of units and value once a buyer is found.
In fact, Singapore’s lucrative En Block sales have made property owners overnight millionaires, making them highly sought-after real estate options. 99.co examines the factors that contribute to a successful En bloc sale.
Old buildings were traditionally torn down in land-strapped Singapore to make way for newer, more luxurious developments. En bloc is French for “all together” or “as one block”. It refers to a large-scale collective sale of condominium developments by one buyer (usually the government or property developer). The condo development must be redeveloped, priced and incorporated into a new project.
Condos that are less than ten-years old must be sold by at least 90% of the owners. Condos older than ten year need to be sold by at least 80%.
Collective sales are essentially a mini-golden handshake between landlords, since the reserve price is often higher than the current market value.
Both the buyers and the sellers will reap the benefits of the en blocs. The buyer will eventually be able to recoup his costs and make a good profit from the planned development.
In 2007, Farrer Court’s 618 apartments were sold en bloc for S$1.339Billion. This amounts to an average of S$2.122-S$2.238 Million per apartment.
This is not bad considering the market price of the same units was just S$500,000 to S$600,000. Before the en bloc negotiations began, it was about S$500,000 to S$600,000. The site was subsequently redeveloped as the d’Leedon, a grand apartment complex featuring more than 1,715 luxury, high-end apartments by Farrer Road.
What factors led to a possible collective sale?
1. Age of the development
Older developments are often quite old and require expensive ongoing maintenance. Therefore, it is a good financial decision to replace the building with something more profitable. A majority of older developments, especially those built before 1990, have not been built to the Master Plan plot ratio. This means that a redevelopment will likely yield a higher return today due to its land value.
Is the government planning to redevelop the area? There are less chances of government land being released in these areas than in the rest of the island. It is no secret that the price of an en-bloc sale will be higher if the condominium development takes place in the prime Districts (9-10, 11 and 15).
Is there any news about a new MRT, or other exciting developments in the area? These developments often lead to an increase in property and land prices.
Flynn Park was sold in a lucrative group sale because of the Greater Southern Waterfront redevelopment plan. Wong Swee Chun (chairman and MD of Hoi Hup Realty Private Limited) said, “We are very happy to secure the tender for Flynn Park. This rare hillside parcel offers spectacular views to the South.
It is peaceful, green and lush, but it is also close to the MRT network, and only minutes from the city. It will also be greatly benefited from its proximity to the new Southern Waterfront development. We are excited to develop a premium product at this site.
3. Plot Ratio
A lower plot ratio in condos means that fewer units are being built on the land. You can make the land more productive by adding more units to future developments. These plots are great for en bloc sales, as they can be used to make more money by being densely packed.
4. En bloc fatigue
If an en bloc sale fails, owners may feel discouraged and decide to not do it again.
5. Alternative options and the size of the apartment
The larger the condos, the better. Some owners may be eager to sell their units, while others might decline the offer due to having to settle for smaller units elsewhere.
6. Residential makeup of the development
Older developments are more likely to be home to a large, older population. Most residents also own their units. It is often easier to persuade older people to sign the handshake and move to a smaller unit in a different area where they will feel more at home in their later years.
7. Dimensions of the development
Because of the higher likelihood of collective sales in smaller developments, there are greater chances that owners will agree to sell their units together.
However, a smaller number of owners can mean that sales efforts are more difficult if a few of them don’t want the sale. This makes it harder to get the required 80% consent.