Collective sale boom or blip?

By
/ The Edge Property
|
June 23, 2017 2:00 PM SGT

The recent spate of collective sales has sparked enthusiasm among owners of ageing condos. Most property consultants see a window of opportunity in this frenzy, but how long will it last?

The latest privatised HUDC estate to hit the collective sale market is the 244-unit Serangoon Ville on Serangoon North Avenue 1
Singaporean property investor Victor Ng is one of the owners at the 330-unit Eunosville who will stand to get a windfall of around $2.3 million each upon the completion of its en bloc purchase by MCL Land. The developer paid $765.78 million for the privatised HUDC estate early this month, a 17.3% to 19.1% premium to the original asking price of $643 million to $653 million ($780 to $790 psf per plot ratio, or ppr) when the site was put up for tender in April by marketing agent OrangeTee.
This was Eunosville’s second collective sale attempt and “the timing was perfect”, says Ng. The tender for the project closed just a week after that of Rio Casa’s on May 23 that saw strong bids. Rio Casa, another privatised HUDC estate with 286 units and located on Hougang Avenue 7, was sold for $575 million to a consortium comprising Oxley Holdings, KSH Holdings, Lian Beng Group and the private investment arm of Super Group’s Teo family. This was also higher than the initial asking price of $450.8 million for Rio Casa.
The sale price for Rio Casa, inclusive of the differential premium of $208 million for the lease top-up and intensification of land use, translated into $706 psf ppr. The owners at Rio Casa are also expected to walk away with about $2 million each upon the successful conclusion of the sale. It was Rio Casa’s first attempt at a collective sale, after it was privatised in 2014. The marketing agent was Knight Frank.
In Ng’s view, a successful en bloc sale needs “a bit of luck”, as the collective sale process can take one to two years. “The demand-and-supply situation could change drastically during that period of time, and we could be in a totally different phase of the property cycle,” he says. Hence, he advises investors not to try to time en bloc sales. “You may...