Source : Channel NewsAsia, 16 July 2009

Observers say more en-bloc sales are on the cards as a result of improved sentiment and rising demand for land.

Laguna Park

One market player, Credo Real Estate - a leader in the collective sales market - said at a seminar on Thursday that it expects five to 10 cases in the next few months, with more to follow in 2010.

The seminar on en-bloc property sale was Credo's second in a week on the back of rising enquiries. Representatives from about 18 residential developments attended the seminar.

In the last two months, Credo received 10 calls about potential collective sales. There were also existing clients hoping to re-initiate the sales process.

Among them was the 528-unit Laguna Park in the east, which could be launched for collective sale next month.

Observers say the project is likely to attract consortiums rather than individual developers, given the scale of the development and its S$1.2 billion price tag.

Credo said that with the current conditions, owners should lower their asking price by 20 to 25 per cent, compared to prices during the boom time in 2007.

Karamjit Singh, managing director of Credo Real Estate, said: "But that gap can also quickly narrow if the pace of recovery picks up because where the outlook remains positive and end unit prices move up 10 per cent, land values move up even more than 10 per cent - there is an exponential effect at the pace which land values rise."

The company said it expects 30 to 40 en-bloc transactions next year, comprising mainly small and medium sized projects. For 2011, it projects about 18 collective sales deal will go through. This pales in comparison to the 87 residential property transactions done in 2007.

The failed sale of Horizon Towers and new rules on the conduct of sales committees and transparency of sale process will also affect transaction volume.

Industry players say the additional requirements will mean that potential en-bloc projects will take a longer time to hit the market.

The cost of putting a project on sale will also increase, given higher administrative costs and legal fees. -- CNA/yb

Collective Sales To Trickle Back Into Market, Says Credo

Source : The Business Times, July 17, 2009

PROPERTY consultancy firm Credo Real Estate expects collective sales to resurface this year or next, but not with the same intensity as in the boom years of 2006 and 2007.

Some 5-10 collective sales may happen this year, said Credo's managing director Karamjit Singh. But they will probably involve small to mid-sized sites, as these tend to reach the market faster, he added.

This week, 72-unit Dragon Mansion became the first property launched for collective sale this year. There were more than 100 such transactions in 2007.

The outlook for 2010 is brighter, when some 30-40 estates may be sold en bloc, said Mr Singh. A collective sale is financially feasible when the land value exceeds the total value of individual units in the open market. Right now, this situation has yet to occur for most estates, he explained.

But even when the collective sale market picks up, it is unlikely to rebound to earlier levels. Owners may also have to trim their price expectations 20-25 per cent from peak levels, according to Mr Singh.

Owners may start asking for more if recovery in the property market accelerates, he said. Since February, private home sales have been buoyant, leading to greater optimism in the industry. Developers sold 1,825 new units in June - more than double the number sold a year ago.

As more stock is cleared, developers will want to replenish their land banks and that will drive collective sales, said Mr Singh. According to him, small developers in particular have started looking for smaller sites.

Calmer markets today are less likely to create contention in collective sales, much of which arose because of steep increases in land values, he said.

But new challenges have emerged. For instance, new legislation governing such deals may make it costlier and more time-consuming for estates to reach the market. Also, fewer owners may volunteer to join sale committees now that the law has spelt out their responsibilities clearly.