En Bloc Singapore 2019

By Q1-2018, 15 En Bloc transactions were completed successfully and Q2-2018 saw another 20 added to the plate. With heavy activity and steady prices, senior market watchers rightly began to sense that H2-2018 might become slower.

This bitter reality combined with the new cooling measures on residential properties sent the En Bloc Singapore 2018 to hibernation.

Out of caution, bidders for residential developments vanished out of sight. Therefore, over 60 En Bloc sites are unable to find buyers yet.

Some property experts do feel that the En Bloc residential sales would have continued to flourish for another three years, had the authorities left it unchecked.

Though, it appears that the market has reached a standstill, it actually is undergoing a stability period, according to many expert opinions.

So, the owners of these residential properties gear up with revised prices and new strategies for the relaunch, as the focus of En Bloc market turns to mixed developments, shophouses and hospitality investments, in the meanwhile.

The entire market was taken aback by the sudden new cooling measures of the Government. However, that is seen as a necessary step to avoid a huge plunge in the country’s economy.

New Additional Buyer’s Stamp Duty (ABSD) Rates

Before the cooling measures, the natives were required to pay nothing as ABSD for their first residential property, 7% for the second property and 10% for all subsequent purchases.

After the cooling measures, they are still required to pay nothing for the first property, but 12% for the second property and 15% for all subsequent properties purchased.

The Permanent Residents (PRs) on the other hand, were required to pay 5%  for their first property and 10% for their subsequent purchases.

After the cooling measures, they are required to pay the same 5% for their first property, but 15% for the subsequent purchases.

For foreign homebuyers, it increased from 15% to 20% and for entities, it increased from 15% to 25%.

The Developers, on the other hand, incurred an additional 5% ABSD apart from the 25% refundable deposit.

Loan-To-Value Limit (LTV Limit)

Unlike ABSD, the LTV Limit, which applies common to all buyers, fell from 80% to 75% for the first-time buyers. For their second purchase, the previous 50% limit fell to 45%. While for the third purchase, it fell from 40% to 35%.

These limits are still lower for loans periods up to 30 years. It is also lower for purchasers turn 65 years during the loan period.

Both the revised ABSD and LTV Limit contributed to the dampening of the once hot En Bloc market.

However, Agents, Developers, Investors and Owners are still working out different strategies for the success of En Bloc sales.

Such initiatives include Marketing Agents requesting URA for change of use, Owners lowering asking price etc.

Several En Bloc sites have especially applied for change of use to Serviced Apartments, to keep in line with the consistently growing hospitality industry, enabling the success of En Bloc in the process.

High Jump Hurdles

Next to the long jump cooling measures, URA has issued fresh guidelines on the maximum number of dwelling units (DUs) for non-landed residential developments.

These new guidelines would come into effect from 17th January 2019, after about seven years of the previous circular. These are some additional high jump hurdles that the developers would need to overcome in the coming days.

Firstly, the maximum number of dwelling units (DUs) has been reduced. The new formula GFA/85 sqm has been introduced for determining the number of units.

Due to this, around 18% less units are likely to be built by the developers in the redevelopments outside Core Central Region (CCR).

These maximum number of DUs is further reduced to GFA/100 sqm for nine areas namely – Telok Kurau-Jalan Eunos, Marine Parade, Stevens-Chancery, Joo Chiat-Mountbatten, Balestier, West side-Pasir Panjang, East-side Kovan-How Sun, Shelford and Loyang.

The other guidelines include the first of a kind bonus 1% GFA for indoor entertainments and introduction of 1.5 meters minimum width for balconies.

These are in line with URA’s vision to encourage multigenerational living, to ensure standard livelihood and to reduce the strain on the existing infrastructure.

While the Homebuyers stand to benefit from these measures, the En Bloc Owners, Investors and Developers would need to bear the brunt of this exercise.

In spite of growing restrictions, like the mythical phoenix bird symbolizing fresh beginnings and resurrection from death, the sale of Phoenix Heights in August 2018 revived the seemingly dead En Bloc Singapore 2018, within a month of the cooling measure.

This 99-year leasehold property at Bukit Panjang was acquired by USB Holdings at S$33.1 million.

Then, after a period of deafening silence in September and October, thanks to the sale of two other institutional-grade properties, the Golden Wall Centre  and the Waterloo Apartments in November 2018.

The selling prices of these two properties, acquired for hotel development were clearly above their asking prices. This indicates the newly establishing trend, towards investing on the country’s No.1 tourism and hospitality industry.

Surpassing the asking price of S$260 million, Golden Wall Centre was acquired by City View Holdings, a wholly owned subsidiary of Worldwide Hotels for S$ 276.2 million.

Similarly, Waterloo Apartments was acquired by Fragrance Group for S$131.1 million as against their asking price of S$115 million. The 2 enbloc deals were successfully orchestrated by Marketing Agents Edmund Tie & Co and Cushman & Wakefield respectively.

These two En Bloc acquisitions by Hotel Operators follow the establishment of Andaz Boutique Hotel of Hyatt Group in the Duo complex, Ophir-Rochor District.

Both business and leisure travelers from around the world are expected at Andaz Hotels, which provide unconventional hospitality services in comfort and style.

The sale of these three properties namely – Phoenix Heights, Golden Wall Centre & Waterloo Apartments after the July cooling measures is a clear indication that revival has begun.

Cycles repeat and, in each repetition, things move forward progressively, according to the law of revival.

These transactions underline the never die spirit of En Bloc Singapore 2018. With undeterred new launches and revived re-launches, the positivity is expected to spread more and more braving the new curbs.

“The empire on which the sun never sets” was a phrase coined in the 16th century to describe some empires that had very large territories on the globe. It was so vast that at any given time, at least one part had daylight. So it is, with the ever dynamic En Bloc Singapore market.

It might have gained focus on residential properties at some point, commercial at another, or an entirely new, never thought before format, in the days to come.

The demand, however, is never ending with clever Property Agents, hungry Developers, appealing amenities and ever-ready Homebuyers. Hence, there is as such no sunset expected to the En Bloc Singapore Market in the near future.

Owners are with their need to dispose ageing properties posing outdated designs and worn-out facilities.

The Developers are with their need to replenish land stock for continuity in business. So, are the Homebuyers, whose needs are especially evident on the first day bookings of new project launches.

Therefore, the cycle is anticipated to go on and on, in the vibrant Singapore that keeps itself up-to-date all the time.

After all, it is not wise to keep a > 20-year property at a prominent location as an eyesore. It benefits instead to redevelop it manifold, in number and quality, to the pride of the market and nation as a whole.

A fever waxes and wanes, but warmth is normal. Probably, the En Bloc Singapore 2018 fever that dominated the beginning of the year has subsided, but the warmth remains. Prime properties with excellent features are still attractive to Developers and Homebuyers.

So, starting off fast and frenzy like the hare, the En Bloc Singapore has now entered into the slow and steady tortoise phase. Hence, it is very likely to finish a successful cycle to the relief of all concerned in the market.

Therefore, expecting an early spring, the Property Market welcomes 2019 to refresh the situation and bring in more newness with bright ideas, sound methods, best bargains and good luck.

Tracy Goh of PropNex Realty believes that with the right reserve price, residential en bloc is still possible.

The main reason that more than 60 sites have no bid is because of unrealistic reserve prices.

In June 2018 alone, without the cooling measure which came to the market on 6 July 2018, there were already no bid for 15 sites out of 19 sites.

The new ABSD on residential en bloc sites have just shifted the focus to commercial en bloc as there is no ABSD and no time frame for developers to sell the commercial properties.

The 25% remissable ABSD is only applicable on residential en bloc if they are unable to sell within 5 years from their acquisition.

The commercial sector also get a lift as the prices are still less compared to acquiring assets in neighbourhood countries like Hong Kong.

And our 3.3% GDP performance in 2018 still makes Singapore vibrant and attractive.