En bloc candidates are still racing the clock even after the countdown for New Year is already done, due to numerous factors including collective sales from various deadlines as well as the cooling market.
Such pressure resulted in various projects increasing their asking price to convince owners to join the bandwagon, which adds to the repugnance of potential buyers.
Dairy Farm Estate is following this trend, as there is a surge in the reserve price for the project from S$1.688 billion to S$1.84 billion.
This is just a way of swaying owners before the April 2019 deadline. Based on the law, property owners get up to 12 months to make a mandatory en bloc tender launch to the public, from the first time they signed their Collective Sales Agreement (CSA).
According to the news, Tay Tiong Choon, Chairman of the Collective sale committee (CSC), who stated that the signature collection began in April 2018, wherein they already have 68 percent for the present count.
There is an addition of only two signatures for the last couple of months.
He reiterated, “We have respectable regard to the subsidiary proprietors and their decision.
However, increasing the reserve price is the only way, particularly in offering what the subsidiary proprietors would consider.”
Pine Grove is another mega site that followed the trend for the reserve price increase, which is from S$1.72 billion to S$1.86 billion, making the last-minute increase ensure 80 percent mandate.
However, this also became the reason for marketing agent, Huttons Asia, to resign.
The present marketing agent of Pine Grove, C&H Properties, particularly its key executive officer, Nelson Lim, stated that the owners helped secure the 80 percent mandate.
Moreover, the expected launch of the tender is either February or March, much earlier than their October deadline.
Increasing of reserve price is another 99-year leasehold, Mandarin Gardens, closing to 12.5 percent in November for S$2.79 billion.
The decision came after the discovery of the owners about the undervalue of the land parcel that the property sits on.
For now, the signatures are currently at 62 percent.
According to Mr. Lim, “The love of the residents for Mandarin Gardens is quite stronger, on top of the premium location of the site by the sea. Residents would not be enticed to move inevitably.”
As for Dairy Farm, the increased reserve price has a corresponding higher development charge amounting to S$75 million for its 750,019 sq ft project, following the increase of the DC rate in September.
The estimated figure in April is at S$61 million.
However, the S$1,216 price for its (psf ppr) per square foot per plot ratio is quite reasonable, according to Mr. Tay.
This is in comparison to the property located in Toh Tuck Road, Goodluck Garden, selling for S$1,210.
The Goodluck deal’s closure in March 2018 took place before the property cooling measures in July, majorly changing the en bloc scene.
Mr. Tay commented on the aversion of the developers to highly priced projects in the midst of the cooling measures.
He stated: “Any business always faces a risk but we are hoping that consortiums would cooperate in sharing this risk.
Mr. Lim of C&H expected some bids coming from the consortiums regarding Pine Grove because of the site location in an established estate.
He also reiterated a “doable reserve price”, basing on the new viable launch price. C&H became the marketing agent for Pine Grove after the increase of its reserve price.
“Not increasing the reserve price means not getting the tender state and not doing anything at all. These are aging estates and time is your worst enemy to face.”
Owners of the sites with 80 percent mark only have 12 months in order to find a buyer as well as apply to the STB (Strata Titles Board).
The New Year is when some projects relaunched their tenders.
According to the owners of Horizon Towers, they only have until May 21 for their sale contract conclusion.
They must send in their application for a sale order from the Strata Titles Board. Lawyers have 2 to 3 months to apply to the board.
On Thursday, Cavenagh Gardens launched its en bloc sale once again but without changing their initial asking price of S$480 million because it is looking for a buyer as well as applying to the Strata Titles Board by middle of April 2019.
JLL markets both sites and the projects are receiving no bids for their first launch and private treaty period.
Tan Hong Boon, regional director of JLL, stated with a firm view that the “cooling measures of the July market is the reason why developers hold back.”
Only a few transactions for en blocs took place after the July cooling measures including the Golden Wall Centre sale to City View Holdings for S$276.2 million as well as selling Waterloo Apartments to Fragrance Group for S$131.1 million.