Residential en-bloc market on the decline

Statistics from the Urban Redevelopment Authority (URA) show that the total transaction value of residential en-bloc properties for the first half of this year has plunged by 80 per cent compared to the same period last year.

And there were fewer en-bloc property transactions.

Real estate analysts believe that this is due to the global economic slowdown, and the government cooling measures introduced late 2011.

In the first half of last year, 28 en-bloc residential properties were successfully transacted.

But this fell to just eight in the same period this year.

Among them was Nam Peng Centre in Upper Serangoon Road.

Between January and June this year, the total transaction value of residential en-bloc properties fell to about S$250 million, from almost S$1.6 billion in the same period last year.

Analysts said the additional buyer’s stamp duty introduced by the government in December last year has curbed speculative demand for properties.

In addition, developers who buy en-bloc projects are now required to build and sell all units on the residential site within five years of acquiring the land.

Otherwise, they have to pay an additional 10 per cent in stamp duty.

So developers have been extra cautious before they enter the market.

Director of Ascendant Assets Pte Ltd, Getty Goh, said: “In the past, developers can buy certain pieces of land and sit on it almost indefinitely. These days with all these additional constraints, it would definitely make a developer think twice before proceeding with an en-bloc transaction.”

And with more land sites released through the Government Land Sales programme (GLS), this gives developers more choice, which in turn, pushed down the transaction price of en-bloc projects.

Goh said: “About 14 land parcels have been awarded via the GLS programme. However, the highest that has been transacted at was about S$400 million. Naturally, this puts a price pressure on the en-bloc market.”

The value of en-bloc deals for the first half of this year is merely 9 per cent of the total transaction value for the whole of last year.

Analysts feel that while the market may pick up in the second half of this year, it is unlikely to top last year’s numbers.

But, if the price for en-bloc projects in mature estates is not too high, developers would still be keen on them.

Source : Channel NewsAsia – 29 Jul 2012

 

 

 

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