Developers thinking twice

The total transaction value of residential en-bloc properties for the first half of this year has plunged 80 per cent compared to the same period last year, with fewer en-bloc property transactions taking place, according to data from the Urban Redevelopment Authority (URA).

And real estate analysts Channel NewsAsia spoke to believe that this is due to the global economic slowdown and the cooling measures introduced by the government late last year.

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.

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, or pay an additional 10 per cent in stamp duty.

Ascendant Assets Director 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.”

With more land sites released through the Government Land Sales programme (GLS), developers get more choices which, in turn, pushed down the transaction price of en-bloc projects. Mr Goh said: “About 14 land parcels have been awarded via the GLS. 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 9 per cent of the total transaction value for the whole of 2011. Analysts feel the market is unlikely to top last year’s numbers, but developers would still be keen if the price for en-bloc projects in mature estates is not too high.

Source TOday -2012 Jul 30

 

 

 

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