More estates get in on collective sale action. Who may get lucky this time?


Another day, another enbloc news. Another 3 residential estates are going for collective sale. Let us take a look at 2 of these projects – How Sun Park and Pearl Bank Apartments, to evaluate their chances of success for their enbloc attempts.

How Sun Park

Quick Facts

  • Tenure: Freehold
  • Location: How Sun Road, near Bartley MRT (12 min walk)
  • Number of owners: 20
  • Land Area: 54,942.7 sq ft
  • Zoning: 5-storey residential with 1.4 plot ratio
  • Permissible GFA: 76,920 sq ft (before bonus GFA)
  • Asking Price: S$78 mil (S$1,052 psf ppr, including development charge of S$2.92 mil)

Kopi Talk: Price quantum of S$78 mil is low enough to attract developers. Asking price of S$1,052 psf ppr is 21% lower than the price that SingHaiyi paid for nearby Sun Rosier. Considering that this piece of land is smaller in size (which means a development would come with less facilities) and has a long west-facing frontage, it is not unexpected for this site to come with a lower asking price.

But is a 21% price differential (compare to Sun Rosier’s price) a good enough price gap for developers to snatch this site? It probably does, considering the margin of safety that a developer has at this price point. Based on SPK’s estimate, breakeven price for How Sun Park would be around S$1,400 to S$1,450 psf and selling price would probably be around S$1,650 psf to S$1,750 psf. With the expectation of Chip Eng Seng’s new 99-year residential development at Woodleigh selling at S$1,720 psf to S$1,800 psf and Sun Rosier selling at an even higher price, the estimated selling price of How Sun Park would appeal to buyers due to its Freehold and proximity to the other 2 projects.


220px-Facebook_like_thumb    How Sun Park is likely to be sold, but owners should not expect a huge premium from developers.


Pearl Bank Apartments

Quick Facts

  • Tenure: 99-year leasehold from
  • Location: Pearl Bank Road, near Outram Park MRT Interchance
  • Number of owners: 280 residences + 8 commercial units
  • Land Area: 82,376 sq ft
  • Zoning: Residential with 7.2 plot ratio (Baseline plot ratio is 7.4479)
  • Permissible GFA: 613,530 sq ft (before bonus GFA)
  • Reserve Price: S$728 mil (S$1,505 psf ppr, including upgrading premium of S$195 mil)

Kopi Talk: This is the fourth time that Peal Bank has gone for an enbloc attempt. This time round, the asking price of S$728 mil is slightly lower than the S$750 mil that owners were asking for back in 2011. Would this make Pearl Bank an attractive enbloc opportunity for developers now?

Let us take a quick look at the numbers. Asking price of S$728 mil works out to be around S$1,505 psf ppr after adding in a lease upgrading premium of S$195 mil. That means a whopping S$923 mil for a 82,376 sq ft of mid-size prime land! A new development on the Pearl Bank site will need to be built high, and come with sky facilities due to land constraints and to leverage on its unblock views in order to make the development more premium and sellable (probably Sky Habitat would be a good reference). But all these would come at a higher construction costs to developer. Base on SPK’s estimate, such a project would probably breakeven at S$1,900 psf to S$2,000 psf and developer will need to sell at S$2,200 psf for a decent margin. Despite Pearl Bank’s prime location, it might be a challenge to achieve such a high pricing for a 99-year leasehold in current market. Moreover, the investment quantum is huge. Hence, the risk-reward for this site might not be optimal for most developers.


897px-Not_facebook_not_like_thumbs_down     Pearl Bank still looks too expensive for any sensible developers to absorb. But let’s hope a rich foreign developer comes in and make it fourth time lucky for the owners!


Good luck to all the enbloc owners!



The information and opinion contained in this blog posting above are based solely on the personal analysis of Singapore Property Kaki (“SPK”) and is for general information purposes only. SPK assumes no responsibility for errors or omissions in the contents of this blog posting. In no event shall SPK be liable for any special, direct, indirect, consequential, or incidental damages or any damages whatsoever, whether in an action of contract, negligence or other torts, arising out of or in connection with the use of the content in this blog posting. SPK reserves the right to make additions, deletions, or modification to the contents at any time without prior notice.

Happy reading!

Kopi Talk – Leasehold favoured over freehold properties in current en bloc fever



SPK briefly talked about this observation in an earlier blog post – Deep diving into the Singapore enbloc scene (Part 1) and coincidentally, The Business Times did a full coverage on this topic this morning.

Below is a summary of the expert views quoted in the Business Times article:

  • Industry players see insufficient supply from government land sales (GLS) and strong purchasing demand for mass-market private homes among the biggest factors
  • Larger leasehold sites that can achieve greater economies of scale and churn out substantial revenue
  • The collective sales cycle started from the mass market. This came on the back of strong purchasing demand for mass-market private homes from Singaporeans
  • Many of the HUDC owners are in their 60s and would want to cash out of their ageing properties that have depleting leases
  • The urgency among owners of former HUDC estates may explain their land rates being more reasonable than some freehold properties
  • 10-15 per cent price premium that freehold properties tend to command over leasehold properties also present a hurdle to quantum-sensitive buyers and investors

Probably one of the important factors that led to this change in trend was missed out in the coverage by Business Times – the introduction of Additional Buyer Stamp Duty (“ABSD”) remission rules in 2011. Under the ABSD remission rules, developers who complete and sell ALL their units within five years of the acquisition date of a site will not have to pay ABSD on the purchase of land. In the event that they fail to do so, they will incur a 15% on their land cost. A 5% interest rate per annum will also be levied.

In the past, developers prefer to buy Freehold sites as they can landbank the sites and have greater flexibility and control over their launch strategy. But with the ABSD remission rules, land banking is not feasible anymore. Also, with the run up in property prices and a 10-15% price premium of a freehold project over leasehold projects, affordability of freehold projects may be an issue which could lead to slow take-up rate, and, in turn, result in ABSD on their land cost if they can’t fully sell their projects within 5 years. On the other hand, leasehold projects are more affordable and take-up rates tend to be stronger than leasehold. Hence, from a risk management perspective, it would have made more sense for developers to go for leasehold sites instead.

The owners of ageing leasehold properties would probably have the government to thank for this round of leasehold enbloc frenzy!

Kopi Talk – 9,300 new homes from enbloc sites? Let’s not get worried too soon

9,300 new homes to result from slew of en bloc sales, warn URA – The Business Times


Kopi Talk:

Yes, the headline number of 9,300 new home supply looks bad and this figure could even be higher than what URA estimated. A reverse engineering of URA’s estimate seem to imply the following key assumptions in URA’s estimate:

  • URA has not assumed that the developers will go for the bonus GFA scheme, which is a fair assumption as it is at the developer’s discretion to decide whether they would like to subject themselves to the scheme requirements and apply for the bonus GFA;
  • An assumed efficiency of 85%;
  • An average unit size of 820 sq ft per unit

Pessimistic Scenario: 10,800 new units from enbloc sites

Let us take a more extreme, ‘pessimistic’ view of the supply outlook, assuming that all of the developers apply for the 10% bonus GFA scheme and maximise their efficiency to 90% that is already the norm in today’s developments. Average unit size assumption looks reasonable, especially when a lot of the enbloc plots are big in size and will have a good mix of small and large units. Under this ‘pessimistic’ scenario, we could be looking at a potential 10,800 new units from enbloc sites, which is 1,500 units or 16% more than what URA has estimated.

Looks bad? Let’s not get worried too soon. A significant number of the enbloc sites are in the Outside Central Region and developed mature estates, where demand tends to be primarily driven by new homeowners and upgraders purchasing for own stay, with a smaller proportion of buyers for investments. New homeowners and upgraders are likely to be more location-specific in their purchases. They may look for a place closer to their current homes or childhood homes, or somewhere near their parents, for example.

Hence, SPK thinks that as long as the enbloc site is located in an established matured estate, with limited new residential supply and if developer comes out with a good product and reasonable price, the new development should still see healthy demand from buyers. Moreover, there is also a potential demand from the enbloc sellers who might be keen to re-investment part of their profits in the new development, due to sentimental reasons or familiarity with the neighbourhood.

More new condo options for Kovan and Hougang residents

However, there might be some cause for concern on the potential new condo supply in District 19, which is the current enbloc hotspot. 3 of the biggest enbloc projects – Rio Casa, Serangoon Ville and Florence Regency, are located within close proximity in the Kovan and Hougang area. Even though these are matured estates, it is still unsure how much of these new condo supply can be absorbed by the buyers. SPK estimates that these 3 projects could potentially yield a total of 3,600 units (which makes up about 34% of the total potential new supply from enbloc sites), which is quite a large number of units to be absorbed for the area.

But, let’s look at the brighter side of things! If you are staying in Hougang or Kovan, there will be ample choice of new condos for you to choose from in 1 or 2 years time!

Keep calm and start saving!

Deep diving into the Singapore enbloc scene (Part 1)


How has the enbloc market in Singapore evolved so rapidly during the year?

The first successful enbloc only took place in May this year, when Lum Chang bought One Tree Hill Gardens and BBR bought Goh & Goh Building. Nothing much to shout about back then as the transactions were small in size and final prices came in lower than the asking prices of the enbloc sellers.

The Game Changers

What might have been the game changer were the next 2 enbloc transactions – Rio Casa and Eunosville. Why were these transactions significant? Firstly, these are 2 big transactions of S$500 mil and above and secondly, the sellers received much more than what they asked for. Hence, these transactions might have triggered the herd instinct of developers who were still sitting on the sideline, and the greed of private property owners who were hoping for a windfall.

The Perfect Storm

Here comes the perfect storm. Private property owners rushed to form collective sales committee and get the enbloc process going, and developers competing to grab whatever properties that are available for collective sales. Enbloc momentum seemed to pick up rapidly in September and October, with the conclusion of 9 enbloc cases during the 2 months.Enbloc1Hotspots for Enbloc: District 19 and 15

For the year to date, the enbloc craze has created a potential 2,721 millionaires (assuming that STB approves all the enbloc cases). Popular districts for enbloc are District 19 (particularly Hougang and Serangoon area) that has 5 successful cases of enbloc with 950 owners profiting from it. The other enbloc hotspot is District 15 (Amber, Meyer Area) that has seen 3 condos acquired via enbloc with 247 households making their money from it. Prime districts 9, 10 and 11 have not yet seen a spillover in the enbloc interest. There were only 3 enbloc cases in the prime districts and these are relatively small in size with value below S$100 mil.

Developers’ Insatiable Appetite for Land

Despite the pressure to sell all units within 5 years after acquiring a land to avoid paying the additional buyer stamp duty, developers have continued to exhibit good appetite for large development sites. Out of the 17 enbloc cases, 8 of them have land area that are more than 200,000 sq ft. Risk management seems to be secondary to the developers at this stage as the majority of the developers went in on their own without partners to acquire the sites and these aren’t small sum of money. Sim Lian Group went in alone to acquire Tampines Court at a whopping S$970 mil.

The last enbloc cycle in 2007 was quite a different case from today’s. Back then, developers tend to form consortium to jointly bid for large enbloc sites, such as Farrer Court (Capitaland, HPL, Morgan Stanley, Wachovia), Gillman Heights (Capitaland & HPL) and Minton Rise (Kheng Leong & Low Keng Huat). Such a trend has not yet happened during this round of enbloc cycle.

Freehold or Leasehold? It doesn’t matter

Out of the 17 developments sold enbloc to date, 10 are freehold sites and 7 are 99-year leaseholds. The acquired freehold sites tend to be smaller in size and located in either prime districts or exclusive areas. Developers also tend to exhibit good appetite for 99-year leasehold sites that are big in size. What is the attractiveness of large leasehold sites? Large sites would give developers a lot of room to create innovative real estate products. Nowadays, lifestyle is what consumers are looking for. Developers can create a lot of lifestyle facilities within a large plot of land that will make their product more interesting and marketing will be a lot more easier. Moreover, cost of a 99-year leasehold site is relatively lower than a similar freehold site and that reduces the capital burden on developers, or, for the same amount of money, developers can invest in a bigger leasehold land rather than a smaller freehold land in a similar location.


In our next enbloc posting, we will provide more review on the key players and transaction prices of the successful enbloc cases.

Stay tuned!