Collective sales to continue on back of strong market recovery

2018 seems to be a fruitful year for the collective sale market. There have been 17 successful deals thus far, totaling $5.8 billion.

Holland Tower. Picture: SRI

$5.8 billion for 17 collective sales in Q1

The $5.8 billion worth of deals done in Q1 is already 29% higher than that of 2017’s fourth quarter. Boosted by the rise in residential property prices last year, developers have continued laying keen eyes on en bloc deals in the market this year. And there is still space for growth.

The confirmed list of sites to be released under the Government Land Sale (GLS) programme in the first half of 2018 have provided land-hungry developers with opportunities galore. That has, in turn, lifted bidding-confidence and developers seem determined to continue bidding for both private and government land sites well into the year.

RelatedHolland road site sold to the consortium led by Far East Organization for $1.213 billion

Strong signs of recovery in the non-landed residential segment

The private residential index has risen 3.1% quarter-on-quarter and strong market recovery has been recorded in several sectors such as the core central and outside central regions. Non-landed home prices in these 2 regions rose 5% and 3.8% respectively.

Many of the en bloc deals in prime locations have however already been snapped up. Properties flying under the radar in less well-supplied districts may, however, be of increasing interest to developers. These sites may be in the suburbs with less connectivity but that could only mean a wider margin of growth.

Previously, the collective sale market was dominated by freehold properties but the current cycle is led by 99-year leasehold properties.

Some of these undersupplied districts in terms of 99-year leasehold properties:

  • District 7 (Bugis, Beach Road, Golden Mile)
  • 8 (Little India, Farrer Park)
  • District 9 (Orchard Road, River Valley)
  • District 23 (Choa Chua Kang, Dairy Farm, Hillview, Bukit Panjang, Bukit Batok)
  • District 26 (Upper Thomson/Springleaf)

RelatedThe owners’ reserve price of S$65 million equates to S$1,489 per square foot per plot ratio (psf ppr)