The effects of the en-bloc effect

Older apartments are selling like hotcakes amidst the collective sale fever. By the end of 2016, 50 to 60 projects have already been sold en bloc.  But are the floor footages of new units shrinking despite caps on unit-sizes for private apartments

Brookvale Park, Clementi.

High prices paid for en bloc deals pushing developers to shrink apartment sizes?

While the property market is in good stead with the fuel poured on by collective sale successes, an estimated 20,000 new units are slated to enter the market in the next 3 to 4 years.

Questions about a possible supply glut have been raised. But the overall market recovery and positivity have overshadowed those. Land prices have been rising as developers bid high, but that could also mean rising home prices. Some developers may keep units small to maximize the land area and keep the overall price affordable. The supply of resale units in the secondary market has also decreased as more projects are sold en bloc.

Changing lifestyles may mean smaller apartments more palatable

The population of smaller families, singles and the elderly is likely to grow as we proceed further into the first decade of the 21st Century. Thus despite the fact that more shoebox apartments sized at a minimum average of 70 sq m is increasing, demand could still be high. Smaller apartments also come with more affordable quantum prices.

The more concerning issue is perhaps whether the need for speed and profitability will prompt developers to build faster but not necessarily better or safer. Infrastructure such as public transport and road traffic may also be strained in neighborhoods that suddenly find themselves imbued with a big pool of new inhabitants.

The government has found ways to hold developers to the public spirit. For example, developer Sim Lian Group was awarded the Tampines Court site last year but will also have to build a new link to the slip road learning to the Pan-Island Expressway (PIE).

Another positive effect of the en-bloc run is the boost it brings to resale market in some districts such as Bukit Timah, River Valley, and Holland Road. Moving ahead, will the market be flexible enough to absorb the large load of new units entering the market and will smaller units be popular once more.

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