Collective Sales and En Bloc Sales in Singapore. Will the Trend Continue? | Cushman & Wakefield Research
2017 Year in Review
What Does 2018 Hold?
The market got off to a firm start in 2018 with eight deals worth $3.1 billion transacted from January to mid-February, equivalent to 69% of the volume in 4Q2017.
With the upturn of the residential prices just two quarters ago, coupled with the paucity of the government land sale (GLS) sites on the confirmed list for 1H2018, the current collective sale cycle still has room for further growth.
Land-hungry developers who lack a sizeable land bank have bid aggressively for collective sale sites to ride on a price recovery after a price slide over three years. this is set to continue in 2018 when the residential price recovery accelerates, driven by both stronger economic fundamentals and market sentiment.
Top 5 Most Under-supplied Districts
Given the multitude of collective sales coupled with recently awarded and upcoming GLS sites, there may be concerns regarding potential oversupply in certain districts.
Accordingly, we examined the supply for units from GLS and successful collective sale sites which will be launched for sale from 2018 onwards to assess the supply situation by districts. The most under-supplied districts may be more appealing to developers.
D8 (Farrer Park/Little India) is the most under-supplied with 15 units from Oxley’s Tessensohn Road project.
D13 (Machpherson/Braddell) is next at 18 units, from Oxley’s redevelopment of former Apartment 8.
D16 (Bedok/East Coast) is third with 25 units, from Oxley’s Upper East Coast Road project
D20 (Ang Mo Kio/Bishan) is next with 31 units from TEE Land’s Seraya Crescent site
D14 (Geyland/Eunos) rounds out the top 5 list with 97 units stemming from Roxy-Pacific’s two sites at Guillemard Lane.
Freehold Collective Sale Sites Present Opportunity
As URA indicated that it will not significantly increase the GLS supply, developers who are still looking to shore up their land bank are likely to turn to collective sale sites.
Previous research by C&W indicated that in contrast to past collective sale cycles which was led by freehold projects, the current cycle was however led by 99-year leasehold projects. Indeed, the future supply from 2018 onwards currently comprises of approximately 25,500 99-year leasehold units, as compared to just 4,900 freehold units.
Therefore, there is an undersupply of freehold units which present an opportunity for developers who still prefer freehold sites over leasehold ones. Developers who acquire freehold sites will be able to target long-term investors and buyers with a preference for freehold status, such as those who have a strong bequest motive.