Opportunity For En Bloc Sales Of Mixed-use Projects

Window Of Opportunity For En Bloc Sales Of Mixed-use Projects Could Be Brief

SINGAPORE – Savills expects the local collective sale market, particularly for mixed-use development with commercial components, to continue to be active in the next few months, reported The Edge on Friday morning (24 September, SGT).

“There are many potential collective sale launches in the pipeline and many collective sale committees (CSCs) are at different stages of the process,” said Jeremy Lake, Managing Director of investment sales & capital markets at Savills Singapore.

The pace of plots being sold en bloc is projected to rise significantly in the next 3 to 6 months, so long as real estate developers continue to covet land. However, the collective sales momentum could be negatively impacted if strata unit owners’ expected selling prices exceed what developers are willing to fork out.

Moreover, the window of opportunity is unlikely to be open for long. “These windows of collective sale activity tend to be relatively brief, so it is important that owners catch the wave in time, get themselves ready quickly and enter the market so as not to miss the boat,” Lake added.

The collective sale frenzy for mixed-use developments was kick-started by several commercial properties entering the market. One of which is the recent en bloc sale launch of International Plaza for S$2.7 billion, which has encouraged other owners of ageing strata-titled integrated projects to explore a similar divestment.

Another is the collective sale launch of the Peace Centre/Peace Mansion complex at a reserve price of S$688 million, as well as the maiden en bloc sale attempt of Sim Lim Tower.

Real estate consultancy Delasa’s Chief Executive Karamjit Singh shared that there are 3 factors supporting the healthy collect sale sentiment in Singapore’s commercial property market.

First, “there has been a big push by the URA to revitalise parts of the CBD and commercial developments in the area have been given incentives to redevelop as long as a significant portion of the new development is residential or hospitality component”.

Another factor is the city-state’s general shortage of residential land supply, which is driving some property developers to seek out other alternative land sources to replenish their land banks.

Third, Singapore’s attractiveness and overall stability as an investment hub has drawn many family offices and investment firms. “This capital inflow is bound to rub off to the commercial sectors and we have seen asset values in Singapore increase over the past few years,” Singh added.

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