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5 factors that boost your odds of en bloc in Singapore

The successful en blocs in 2021 have paved the way for others in 2022. But what determines en-bloc success?

cover image credit: CNA

Mandarin Gardens was in the news recently – as they have kickstarted the enbloc process again by forming a new collective sales committee.

They are amongst one of the many developments who are prepping for the en bloc cycle.

2021 has seen a couple of successful en blocs so far and we will likely see this trend extend into 2022 with a dwindling landbank and new units inventory and silent confidence of the return of the foreign buyers into the local markets as a few reasons for the momentum thus far.

The question is: What are the factors that usually contribute to the favourable odds of a successful enbloc?

The following factors are more likely to weigh on the success or failure of an en bloc.

This list is not exhaustive but should summarize the gist of the process.

1. Reserve Price

I know this sounds pretty cliché but it boils down to the price. Reserve price is a delicate balance.

Too low and not enough consensus for owners to sign up . too high and it doesn’t entice the buyers enough.

When the offer comes through and is lower than reserve price, there needs to be another round of signing up but within a stipulated period . that itself forms another hurdle.

Reserve price is both and art and science.

2. Tenure

Freehold plots will still command more interest over leasehold plots as the only way for developers to acquire freehold land is via the private condominium land owners .

For 99 year leasehold, the developers can turn not only the 99 year leasehold condominium owners but the government land sale plots as well.

The fact of acquiring via Government land sale market is that the land price is competitively bidded but it is probably based on the current market sentiments and premium and there is no need for the buyer to top up the differential premium to a fresh 99 year leasehold again.

3. The Quantum Sum

An enbloc that requires over a Billion dollar transactions vs Sub Billion dollar transactions.

The all in cost on the acquisition of a plot includes the holding costs, and the timeline to sell within a 5 year timeframe will have to be mitigated through factors like how rare is the plot in question, how premium is the address and the target profile of the future buyers.

As an example, a prime district freehold plot is likely to appeal more even if the quantum sum is higher as the likely buyers in future of the unit will be the high net worth individuals in the luxury segment.

4. Number of units

The truth is the race to launch in the market is based on the signatures gathered based on

80% of the total share value and strata give consent to the sale via signing of the collective sales agreement.

Logistically, the more units there are in the development, the more time is required.

Logically, more conversations and explanations will need to take place to hit the 80%.

Small is nimble.

5. Market Sentiments

Should Macro Real Estate Policies remain status quo and Macro Economics remain strong into 2022, then the chances of success are much higher.

Should there be any hiccups based on the current COVID situations or any further cooling measures, then the sentiments in the land acquisition may take a hit.

This is not saying the buying activity from dveelopers comes to a halt.

But if the “wait and see” approach is adopted, it may not favour the timeline of the developments who have launched in market and have a 12-month timeline to find a buyer.

For those who are in the process of your estate going through an enbloc…

May the odds be always in your favour!


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