Experts feel that developers are no longer land hungry and are more concerned about selling existing projects.
Real estate experts believe that en bloc residential sites in Singapore costing at least $1 billion are unlikely to find a willing buyer amidst the new market situation, reported Bloomberg.
“Billion-dollar en bloc deals will be very hard to get through,” said ZACD Group executive director Nicholas Mak. “Developers are no longer land hungry and are more concerned about selling existing projects.”
More: Over 30 En Bloc Sites Fail To Secure Buyers
He said this after Horizon Towers, a 99-year leasehold residential project near the Orchard Road shopping belt, was relaunched for collective sale last week at the same reserve price of $1.1 billion following two failed attempts.
Built in 1984, the 211-unit condominium at Leonie Hill was first put up for sale 10 years ago for $500 million, but the deal was scrapped after a court ruled the en bloc process was improperly handled.
Subsequently, it made another collective sales attempt on 5 July. But given the ill timing of the tender launch as the government announced new property cooling measures that took effect the next day, the project failed to attract a buyer even though the tender’s closing date was extended from 7 August to 12 September.
On 6 July, the authorities raised the Additional Buyer’s Stamp Duty (ABSD) and tightened loan-to-value (LTV) limits for those buying private homes. Subsequently, market sentiment was dampened further by the new higher average unit size of 85 sq m or 100 sq m for non-landed residential projects outside Singapore’s central region.
Taking effect on 17 January 2019, the new average size rule will not only limit the number of shoebox apartments, but also reduce the maximum number of condos developers are allowed build in a single project by 18 percent.
“As the government moves in with more restrictive measures to curb both demand and supply, we expect developers to focus on clearing inventories rather than adding more,” said DBS Group analyst Derek Tan.
More: Understanding The En Bloc Process (August 2018)
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg