Thanks to the ever rising developer ABSD, Singapore’s residential collective sale market went from boom to doom.
(Watch my youtube video Ep#22: En Bloc? It’s All Over Now)
Collective sale deal discounts and hiccups
After the collective sale bull market in 2017-8, only three large-size old condos (Chuan Park, Thomson View and Loyang Valley) managed to sell en bloc in recent years.
• 2017: 31 deals closed totaling $8.5 billion
• 2018: 36 deals closed totaling $10.3 billion
:
:
• 2022: Chuan Park $890 million
• 2023: Meyer Park $392.18 million
• 2024: Thomson View $810 million
• 2025: (no large en bloc deal)
• 2026: Loyang Valley $880 million
1. Loyang Valley
After trying three times in four years, owners of Loyang Valley finally managed to close the deal in April this year. But this was after slashing $100 million off the original asking price.
2. Thomson View
In October 2024, Thomson View sold collectively after five failed attempts in 12 years. But minority owners were not happy with the low price (after a discount of $108 million off the original asking price). Joint developers UOL, SingLand and CapitaLand took another year to obtain acquisition approval from the High Court.
3. Chuan Park
After four attempts at collective sale, Chuan Park condo owners finally closed the deal via a private treaty in July 2022. The final price $890 million was 5.11% lower than the guide price of $936 million. In December, the Strata Titles Board issued a stop order when six minority owners did not withdraw their objections after mediation. It was not until May 2023 that the High Court finally gave the majority owners the green light to go ahead with the sale.
The latest tweaking of developer ABSD
The ABSD rate slapped on developers was raised two times:
• 2013: 15%
• 2018: 30%
• 2021: 40% (inclusive of 5% non-remissible ABSD)
From 29 July 2026, there are two new changes:
1) Extension of ABSD timelines for large redevelopment projects completion and sale timeline from 5.5 years to 6 or 7 years
2) Lowering of consent threshold from 80% to 70% (40 to 59 years old projects) or 65% (60 years old or older projects)
Can tweaking rules revive the collective sale market?
1. The numbers must add up
To the developers, they acquire land plots based on a few key factors, including economic outlook, total land price, financing costs and construction costs.
The authority is extending ABSD deadline, not lowering ABSD rate. If the project cannot sell for whatever reason, ABSD is still applicable to unsold units later.
Besides topping up a leasehold site, there is also land betterment charge (LBC). From September 1, LBC was revised up 3.4% on average for non-landed residential use. The last revision of 4.1% increment was end of this February. Some areas had surprisingly high revision, including Bedok South (+22.7%) and Newton Circus (+10.2%). Every time after a developer paid top price for a GLS plot, the LBC of that area will be raised immediately.
2. It is hassle-free or a real hassle
Like any purchase, land acquisition is willing buyer willing seller.
If developers need to go to High Court every time to get approval for the purchase of a mega-size old condo project, they might prefer submitting bids in Government Land Sales which is straightforward and hassle-free.
Also, the lowering of consent might make it easier for en bloc hopefuls to obtain the necessary percentage of consent. But history told us that large-size old condos were likely to go through four to five attempts and slash a hundred million dollar off the original asking price before closing a deal.
There is no rush. Developers just need the patience to wait for a decade or two for the right time when owners are most desperate to sell.
The dilemma of collective sale hopefuls
A super-aged country comes with more aging public and private residential development. Singapore started mass building of condos from the mid-1990s.
Today, over 1,000 of 3,750 private residential developments in Singapore are at least 30 years old. In ten years’ time, one-third of them will be 40-year-old. The private home market will be flooded with 40-year-old condo projects with retired owners eager to go en bloc.
In the near future, supply will well exceed demand. When developers are presented with too many en bloc choices, they will be very selective.
The reality is: Over the past decade, only a single digit percentage of old condo projects were successful in going en bloc. Even if owners settle for very “realistic” pricing, fewer old projects will succeed in collective sale in time to come.
Above all, these older condos are inhabited by the retirees who may not afford to pay the high maintenance costs. Yet they are not entitled to any subsidy or grant by the government. Another decade passes they will reach 50-year-old/ Whether it is 99-year leasehold or freehold, these old condos will be beyond repair. For older condos, expect to see more under-maintenance projects and force-sell by the MCST cases.
(Read my earlier blog post “En bloc sale – the good, the bad and the ugly“)
Food for thought
Neptune Court with 51 years behind it has been through many rounds of collective sale attempts in the past 19 years since 2007. Nearby 40-year-old Mandarin Gardens first attempted collective sale in 2008 and failed again in 2019 and 2023. Likewise, Pandan Valley is 48-year-old now after failed en bloc attempts in 2011, 2018 and 2021.
Owners of large sites lamented that, despite lower consent threshold, the shorter timeline of six months (down from 12 months) to obtain the necessary consent was tough. It would only lead to more failed attempts and wasted efforts.
In a booming residential home market, it is not difficult for owners who want to cash out to sell individually. The windfall from a collective sale is good to have. However, if developers are expecting en bloc hopefuls to offer deep discounts, owners should ask themselves whether it is still worthwhile engaging a marketing agent to go through all the hassles in the collective sale process.
(The above is a repost from my facebook page fb.com/propertysoulblog)
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