Singapore enbloc market is quiet, up to 15% price gap between what developers are willing to pay and what owners want is the main reason for this mismatch.
Due to the rising costs of construction and labour, the expectations between developers and owners is having a more significant impact on pricing.
Only a third of collective sales have succeeded in the current 2021-23 sales cycle, compared to the 63% success rate in the 2017/2018 enbloc boom cycle.
Despite the slowdown, the resale market for owners is still “very strong and optimistic”.
Developers are also more careful about the final sale price they are able to achieve when they launch their project, which is why it is harder to offer the desired price to owners.
As the sellers are reluctant to sell at a lower price, if there is no buyer for their enbloc sale, they tend to wait for a better time to launch a collective sale.
Even when enbloc sellers are willing to consider a lower price, they may only accept a price that is about 40% to 50% of the premium, instead of 50% to 60%.
The enbloc premium refers to the difference between the enbloc offer price and the resale market price of units.
This trend is likely to continue as the costs of replacement continue to rise. It is likely that enbloc sellers who face high replacement costs will be unwilling to accept lower prices.
If you’re punting for an en bloc project, be prepared that you may have to hold the property for more than 10-15 years while we wait for the next enbloc cycle.