Owners driven by fears of hike in GLS supply

Owners in some developments are racing to launch collective sale tenders for their sites - driven by fear that the government could increase land sales in the first half of next year, which would mean more competition for en bloc sales.

En bloc sale owners are so united in their belief that the government is going to step up the release of land from H1 2018 and therefore they have to rush. They have to let their property be made available for tender to the developers before January 2018.

Given a choice, most developers would prefer to buy residential land at a state tender as it is relatively hassle free and they can turn around the project quicker - compared with a collective sale, where owners objecting to the sale can take the matter to court.

In a market where the profit margins are very thin, cashflow is important and certainty as to when a project can be launched is needed.

The conspiracy theory out there is that owners' fears about a step-up in the GLS Programme may be fanned by some agents eager to persuade owners to swiftly agree to a sale.

While that could be the case, a more plausible explanation for owners' enthusiasm to sign the collective sale agreement is that residential land prices have risen very quickly in a matter of months. Hence, a new batch of en bloc sales becomes viable which, prior to the land price acceleration, would not have been viable.

These en bloc owners are suddenly discovering an opportunity which did not exist for 10 years. The buildings they are living in are 10 years older and the owners themselves have become 10 years older.

Since they lost the opportunity before, and if they now have a shot again, these people would want to quickly put their properties on the market.

Adapted from: The Business Times, 4 September 2017