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Tne value of HUDC estates will go up with Shunfu Ville deal

Tne value of HUDC estates will go up with Shunfu Ville deal.

The Shunfu Ville en bloc sale late last month has given some owners of ageing homes hope that they can reap a collective sale bonanza. Property consultants said inquiries started coming in from estates shortly after the Shunfu Ville announcement, while efforts are already under way at other blocks.

The 358-unit privatised Housing and Urban Development Company (HUDC) estate near Marymount MRT station was sold for $638 million last month, the first en bloc sale in nearly a year and the largest since 2007. Each owner will pocket about $1.782 million, or nearly 50 per cent above the typical value of a unit on its own.

It was a shot in the arm for an otherwise moribund en bloc sales market, with just mixed-use Thong Sia Building sold last year, for $380 million, and no en bloc sales in 2014. In comparison, a record $11.6 billion of collective sales took place in 2007 at the market peak. Elsewhere, the Changi Garden condominium and a former HUDC project in Potong Pasir are already into the sale process.

The collective sale committee at the mixed-development Changi Garden off Upper Changi North Road selected lawyers and a marketing agent last month. The 84-unit estate has tried going en bloc twice but came up short both times.

Some residents of The Capri condominium in Stevens Road are also said to be exploring the option, having sent out invitations to quote. Among privatised HUDC estates, the collective sale committee at Blocks 110 to 112 Potong Pasir Avenue 1 is collecting signatures from owners and has apparently obtained about 60 per cent of the required minimum 80 per cent approval.

The collective sale committee at former HUDC project Tampines Court is drafting a sale agreement, while residents of former HUDC project Eunosville are said to be considering reigniting the process. Both estates have attempted to go en bloc twice. The 560-unit Tampines Court was privatised in 2002 and the 330-unit Eunosville in 2011.

"Owners of privatised HUDC developments are under pressure as their estates grow older and the responsibility of upgrading rests on their shoulders now," said Mr Lee Liat Yeang, a senior partner in the real estate practice group of Dentons Rodyk & Davidson. "As time passes, the value of topping up the lease (of site) will go up and, correspondingly, the amount of money that goes to owners in an en bloc sale will come down," added Mr Lee, who is acting for Qingjian Realty in the Shunfu Ville deal.

On the retail front, owners at Katong Shopping Centre have reached the 80 per cent mandate for a collective sale and are expected to launch the site soon. The landmark in the Katong area is zoned for commercial and residential use.

Now may be a reasonable time to start a collective sale effort as the Government has been moderating its supply of land via its sales programme. Not all of the Government Land Sales (GLS) sites are attractive; they may be too big or highly contested.

That said, the GLS programme for the second half of this year, likely to be announced this week or next, could offer developers attractive alternatives. While developers see the en bloc process as a viable source of well-located sites, they will be realistic in their offering prices, given building completion and sales deadlines imposed by the Qualifying Certificate and Additional Buyer's Stamp Duty.

Eventually, it is about pricing. Developers are low on their land stocks so quite a number will be keen to restock. But they are also very mindful of whatever sales backlog they may have.

Adapted from: The Straits Times, 4 June 2016