Spring Grove is the latest condominium jumping on the en bloc sale bandwagon.
Almost every week, there is an announcement of a new privatized HUDC estate or old project putting up for sale.
Recent candidates joining the collective sale craze include Braddell View, Pine Grove, Changi Garden, Amber Park, Jervois Gardens, Florence Regency and Normanton Park. Developers are simply spoiled for choice!
Collective sale hopefuls are probably inspired by the recent successful deal at Tampines Court.
The ex-HUDC deal managed to be closed at S$970 million after two failed attempts in the past. This is no doubt a heartwarming winback for the owners who stand to pocket $1.71 million to $1.75 million each for their unit.
It sends encouragement and positive signals to home owners who have failed to sell en bloc that it’s time to try again.
The Good, the Bad and the Ugly
I have covered the collective sale topic in my book No B.S. Guide to Property Investment.
“Like many hopefuls in an en bloc sale, it all started with excitement and greed, then gradually there were resistance and quarrels, and finally things ended in a mediated consensus. It turned out that the majority of the residents agreed to sign, not because of a better offer, but because of the fear of ‘missing the boat’.”
It reminds me of the famous 1966 movie The Good, the Bad and the Ugly. Fortune seekers are trying their luck to bag their pot of gold, but this time from selling their home.
The “Good”
In my previous blogs posts, I also talked about the good, the bad and the ugly in my personal encounters of going through the process of collective sale in two of my properties.
Both projects were over 25 years of age. Many residents bought their units first hand from the developer and have been staying there since the development obtained TOP.
These owners were already in their 50s. They were either near retirement age or already retired with grown-up kids. To them, putting their home for collective sale was a good opportunity to bag the windfall to achieve the following:
1. Plan for an early retirement;
2. Support their children’s overseas education; or
3. Move to a newer home so they don’t have to put aside money for repairs and renovations of the old estate.
Of course, there were en bloc speculators sitting in the Collective Sale Committee who just bought the units recently to wait for en bloc sale. But they were the minority.
The “Bad”
Collective sale is not as glamorous as reported in the media. Owners have to go through the following “bad” in the whole process:
1. It is a long journey.
It is rare for any collective sale to be successful with the first attempt. It often takes a second or third round.
Amendments to en bloc sale legislation that took effect from 15 July 2010 imposed a two-year restriction period from the date of the initial failed en bloc attempt.
The first retry requires approval from at least half of the combined share value or number of owners. For the second and subsequent rounds, approval from 80 percent is needed.
The Collective Sales Committee will be automatically dissolved if it does not receive any signatories to its Collective Sales Agreement within one year of the Committee’s formation.
2. It is a lot of work, stress and uncertainties.
The Collective Sale Committee has to engage consultants, review proposals, agree on a selling price, and above all, collect enough signatures from the residents. Regular resident meetings are called for in the evenings and over the weekends. All of these have to be completed under the pressure of time.
Many residents who face a collective sale of their home are going through a lot of stress, tensions, frustrations and disappointment in the whole process of en bloc sale.
When the sale finally goes through, residents have to deal with the new uncertainties in the near future:
– Will they have sufficient time to find a new home given the timeline to move out of the old estate?
– Can they afford a similar or better unit in the same location with the sum from the en bloc sale?
– Will they miss the familiar environment and friendly neighbors they have for many years?
The “Ugly”
Every news article reports a successful en bloc sale in a similar way: how much is the project sold, what is the estimated amount each owner can pocket, which developer pays the top price, what is the potential of the future project, and so on.
The media is only covering part of the story of a successful en bloc sale. Have they interviewed the rest of the 20 percent owners who voted “No” to sell their home?
En bloc is a battle between the two camps of “sell” and “stay” owners. You will be surprised how a quiet and peaceful housing estate suddenly turns upside down when the talk of collective sale begins.
En bloc is not a straight-forward business deal. It is about money, greed, emotion, uncertainty and fear.
I shared my experience of the ugly side of an en bloc sale in my book No B.S. Guide to Property Investment:
“Objections came from a small group of residents. They thought that it was almost impossible to find an equivalent project with the same spacious layout and big site area. There were also new owners who just settled down in their new home after a lot of work doing the renovation.
Then unexpected things happened. People were targeting owners of big units who owned more shares of the condominium. There was also a rumor that the fengshui of this place was bad. This was followed by stories of harmful radiation from a rooftop antenna, terminal illness of a few residents, a suicide case …”
I am neutral to property investors who speculate in en bloc sale — provided that they use the honest means and show respect to owners who hold a different view.
Collective sale is good or bad for the residential market?
The 2007 en bloc fever was caused by the need of developers to refill their depleting landbank.
The 2017 en bloc fever is caused by the need of developers to refill their landbank after being outbid by Chinese developers.
The property agencies, bank analysts and owners of old estates are all excited by the revived collective sale market. It helps to fuel the optimism of a market recovery after a quiet market in the last few years.
Many believe in a bull market formula for the local residential property market:
high bid for new site = higher psf price of new project = higher sales volume = higher asking price in resale market = booming property market
This formula seems to work in the last few years. But two critical factors are missing in the equation: a stable economy and willing buyers.
Jones Lang LaSalle estimated that about 12,700 new private homes from 10 collective sales will be launched in 2018 and 2019. The number can be higher given the closing of new en bloc sales in the market.
According to URA, 15,085 units (17,827 units including ECs) remained unsold as at the end of 2nd Quarter 2017. The vacancy rate of completed private residential units (excluding ECs) remained unchanged at 8.1 percent.
Jones Lang LaSalle’s figures show that the 17 collective sale sites closed since last year have 3,141 existing homes. If all of these home owners need a replacement private residential unit, they are at most consuming only one-fifth of these unsold units, not forgetting the fact that there will be 12,700 new units to be launched in the next two years from the en bloc sites.
What if many of the collective sale owners are keeping the sale proceeds for retirement and opt for a cheaper HDB home?
Is our population growth and home buyers able to create a housing demand fast and big enough to consume the surge in supply?
Above all, developers are under the restriction to sell all the units from the collective sale within five years or pay 15 percent ABSD of the land price.
Do you think the current en bloc sale fever is good or bad for the market? Let me know whether you are an industry stakeholder or a home buyer when you answer this question.
Did you watch my video “2018 Singapore Property Market – what developers, agents, banks and analysts are hiding from you”? Watch it now!
First, I state that I’m one of the SPs of Tampines Court and I m a signatory of the CSA.
Outsiders may think that there is celebrations of joie de vivre for a successful enbloc. You should scour the blogs on both sides of the debate to know the sentiment. The once serene neighborhood is now filled with tensions with both sides of enbloc accusing one another of extirpaing each other dreams and hopes.
Some members of the majority ( albeit having 84%) wanting to sue the minority of deliberately delaying the process for them to have a quick access to their windfall to enable them to capitalise what the majority feels the ascending property market for a bigger gain. They ignore the legal rights of the minority to object, simply brushing aside their empathic and visceral positions without even allowing the minority the rights in the STB hearing. The ersatz presumptions of simply stating upfront that minority have no grounds whatsoever is denying the minority of a legal right is surely an affront of any system. Have the majority forgotten that it is they who initiate the sale of not only their roofs but also the roofs of the minority by exploiting the legal 80% rule, to achieve their selfish and intemperance greed? Now they have the gall to sue the minority. The bestiality of the minds is manifested simply because millions is in the air.
The abnormally quick joining of the enbloc orgy is indeed worrying. The intervention by authorities of these situations that can potentially split our nations asunder, is in order.
Thanks for sharing your story. It is very sad. But it’s so true.
Collective Sale really exposes the ugly side of some people when you dangle a big sum of money in front of them. The fact is: They never have imagined they can pocket that type of money their whole life. And they know no other way to make that kind of money.
Frankly, I was secretly happy that the en bloc sales in my two properties didn’t get through. It has nothing to do with “sour grapes”. It is also not because I am so rich that I don’t need the proceeds.
I don’t want this kind of windfall if our neighbors have to compromise their integrity and destroy the serenity of our place. Who want to go back to their home after a long day to be surrounded by nothing but banners, posters and social media full of politics, attack and hatred?
Peace of mind is priceless. Only people who have gone through en bloc sale (like you and I) understand.
As I have said in my book when I talked about en bloc, “In property investment, there are many ways to make the same or even bigger amount of money. Under all circumstances, it is not worth compromising your integrity to win the jackpot of an en bloc sale.”
Put aside my conscience and graciousness for $1.75 million? Never!
Does the en bloc of all these older estates indicate a property boom is coming? Does it mean that property prices will really rise as predicted?
Judge ypurself. Did you read my earlier blog post “Recovery? What recovery?”? https://www.propertysoul.com/2017/08/22/recovery-what-recovery/
It is frightening to think that the majority are exploiting the minority in any enbloc sale and the slightest inference to this idea does no justice to those who put their signatures down to support the sale.
Each of the owners have their own reasons for wanting or not wanting an enbloc sale. For those who opposed, be it tranquility of their homes or sentimental justification to the estate, failure to recognize that their decisions collectively impact the majority is in deed a reflection of their selfishness too.
The law has been revised to take into consideration both the interest and aspiration of all owners as well as various legitimate reasons for an estate needing to go for enbloc sale. Further, there is no guarantee of successful completion even for estates which are in dire states.
Unless owners could justify and convince the arbitrators to revise the law to make it even more equitable, arguments for any revision at this point would seem not only hasty but completely unfair to owners who truly support having their estate renewed through the enbloc process. Thank you.
It is important for any civilized society to protect the interests of the minorities and ensure that their voices are being heard. Whether it results in any amendment of the law we have to leave it to the government.
Pro-enbloc owners have choices. They can sell their home individually if there is no en bloc. But those who are against it do not have a choice to keep their home.
Yes, you are right. The law has already been amended to take into consideration the rights of both majority and minority owners. There WILL be further amendment if justice is not done.
Yes, there are choices opened to both groups. Those who do not like it can choose to sell in the market. But, why should they if they can do it collectively and get a better prices (and in turn they can afford a better unit if they are flexible about where to stay) instead of being made to suffer by the minority owners?
What we are discussing here is that the minority group is trying to accuse the majority group of not heeding their needs. It is a typical case of cry-baby because they could not have it their way under the provision of a lawful society. If they continue to feel aggrieved and they truly have a case to be supported by law, then they can take it out by legal means through the courts.
The law has provided for them to appeal and seek final judgement. Further whining will not do good to anyone else. Thank you.
Thank you and appreciate my post being put up.
Hi Property Soul,
According to the last edition of The Edge Singapore, the article title “Huge pickup for Singapore economy expected as global growth revives” . Its seem that one more of the critical factors you mentioned are fulfilling , isn’t it?
Everyone can form their own judgement of the market. It’s fine. But it won’t change your mind by just looking at a media report. You look at the raw data, walk the ground and talk to those people in the industry who can give you an honest view.
Read this http://www.straitstimes.com/singapore/property-market-to-rise-or-fall-30-sure-ive-heard-that-one-before
Those who has just bought the property while speculating for an enbloc are required to pay SSD. This will reduce their gains. That being said recently government has increase the DC for the property developers. Thus this should act to temper the current enbloc fever a bit since the developers margin will be eroded. Once the landbank is replenished the enbloc party will stop.
I agree with you that the current en bloc fever won’t last long. The government has reduced the release of new sites in the past few years in the midst of a quiet market. There will be more GLS coming up.
On the other hand, the demand for new plots of land will be coming down soon. Big local developers have already gone abroad for overseas projects. Developers who are stil going after new sites (either GLS or en bloc sales) are finding their margins going lower and lower. Last time, developers’ margin is close to 30 percent. These days, marketing agents are presenting a profit margin of 8 percent to developers.
An En bloc today is a zero sum game. Between 1994 to 1997, the windfall from an En bloc then was real & fairly substantial. The key factor was REPLACEMENT COST. You could get a replacement cost property for less than your proceeds from the En bloc ie. you get to keep some of the proceeds. But today, replacement cost (today’s $2800 avg psf for D9,10,11, 21 to $1,400 avg psf for the rest) had gone up 3x to 5x since 1994 (Median price $500 psf) while En bloc prices had been stagnant since 2007 but not that substantial from the 1994-1997 En bloc golden era. There are no real gains from En bloc today!
Another factor are plot ratios. The URA master plan for private properties is capped at 2.8 (36 storey) while GLS are much much higher @ 7 or 8 plot ratio (50-60 storey high).
For En bloc speculators, the financing cost would eat into any profits made because the En bloc process today would be relatively longwinded & complex (minority issues). There are better ways to make money. Just my 2 cents worth!
In the past, en bloc sales owners are able to use the substantial proceeds to upgrade to a new and bigger home. For the latest round of en bloc sales, the amount for each owner, after deducting the middleman, legal and admin fees, is just enough to downgrade to a smaller condo unit. Of course, they can choose to rent for some time or move into an HDB flat for retirement. What they have achieved through en bloc sales, after the long process, is just “being able to sell their home” in this market.
The En bloc phenomena will perhaps be almost dead within a decade. There are many hidden forces swirling around that could change people’s housing needs. One is the ageing demographics & the downgrading trend – the need for retirees (baby boomers) to downgrade & monetize their property assets. On the other hand, Millenials will prefer either staying on with parents (as overaged nestlings) &/or share house with peers/delaying or abstained from marriage to avoid buying housing & incurring mortgage commitments. This will alter the demand & supply profile for the future.
In addition, one unexpected development over the new horizon is electric & autonomous (self driving) vehicles with ridesharing apps that will change the property landscape – car parks, petrol stations, new car distributors/2nd hand car dealers/car workshops will all disappear – this new change of use for land would also redefined housing redevelopment & lower land demand. Future apartments with zero car parking or with car sharing facilities/ride share apps will limit the need for land & space – developers would be able to increase living area intensity without requiring additional land for cars & for road.
I was invited to a private talk by a property agency last week. They shared some interesting insights on how Singapore’s changing demographic trends will affect the future housing market in Singapore. I will cover this topic in one of my coming blog posts.
I have just signed a OTP for a freehold apartment unit. I am also paying ABSD since it’s my 2nd property.
Recently, I have found out that a CSC has been form to go en bloc. I am sadden by this since I like the place very much and that also means I have to pay SSD of 12%.
If the 80% consent does go thru, is there anyway that I can still seek redress and object to the sales?
When you buy a condominium, it implies that you are owning a few number of shares, depending on the size of your unit. Because the development is owned collectively with other owners, your vote in any decision of the condo is limited to the number of shares you own. If you object to the decision to go en bloc, the only thing you can do is to lobby more neighbors against it.
I have talked to people in the industry about the current round of enbloc fever. It is reaching a saturation point soon and the phenomenon won’t last for very long. There are many old condos in Singapore (those not so old also want to go for the same route). Developers have stocked up their land bank and they all know that the pathetic margin of new projects means this game is not sustainable.
Hi PS,
Thanks for your prompt reply. I can choose not to sign the collective sale agreement right?
According to my previous experience, the collective sales committee will go door-to-door to persuade you to sign. You can politely tell them that you haven’t decided yet, need to consult your spouse, etc. They can’t do anything to you if you don’t sign.
I was. advised by a lawyer friend that SSD will be paid from a fund that is contributions from other SP owners.
The duration for collection of 80% signatures needs to be reduced to 3 months or so. Allowing the sales committee 12 months to harass people is bullshit. I’ve literally printed up a list of 12 reasons I won’t sign and I just hand it out., I am also ON the sales committee and I see a complete disregard for the opinions of the minority who won’t sign who have very valid reasons (not necessarily financial) as to why they don’t want an enbloc.
I am trying to find out how the proceeds are apportioned for each successful emblocks. Do you know where u can obtain this info ? Thanks.
Go ask the en bloc brokers. The collective sale department of the property agency should know.
I agree It is a long journey but everything pays off eventually thanks for sharing your blog!
Hopefully 🙂
Nice read. Like most other articles written about enblocs, yours also covered the same topics – the majority SPs want to enbloc for financial gain, the minorities want to stay back for sentimental seasons or due to financial loss if they have recently purchased their property. Its not a win-win situation for all as it has been made out to be. Reality can be different for people in different situations.
I would like to draw your attention to another aspect of frequent enblocs – the environmental aspect.
Has anybody done a research about the environmental impact of tearing down a perfectly functional building ? Are buildings in SG built only to last about 20-25 years (sometimes even less)?
While a lot of awareness is being created about plastic waste and environment consciousness has increased lately, don’t you think enblocs of buildings which are good enough to be used for many more years creates a massive environment disaster by wasting massive resources? Land is scarce in SG and property prices are among one of the world’s highest. We import all our sand, most building material and even labour from abroad, making the prices even higher. Does it then not make sense to bring about changes in the system and curb unnecessary enblocs? I can understand the need to tear down and rebuild if the building is old and its not feasible to maintain it. But tearing down buildings that are structurally sound and with no major leakages or other problems, is beyond me.
Please share your thoughts on this topic too, would love to hear your point of view.
Thanks.
Thanks for your comments.
I have already touched on the environmental aspect of collective sale in my earlier blog post back in 2011. Read “En bloc the Singapore Way (part III)” under “What about the environment?” at https://www.propertysoul.com/2011/06/24/en-bloc-the-singapore-way-part-iii/
Read also “Too much of anything is a waste” at https://www.propertysoul.com/2016/05/18/too-much-of-anything-is-a-waste/
I also talk about the same issue in my book “No BS Guide to Property Investment”.
Economic growth is a priority of the Singapore government. Environmental protection is not. Singaporeans are not big fans of the topic. We don’t talk about how to live in harmony with the environment (which is the living principle of Canadians and most Europeans). Just look at the number of plastic bags generously given out by NTUC Fairprice every day. This won’t happen in Japan, Taiwan, Hong Kong, or even Malaysia.
The enbloc rules are clearly tipped against the minorities. As an individual citizen you buy your property with your own hard- earned money, but 80% of your neighbours ( and they could be foreign speculators and non citizens) are given the right to sell off your property without your approval. This is “uniquely Spore!”
What is worse, your financial fate is dependent on the motley group of people that forms the CSC. They are the ones who will make decisions on the sale of your property and in the case of a private treaty negotiate with the buyer/developer. Are there any qualifying criterias set for those wanting to be on the CSC ?
The CSC is made up of owners in the estate and could range from a housewife, temple medium, clerk or saleman or a businessman owning multiple units in the estate.
So your financial fate is dependent on your CSC? And many CSCs are led by the nose by the agents and their solicitors. Now how fair and reliable is this? How many actually understand they are collectively selling LAND and not their individual apartments? How many understand concepts like GFA , plot ratio, PSFPPR and DC and premium top-ups for lease tenure?
Furthermore, the agent can proceed with getting signatures without even doing a proper professional valuation of the estate first. Quite Amazing isn’t it?
And if you are a non signer( and in some cases even if you had signed to sell) you are not privy to the supposed professional valuation obtained simultaneously with the launch of the enbloc, until the deal has been done-be it via tender or private treaty. Only then, you are presented with a hefty package with all the relevant documents including the valuation, when the application to transact the deal goes to Strata Board for approval. Is this fair ?
The CSC gets almost a year to sell your property, but when it is sold you are given only 2 weeks or so to submit your objections after receiving your hefty package of documents. Again is this fair ?
But is fairness a consideration? I cannot believe those involved in making the enbloc rules are unaware of the flaws. Why do I believe so? Because this country is run by the best brains and talents money can buy! So I have to conclude that in my opinion the flaws are there intentionally.
However, there must be a better way of “rejuvenating and redeveloping” land in Singapore, then pitching neighbours against one another acrimoniously in enbloc battles. It certainly does not make for civilised gracious and harmonious living!
I agree with your points. While a collective sale may benefit some looking to cash out for retirement, parting with their home is not worth it for the new and smaller unit owners.
The sad truth is that Singaporeans are brainwashed with the preconception that a successful en bloc sale is equivalent to striking the jackpot. To many of us, the biggest asset we have is the home we are living in. There is no other way that we can make such a big amount in our whole life.
Seeing media reports of en bloc owners laughing all the way to the bank has aroused the greed of other condo dwellers to do the same, with no idea of all the ugly truths behind the scene.