Many Singaporean property owners think of en bloc sales as 4D or Toto, but with better odds. But the reality is a little more complicated.
Here’s a guide to everything en bloc in Singapore so you can understand what it is (and isn’t), how to spot en bloc potential, and what happens in a collective sale. (Updated with the 2018 property cooling measures.)
What exactly is an en bloc sale & how does it happen?
En bloc (pronounced “on block”) is a fancy French term for “collectively” or “all together”. In other words, an en bloc sale means collective sale.
In Singapore, en bloc sales refer to property sales. Specifically, when the residents of an older property development sell their homes all at the same time to a buyer (typically a property developer, but sometimes the government).
Selling your property in an en bloc sale is VERY different from a normal resale, i.e. just selling it to some guy who saw your ad on PropertyGuru.
|En bloc sale||Normal resale|
|What is being sold?||Entire property, including the land||Just one unit|
|Who is selling?||Almost every owner in the entire development (at least 80%)||Owner of the unit|
|Who’s the buyer?||Property developer or government||Regular property buyer like you and me|
|Sales process||Long, takes up to 2 years||Short, as soon as buyer and seller agree|
|How much money you can get||Higher than resale market value||Market value|
For a start, there must be a certain degree of consensus between the owners in your residential development.
For private residential property that’s 10 years and older, owners holding at least 80% of the share value of the property must agree to the sale. If the property is less than 10 years old, 90% must agree.
The en bloc process takes way longer than a resale. You might have to wait up to 2 years for the sale to be finalised and to receive your proceeds.
But you’d generally receive more than the property is worth on the resale market, as developers tend to purchase at a premium. If you bought your property a long time ago when prices were lower, you will probably make a huge profit.
Why are en bloc sales more lucrative than regular resale?
An en bloc sale happens when a developer wants to buy up the land on which your property stands. These developers think they can make more money out of the land than what they’re paying for it.
So if you’re living in an old condo where each block is only 5 storeys high, you’ve got a good chance of going en bloc, as developers can demolish existing blocks, build 25-storey towers in their place and make more money.
But to do that, they will need most of the residents to agree to sell their homes to them in a collective sale.
Now this is the tough part. Obviously, residents aren’t going to want to sell their homes for peanuts. You wouldn’t happily vacate your home just for the price of an ordinary resale unit, would you? Don’t forget you’ll also have to spend some of the proceeds to buy a new place.
So, to convince you to give up your precious home, developers hungry for your land will offer very attractive prices for en bloc sales.
… At least, that was the case until July 2018, when the government imposed a new 5% stamp duty for en bloc sales as part of their property cooling measures. This means hopeful developers would now need to pay 5% of the selling price to the government. And when you’re talking about selling prices of hundred of millions of dollars, that’s not an easy pill to swallow.
To no one’s surprise, developers have pretty much stopped making offers left-right-centre since the cooling measures kicked in. The next section will show you in greater detail what happened.
List of en bloc sales in 2018 & 2019
Here’s a list of en bloc sales that happened in the first half of 2018. Check out how much people have been getting for their homes last year:
|Development||Sold in||Total amount sold for||Each owner will receive|
|Park West||Jan 2018||$840.9m||$1.2m to $2.3m|
|Kismis View Condo||Jan 2018||$102.7m / $941psf||$1.6m to $3.3m|
|The Wilshire||Jan 2018||$98.8m / $1,455psf||$3.76m to $7.46m|
|City Towers||Feb 2018||$401.9m / $1,847psf||$2.78m to $11.5m|
|Pearl Bank Apartments||Feb 2018||$929.4m / $1,515psf||$1.2m to $6.9m|
|Riviera Point||Feb 2018||$72m / 1,461psf||Info not available|
|Cairnhill Mansion||Feb 2018||$362m / $2,312psf||Info not available|
|Brookvale Park||Feb 2018||$530m / $932psf||$2.5m to $4.4m|
|Hollandia||Mar 2018||$183.4m / $1,703psf||$3.3m to $4.2m|
|Toho Mansion||Mar 2018||$120.4m / $1,805psf||Info not available|
|Goodluck Garden||Mar 2018||$610m / $1,100psf||$924,000 to $3.51m|
|Eunos Mansion||Mar 2018||$220m / $1,118psf||$1.48m to $4.7m|
|Lotus at Jervois||Mar 2018||$463m / $1,373psf||Info not available|
|Katong Park Towers||Mar 2018||$345m / $1,280psf||$4.95m to $12.08m|
|Pacific Mansion||Mar 2018||$980m / $1,806psf||$3.26m to $4.5m|
|Makeway View||Mar 2018||$168m / $1,626psf||Info not available|
|Fairhaven||Mar 2018||$57m / $1,629psf||$3.5m to $6.9m|
|Ampas Apartments||Mar 2018||$95m / 1,073psf||Info not available|
|Cairnhill Heights||Apr 2018||$72.6m / $2,045psf||Info not available|
|The Estoril||Apr 2018||$223.9m / $1,504 psf||$4.6m to $9.95m|
|Tulip Garden||Apr 2018||$906.9m / $1,709psf||$4.3m to $7.6m|
|Asia Gardens||Apr 2018||$338m / $1,722 psf||$3.746m to $7.73m|
|Dunearn Gardens||Apr 2018||$468m / $1,914psf||$2.69m to $7.98m|
|Olina Lodge||Apr 2018||$230m / $1,712psf||$3m to $5m|
|Cuscaden Road GLS||Apr 2018||$410m / $2,377psf||Info not available|
|Mattar Road GLS||Apr 2018||$223m / $1,109psf||Info not available|
|Silat Avenue GLS||Apr 2018||$1,040m / $1,138psf||Info not available|
|Holland GLS||Apr 2018||$1,213m / $1,888psf||Info not available|
|Chancery Court||May 2018||$401.8m / $1,610psf||$934,000 to $4.7m|
|Chinatown Plaza||May 2018||$260m / $1,915psf||$1.64m to $10.62m|
While 2018 was a “blockbuster” year for en bloc sales, most of them happened before the cooling measures kicked in in July 2018. After that, only 2 en bloc deals have gone through.
|Development||Sold in||Total amount sold for||Each owner will receive|
|Phoenix Heights||Aug 2018||$33.1m||Info not available|
|Tulip Garden||Jan 2019||$906.9m||$4.3m to $7.6m|
Before you freak out, it’s not that there’s absolutely no interest in en bloc sales anymore.
In this case, what’s been happening is a whole lot of haggling. Many of the original asking prices that the sellers asked for are too high for developers to swallow, now that they have to factor stamp duty into their costs. So, developers are trying the ol’ “can nego?” trick with sellers. It’s just that transactions of this scale take a lot of time to go back and forth between buyer and seller.
How do you know if a property has en bloc potential?
In brief, here are some indicators that your home could very well go en bloc some time soon.
Has there been a sharp rise in land and property values in your area? This typically happens when there’s an exciting new development or new MRT station in the works, and everyone’s scrambling to be a part of it. Property developers might be hungry for a slice of the profits too, and would be looking for land plots in the area with potential.
Is your home one of thoseless intensively built properties that haven’t squeezed every square inch of available land? Older properties, especially, tend to have large common areas and low rise blocks. There’s nothing a developer would like more than to raze it all down and build densely-packed 30-storey towers.
Another thing to think about is whether there is alternative housing in the neighbourhood. If you live in private property, your neighbours are more likely to agree to the sale. If you’re an HDB flat owner, it’s easier for the government to relocate you.
On the other hand… if your development is extremely large in terms of land space, it could be too very expensive for developers to afford, even if your area shows promise and the land is not fully efficiently utilised.
What happens if your home is selected for en bloc?
For private homes, en bloc sales can be initiated by residents OR an interested developer. The entire process takes about 1.5 to 2 years.
Once the wheels are set in motion, a committee has to be set up, comprising owners in the development. If you really, really want the sale to go through and think you have good powers of persuasion, you might want to nominate yourself as a committee member. The committee will then try to convince residents to agree to sell their home.
If there are enough people who agree to sell (80% if the property is 10 years old and up, 90% otherwise), you will sign a Collective Sale Agreement. Now, if there’s an eager developer on the horizon waiting to swoop down and buy your property, that’s great – you can effect the sale.
If not, the sale committee will attempt to find a buyer through a public tender exercise. Developers bid for the site, and when one is selected an application for the en bloc sale can be made.
Around this point, owners prepare to vacate their units and shop around for a new property if necessary.
While you have quite a bit of time before you’ll actually have to move house, you should start looking around for a new home as soon as possible. This applies even if you don’t actually want to go through with the en bloc sale — because unfortunately, if you’re outnumbered, it’s going to happen whether you like it or not.
The entire sale transaction takes at least a year to complete. Proceeds from the sale are usually distributed at least 6 months after completion.
Will you definitely make money with an en bloc sale?
En bloc sales tend to happen to pretty old buildings, so there’s a higher chance that owners have been living there a long time and bought the property when it was worth a lot less.
But that doesn’t necessarily mean you’ll become an overnight millionaire, especially considering you’ll have to buy a new home. While developers usually offer a pretty good price, it is the owners’ responsibility to benchmark that price against what they can get for their units on the market.
Also, remember that en bloc sales take time to be completed. In that timespan of 1.5 to 2 years, the market can change significantly. Property prices can fluctuate quite a bit, and you don’t want to find yourself in the position where you’re unable to get a new home at a good price.
In addition, there are some unlucky situations in which you might enjoy little to no capital gains, such as if you only bought the unit recently.
Is en bloc the same thing as SERS?
The Selective En Bloc Redevelopment Scheme (SERS) is HDB’s version of an en bloc sale. Whenever HDB property is repurchased by the government for redevelopment, it will be acquired by the owners through the SERS. They will effectively be returning their homes to the HDB in exchange for compensation.
SERS differs from a private en bloc sale in the following ways:
SERS owners will be compensated for their flat at market value, taking into account the cash-over-valuation (COV). By contrast, private en bloc sellers are usually compensated at above market value, so the potential for turning a profit is a lot higher.
Sellers will be guaranteed a new home at a replacement site with a fresh 99-year lease not far from the flat they’re giving up. This flat will be made available to them at a subsidised price of about 20% lower than market value. In reality, they might end up paying even less if they are eligible for CPF housing grants! In a private en bloc sale, sellers do not get any help purchasing a new home.
The SERS process takes an even longer time than a private en bloc sale, from the day you are notified of the sale to when you have to actually move out of your home.
What are the implications of this spate of en bloc sales?
As you can see above, there’s been a dizzying number of en bloc sales in 2017 and 2018. This flood of newly-minted millionaires, flush with cash and looking for new homes to buy, has caused property prices to go up.
Needless to say, that’s bad news for everyone who’s trying to enter the property market. Even if you don’t own any property to speak of, you might feel the effects when you finally decide to buy one. Singapore is already known for crazy high property prices, and this just makes it worse.
The property cooling measures of 2018 have been quite effective (in the short term) in quelling this demand.
Although they’ve undoubtedly pissed off both “en bloc millionaire” hopefuls and property developers, the net result is more affordable housing prices across the board, which is, you know, crucial for social stability.
That said, land will always be a sought-after commodity on our little island, so it’s probably just a matter of time before appetites for en bloc sales recover.
Have you ever sold your property in an en bloc sale? Tell us about it in the comments!
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