You’re living in a fantastic condo – the amenities are amazing and you’re close to everything you need. The only thing missing is that the old property isn’t appreciating in value and you’re not sure if it could be sold in a collective sale (i.e. en bloc)
Or perhaps you’re someone looking for a new place to live but with the caveat that it has some medium term investment potential. In that case a condo with en bloc potential could be the answer.
But isn’t the en bloc fever over? Looking at the total collective sales for 2021 (below), one might think so:
En bloc sales tend to come in waves, and the last peak in 2018 saw a massive total transaction value of over S$10 billion. While 2021 might be an en bloc whimper, it’s good to look into 2022 and 2023 and prepare should the hype for en bloc properties return.
What are the requirements for an en bloc sale?
The most important aspect to starting a collective en bloc sale is to get consensus from residents living in the condo. There essentially needs to be an overwhelming majority of homeowners who agree to a sale.
For properties older than 10 years: a minimum 80% approval from residents.
For properties younger than 10 years: a minimum 90% approval from residents.
After a failed en bloc sale attempt, residents are required to wait 2 years before they can launch another collective sale bid.
7 Factors That Increase a Condo’s En Bloc Potential
1. Land size
While your first instinct might be to go for condos with large land sizes, these may end up being a detriment to developers because of the higher absolute prices. In 2019, Mandarin Gardens, a 1017-unit condo sitting on 1.07m sq ft of land, tried to go onto the en bloc market for S$2.9b. It’s a handsome sum but few developers have the financial might to go for such a buyout.
For condos with smaller land sizes, they have a higher likelihood of falling within developers’ budgets, and pose a smaller investment risk. The Business Times reported in early 2021 that 100-200 units are the sweet spot that developers look out for. Having both smaller land sizes and fewer units will increase a condo’s en bloc potential.
2. Plot ratio
Today’s modern condos are often built to their highest possible level, but this wasn’t always the case 20 to 30 years ago.
Plot ratio, a figure that determines density and gross floor area of a property, was not always utilised to its maximum potential during the construction of older condos.
3. Age of the condo
As condo properties age, so do the facilities and infrastructure. Things begin to break down more frequently despite attempts by the condo management to fix them. Over the years, frustration can start to seep in, and residents begin to contemplate moving to a new home.
Dissatisfaction and yearning for a new home could sway enough residents to hit that 80% (for properties older than 10 years) approval threshold. Generally, the older a property, the higher its en bloc potential. Condo below 10 years of age will require a 90% consensus, which is considerably harder and a newer property will have less maintenance issues than older ones.
4. Accessibility to public transport, expressways
Location has always been a big factor for property purchases and investments, but people love convenience and homes generally sell better when they have a wealth of transport options. Short walking distances to MRT stations, or even better MRT interchanges, can be a strong pull factor.
Multiple bus routes, bus interchanges, and major highways are also important considerations for any developers looking to buy an en-bloc sale. A shorter time needed to walk to a transport hub or less minutes to drive to a major expressway are important features that future buyers of a new development will look out for.
5. Proximity of schools
In Singapore, because of the Ministry of Education’s balloting procedure for primary schools, purchasing a property close to your preferred school is a strong deciding factor. Any home within 1 or 2km of a top-choice primary school would make an en-bloc sale more attractive to developers or future buyers.
If you’re interested in home prices around top schools, check out Ohmyhome first edition of Homes Near Top Schools, featuring CHIJ St. Nicholas Girls School and the attractive properties close by.
6. Future neighbourhood redevelopment
Singapore is continuously renewing, and the Urban Redevelopment Authority (URA) also updates their master plan for different regions. One of the most prominent announcements is the rejuvenation of the Greater Southern Waterfront.
What used to be a major cargo terminal for the Port of Singapore Authority is now being converted into a mixed commercial and residential hub for greater activity on the weekends and weeknights.
Other regions in the current URA master plan include the area surrounding Changi Airport, Woodlands Regional Centre, and the Punggol Digital District. When money and resources are put in by the government, these towns become increasingly attractive to homeowners who are then willing to pay a premium for housing. Developers could see this as an opportunity to snap up en bloc properties and redevelop them into profitable projects.
7. Prices of past neighbouring en bloc sales
A good yardstick to determine en bloc potential is to look at past sales in that property’s immediate vicinity.
Apart from location, look for past collective sales that have similar attributes to the property you’re eyeing. Some factors mentioned above – land size, age and plot ratio – are good to take note of, as then you’ll have an idea of what developers are looking out for.
For example, in 2020, Fairhaven and Sophia Ville in District 9 were sold en bloc for S$62 million. Perched in a quiet area of Mount Sophia and just behind Dhoby Ghaut, it’s a prime area filled with private properties of smaller plot sizes. Their combined gross floor area of 23,828 sqft translated to a selling price of about S$1158 psf.
Then just 3 months later, a collection of houses up on the street on Mount Emily Road were sold en bloc for S$18 million. Since its gross floor area was 16,138 sqft, the selling price was about S$1115 psf. What some may not know is that the freehold property had been on the market since mid 2020 at a higher asking price of S$24 million.
When that yielded no takers, and Fairhaven and Sophia Ville found one at a lower price, that provided a benchmark for the Mount Emily Road holders to peg its selling price to. Their research ultimately paid off.
How to handle tedious research
Here are some developments that launched en bloc attempts in 2021. Take a look at them to see if any suits your investment budget:
Siglap Shopping Centre
Queen Astrid Gardens
Looking for an HDB or private property?
Here’s how you can speed up your home search
Let Ohmyhome’s smart data-matching technology MATCH you with the right home, according to your specific needs. Submit your preferences to us and our algorithm will filter all our available listings based on those, and we’ll WhatsApp them to you once we find a match. We’ll also send you relevant content that you can use for your research and inform your home buying decision, so you no longer have to spend hours searching online for the information that you need.
You can also call us at 6886 9009 to secure an appointment with any of our Super Agents or message us in the chatbox at the bottom, right-hand corner of the screen. You can also WhatsApp us at 9727 5270!