What Is An Enbloc Sale And How It Will Affect You
Farrer Court: the largest Enbloc in size and value to- date
Farrer Court, a former HUDC privatised estate along King’s Road and built in the late 1970s, was successfully sold via public tender for $1.34 Bn in June 2007 to a consortium led by CapitaLand. Each owner of the 618 units received between $2.122m to $2.238m, based on their apartment sizes of between 1,453 to 1,615 sqft.
The Marketing Agent, Credo, appointed in July 2006, took only 7 months to get the minimum 80% signatures to proceed with the public tender.
Before July 2006, each unit was going for $500K to $600K.
The Collective Sale Order was approved by the Strata Title Board in Dec 2007, and by late 2008, most of the owners had handed over their units to the Developer but before first buying replacement homes with adequate remaining funds to finance other plans for their future.
The iconic d’Leedon, comprising 1,715 units (including 12 strata semi- detached houses) attained TOP in Oct-2014, now occupies the former site of Farrer Court.
Background behind Enbloc Sales in Singapore
The first residential property that went Enbloc in Singapore was Cosy Mansions located at Upper East Coast Road in 1994.
Since these early days, Singapore has seen several collective sales waves for residential properties. This is largely attributed to increased population, higher economic growth and changes in plot ratios to optimize limited land resource.
The last Enbloc craze occurred in 2017-2018 with no less than 67 deals accounting for appx $18.8 Bn of Collective Sales.
This has dwindled down significantly after further cooling measures were implemented from 6 July 2018, resulting in no more than $617m of Collective Sales for the entire 2019 to 2020.
Many owners of older strata properties are keeping a close watch on the property market as they aim to capitalize on the opportunity to realize capital gains when their properties are successfully Enbloc as they will be able to find newer replacement homes and set aside some of the gains to fund their lifestyle. They are aware that with depleting landbank, Developers will be on the lookout to replenish and build new development.
There are a smaller but very active minority group of strata property owners who are very comfortable with their existing homes and find getting a replacement home a huge burden as newer homes normally comes with smaller areas and they would also have to get use to the new neighbourhood.
Enbloc sales are governed by the Land Titles (Strata) Act which stipulates the Collective Sales Process and the key role of the Strata Title Board. It is mandatory for Owners to seek STB approval after they have first obtain the requisite statutory majority consent and it is the responsibility of STB to approve the Collective Sales Order or issue a Stop Order. The decision of the STB is final and binding on the parties.
What is certain is that all Enbloc Sales attempts are lengthy and divisive.
The quality of the Owners who make up the Collective Sales Committee is key to making this challenging process more bearable and possibly achieving the best results for the majority affected. They are the individuals tasked with selecting the right Marketing Agent and Legal Advisor to provide them the best advice, work together to galvanise the affected Owners to sign the Collective Sales Agreement and then attract the right Developers to tender and give the best price for their property.