Ravi Chandran
Savills Singapore announced on July 15 that it has brokered the sale of 11 Mattar Road with an adjoining land strip via private treaty.
11 Mattar Road has a combined freehold site of 7,842 sq ft, accommodating 4 existing walk-up apartments of approximately 2,100 sq ft each.
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Conveniently located 250m from the Mattar Road MRT station on the Downtown Line, 11 Mattar Road was sold at $8.52 million representing a land rate of S$776 per sq ft per plot ratio based on the permissible Master Plan gross plot ratio of 1.4. No development charge is payable for the sale of 11 Mattar Road.
Savills said, “despite the current weak property market sentiments, there will always be demand for small private plots near good amenities due to the affordable quantum and more importantly, this is essentially the primary source of landbank replenishment for the boutique developers/contractors segment.”
Mr Paul Ho, chief mortgage officer of iCompareLoan, commenting on sale of 11 Mattar Road via private treaty, said: “the en bloc sale market is hit by the property cooling measures which the government introduced last year. Besides this, the once vibrant market is also silenced by the release of several sites under the Government Land Sales programme.”
He added, “Developers prefer to buy land from the Government Land Sales Programme rather than bidding for collective sales sites.”
“Despite the current property market sentiment, small developments like 11 Mattar Road would be interesting to small developers or individual investors who may have a budget of $20 million or less. As the price is on the low side, risks will also be manageable by the buyer,” said Mr Ho.
En Bloc Sales Process Singapore – A Definitive Step-by-step Guide
The news of the sale of 11 Mattar Road comes hot on the heels of the announcement of the successful en bloc sale of another smaller development, Sophia View. Singapore Realtors Inc (SRI), announced yesterday that it has sold the five-unit development, Sophia View to an individual investor. SRI refused to disclose the selling price of the en bloc sale, except to say that the sale will yield the owner of each unit will get about $2 million.
According to SRI, the buyer is buying the property in his own name and is “keeping his options open”, to evaluate later is he should redevelop the site or apply for change of use. SRI’s co-founder and managing director, Bruce Lye, said, “essentially for this investor, he sees the potential upside of the area and value of the land and is taking a long-term view of the market.”
Any en bloc sale should be concluded with minimal delay and maximum benefit to the owners. Collective sale process takes 20 to 30 months to complete and during this time, the owners typically do not have sufficient funds for down-payment and their CPF OA funds are tied up in the property, hence they cannot buy a new condominium early.
By the time the transaction is completed in 20 to 30 months later, the property prices would have already moved up 10 to 20 per cent. This is already evidenced by sellers of older estate asking higher prices. Hence if the process takes 20 months to 30 months, owners may need to consider the cost of a replacement unit by that time, else they may want to hold up a higher selling price.
One way is to conduct a Collective Sales Agreement (CSA) as well as concurrently collect a “Non Collective Sales Agreement (NCSA)”, so that once a NCSA reaches 20%, the collective sale process is called off. There is really no point to drag on.
The rules are quite onerous and stringent and is governed by the Land Titles (Strata) Act – section 84A. Over the years, additions and amendments by the Ministry of Law to the en bloc law have made the collective sale rules even tighter.
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Mr Ho said that many of the home owners who refinanced their home loans to fixed rate home loans or those with 2 years locked-in or 3 years locked-in period will incur full home loan redemption penalty. This penalty is usually 1.5% of the loan amount. This tends to affect those who have bought their properties in recent years as their loan size tends to be bigger and their corresponding home loan redemption penalty higher.
Mr Ho suggested that if one’s home is at risk of en bloc, the owner could consider a home loan where there is no locked-in penalty, but instead entails a higher housing interest rate cost. The next best option is to look for packages with a waiver of locked-in penalty due to sale of property. Such owners may contact a mortgage broker to assist them to find such packages with waiver of locked-in penalty.
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