Investment potential property in Geylang up for collective sale

new en bloc

Conveniently located on the fringe of Singapore’s CBD, Baode Building enbloc may be viewed as an investment potential property

investment potential property

Colliers International announced on 13 December that they will launch the collective sale tender of Baode Building at 8 Lorong 35 Geylang on Tuesday, December 14, 2021.

Baode Building is for sale at an indicative price of SGD27 million, which translates into an estimated land rate of approximately SGD1,007 per square foot per plot ratio (psf ppr) or SGD990 psf ppr, after factoring in a 7% bonus balcony gross floor area.

Baode Building is viewed as an investment potential property

The single eight-storey residential building currently houses 14 units and sits on a site area of 1,031.4 square metres (approximately 11,102 square feet). Under the Urban Redevelopment Authority’s (URA) Master Plan 2019, the site was zoned for residential or institutional use, with a gross plot ratio of 2.8 and an allowable height of up to eight storeys.

This coveted freehold site is strategically located on the fringe of Singapore’s Central Business District (CBD). It is connected by the Pan Island Expressway and Kallang-Paya Lebar Expressway, which link to other parts of the island, including prominent locations like Bugis and the Kallang Sports Hub. The site is also well-served by the Paya Lebar MRT interchange station in its vicinity, which links the MRT East-West Line and Circle Line.

An array of dining, retail and entertainment options are also readily accessible at the nearby malls, including the PLQ Mall, Singpost Centre, and Paya Lebar Square. Additionally, Kong Hwa Primary School and Geylang Methodist Primary School are within a 1-kilometre radius of the site.

Surrounded by green spaces, joggers and cyclists will be able to utilise the Geylang Park connector to arrive at the Gardens by the Bay through the Tanjong Rhu Promenade. The nearby recreational facilities, such as the ActiveSG Swimming Complex and the public library, are also only a stone’s throw away. Healthcare centres like the Kallang Polyclinic, adjacent to the redeveloped Kwong Wai Shiu Hospital, is only a 10-minute drive away.

Pearl Lok, Collier International’s Director for Capital Markets & Investment Services in Singapore, said: “This attractive site is situated near the Paya Lebar precinct, where the URA Master Plan had marked out to develop Paya Lebar Central into a bustling commercial hub. Developers could capitalise on this to reposition the asset to tap into the potential demand for new residential units from a growing working population.”

“Given its strategic location in proximity to a myriad of amenities available in the nearby Paya Lebar Central precinct, as well as the highly accessible and well-connected transport network, the site would also be an ideal real estate investment for future buyers of the new residential project,” she added.

The collective sale tender for this investment potential property will close at 3pm on January 18, 2022.

Mr Paul Ho, chief mortgage officer at iCompareLoan said, “next year the developers may shy away from most en bloc offering because of the new cooling measures. But Baode Building may be the investment potential property that some investors may be eyeing. This is because it is a relatively smaller development. It is also in a good location.”

Homeowner affected by enbloc must act quickly. Whatever decision owners facing en bloc sale make, it is better to make it fast so that the sale (or non-sale) can be concluded with minimal delay and maximum benefit to the owners. One way he said was 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.

As collective sale process takes 20 to 30 months to complete, 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.

Mr Ho pointed out that 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.

He 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 people affected by en bloc sale must read up on its process. 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.

Written by Ravi Chandran

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