How to Spot En Bloc?

📌 4 Great Tips to Assess Your Next Purchase for En Bloc Potential

Today is the 14th of August and for the past two weeks, I’ve seen three articles on en bloc. Are we seeing a new wave of en bloc in Singapore, and how do you spot the next en bloc?

On the 29th of July, Business Times reported that Flynn Park in Pasir Panjang tries for en bloc sale again. This is a Freehold site that was TOP in 1986.

On the fifth of August, Siglap shopping centre is on sale again. It is a Freehold site, mixed development.

International Plaza, a very old commercial building also attempts en bloc. Are we seeing a new wave of en bloc in Singapore? For investors, how to spot en bloc potential when identifying your next purchase?

These are my 4 observations on how to spot en bloc potential.

📌 Small to medium sites are preferred by developers

Flynn Park is a mid-sized land with about 72 residential units.

For Siglap Shopping Center, it is also a small site with only eight commercial units at level one and eight residential units on the second and third storey. In these post-Covid times, while developers are hungry for land, they also have to be concerned with rising construction costs as well as a shortage in labour. So I think small to medium sites are preferred by developers at this moment.

📌 Look for condos or projects that have gone through two or three collective attempts

Siglap Shopping Center, and Flynn Park both went thru one failed attempt last time. So now they’re into a second attempt. I’ve never been on the en bloc or collective sales team as an agent before, but I’ve been thru an attempt as an owner,

I own an investment unit in East Point Green condo on the east side, near Simei MRT. We had an en bloc attempt about 2 years back, but I did not bother to go down to vote because that was the first attempt and from my chitchat with other co-owners, I felt that being the first attempt, they have very high expectations of the price. So I doubt that will go through. So, I didn’t bother to go and vote during that time.

From my own unofficial observation & experience, I think you need at least two or three times to go through. By the second or third attempt, I think most people will have a more realistic idea of what price to fetch and that will give you a better chance to put through.

📌 Majority of private condos go en bloc before their 40th birthday

Few condos remain from the 1970s. Those people who live in the West probably are familiar with this project called Pandan Valley, which TOP in 1978, or Valley Mansion, a small condo in Oxley road.

As you can see from the pictures in the slides, these old condos have been through times and the exteriors are becoming less appealing because of old age and old school design.

Also, they’re troubled by maintenance issues.

This is a quote from the article, Flynn Park in Pasir Panjang tries for en bloc sale again. Flynn Park is getting older and there are more maintenance issues. So it’s going to cost more to repair or to maintain the whole project.

📌 Property goes through a high and low cycle

In Singapore, property will always go thru a high and low cycle because supply is inelastic. It takes about three to four years for the developers to finish the project. So supply is always lagging behind demand. When demand is high, and there are not enough government land sales, the developer will look for land themselves.

As you can see from the record bids made for the Tampines site, which is an EC, as well as the Lentor central site. The land cost for these Tampines EC is about $603 per square foot. The estimated selling price is about $1,250 per square foot.

These are estimates.

For the Lentor central land bid, the estimated selling price is about $2,000 per square foot. When there are record bids for these lands, you will attract the developers to search for lands around this area and attempt en bloc for those old resale condos. Because as the price between the new condos and the old condos widened. That means there’s a margin for profit.

Also, another observation is that there seems to be more interest in mixed development sites. This is a quote from an article, Lentor site winning bid is 30% higher than Tanah Merah Kechil link site, a mixed development site beside Tanah Merah MRT. This was sold in September 2020.

Lentor central site is a mixed development site next to the Lentor MRT, it seems to me that there’s more interest in mixed development sites, probably because of the success of the Pasir Ris Eight launch.

📌 4 Great Tips on How to Spot En Bloc Potential

So to summarise this article, these are the 4 tips on how to spot en bloc potential:

• Small to medium sites are preferred by developers
• look for condos or projects that have gone through two or three collective attempts
• Look for private condos reaching their 40th birthday
• Watch the property market for high and low cycles

Alright, that sums up my four observations. If you’re different views and opinions, feel free to comment on them in this post and on the website!

Update: The Straits Times released another article on 10 Sep. Flynn Park in Pasir Panjang sold en bloc for $371 million.

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