The sums are small compared to the en bloc frenzy of 2017 and 2018, when transaction values totalled S$8.3 billion and S$10.3 billion respectively, said Mr Wong.

However, the stirring of activity could be the start of more to come, with analysts pointing to multiple signs of a collective sale revival in the next year or two.

FALLING INVENTORY PUSHING DEVELOPERS TO SHORE UP LAND BANKS: EXPERTS

For one, developers are running out of stock, analysts sasid.

“Current unsold inventory has continued to fall and currently stands at 26,600 units as at Q3 2020,” Mr Wong said.

“The start of the previous en bloc cycle was in 2Q 2016, when inventory fell to 23,300 units… That can sort of serve as benchmark to the point at which developers would start looking for land,” he said. 

In addition, many of the existing launches are from the previous en bloc cycle during 2017 to 2018, said Professor Sing Tien Foo, the director of the Institute of Real Estate and Urban Studies at the National University of Singapore.

Developers must finish selling their projects within five years to get back part of the stamp duties they pay, so their deadlines are coming up around 2022 or 2023, he said.

Prof Sing added that that would mean developers need to start shoring up their land banks to plan for future projects, and en bloc sales are a “quick way” to do that. 

The experts also pointed out that recent tenders under the Government Land Sales (GLS) programme have been hotly contested, such as a plot at Tanah Merah Kechil Link that drew 15 bidders.

The supply from the latest GLS programme is also still “conservative”, which is likely to renew interest in the collective sales market, said Mr Ong Teck Hui, senior director of research and consultancy at JLL Singapore .

 “The GLS supply is very competitive and there are many eyeing it. For smaller developers, it’s a bit harder to compete, so they may go for en bloc sites as an alternative source,” added Prof Sing.

Huttons Asia’s head of research Lee Sze Teck said developers might also turn to the collective sales market for more “variability” in location, given that the sites under GLS are “a bit concentrated in a few areas”.

However, JLL’s Mr Ong said any likely interest in the collective sales market would not match “the extent of the fervour seen in 2017 and 2018”, due to more economic uncertainty.

WHO WILL BENEFIT FROM THIS?

Smaller developments are likely to be the first to benefit from heightened interest in the en bloc market, the experts said.

“The cooling measures like the Additional Buyer’s Stamp Duty and the non-remissible component increase developers’ costs upfront,” said Huttons’ Mr Lee.

“That’s why they would not want very big sites that come with over a thousand units (which are more expensive) … The risk of not selling out is also higher,” he added.

Instead, developers would eye small to medium developments with fewer than, or about 200 units, said Prof Sing.

“That’s also something that’s easier to organise collective action for.

"Compare getting 160 people to agree to a sale, to a project with 500 units where you need 300 people to agree,” he said.

POSSIBLE INCREASES IN LAND PRICES

While this could be good news for owners looking to sell, the return of the en bloc market could also drive up overall land and property prices, the analysts warned.

“Developers have to entice current owners to sell en bloc, so they have to offer something that’s better than what they get if they sell individually on market,” explained Huttons’ Mr Lee.

That will feed into the cost of whole equation, he added, so when the new project is launched, the developers will charge higher prices for the units.

“There’s an increase in prices because of the intensification of land use. You also replace it with a new structure so it costs you more,” Prof Sing said.

He added: “New developments may also attract more amenities to an area, which leads more people to move there and then raises demand and prices for a location.”

Subsequently, owners from other developments may then take reference from these higher selling prices when they choose to resell their units or go en bloc too, feeding a cycle of rising prices, said Cushman & Wakefield’s Mr Wong.

Should that happen, Prof Sing cautioned that price increases must be carefully monitored, to ensure they do not fall out of line with economic fundamentals and the market's health.

Source: CNA/cl