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Few landed collective sales done even in boom times

Experts say the selling process for houses is trickier than for condos

COLLECTIVE sales were all the rage for a large part of this year – but few were for landed homes.

They are not the easiest of deals to close, but DTZ Debenham Tie Leung managed it two weeks ago when it brokered the sale of 15 houses in the Balestier area for $61 million, a record price for the area.

The houses lined both sides of a road, which was also proposed as part of the sale. The entire area will give a sizeable combined site of 32,978 sq ft.

But such large tracts with a high redevelopment potential are hard to come by, say property consultants.

Also, for landed homes to go en bloc, every owner must agree to the sale. This is unlike strata-titled condominiums, where a collective sale requires the consent of up to only 90 per cent of the owners.

Getting 100 per cent approval for landed homes, as consultants will tell you, is not easy.

‘The risk is there because you need to have contiguous support,’ said Savills Singapore’s director of investment, Mr Steven Ming. ‘You may work on a row of houses only to find that one or two houses in the middle refuse to sell.’

Another dampener is that many landed sites come with a development potential of only 1.4 times their size.

This means that they cannot be redeveloped into large properties, limiting a developer’s potential profit.

Even if a large development is allowed, the developer would likely need to pay a large fee to the Government in order to proceed.

‘This takes out some of the gains for the owners,’ said an industry observer, ‘and, thus, it is often not worthwhile for consultants to work on the sale.’ Hence, some of these sales are done by individuals or smalltime developers, he said.

Mr Michael French, the managing director of Asia Premier Property Consultants, says it is sometimes easier to sell landed homes en bloc because there are simply fewer owners to deal with than in a condo.

But some owners just refuse to sell. Homemaker S. Tan, who lives in a semi-detached house in Telok Kurau, says she has been approached by agents asking her and her three neighbours to sell collectively.

She is not keen, unless all her neighbours agree. ‘We like this place… It is convenient for my children.’

Replacement cost is also an issue. ‘Even if they pay a bit higher, we can’t buy another house with the same location and size,’ she added.

In Prome Road is an example of what happens when not everyone agrees to sell. A row of houses has been sold en bloc, but a few others will be left standing.

An 80-year-old retired teacher who lives in a three-storey terrace house with her family is staying put.

She did not participate in the August collective sale of a stretch of old, single-storey houses in the street because she did not think the apportionment of proceeds was fair. ‘I paid a lot of money to build this house. It’s much bigger inside, so we should get more money than the rest,’ she said.

When confronted with owners such as these, developers tend to build around or next to these houses. That can leave a single house standing, incongruously, next to a five-storey development.

 

Source: The Straits Times 3 Dec 07

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