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No takers for many collective sale sites as market cools

Quiet end to record year where $12.5b worth of estates were sold en bloc

MOST collective sale sites put up for tender in recent weeks have closed without any bids.

About 40 estates have been launched for sale since October, but just eight deals were sealed between October and last month, said property firm CB Richard Ellis (CBRE).

‘The end of the year has come early,’ said CBRE executive director Jeremy Lake.

This market cooling comes after a record of about $12.5 billion of collective sales was notched up this year.

That was more than 50 per cent up on last year’s $8.2 billion, CBRE said yesterday.

But developers have become more cautious about buying new sites, amid slowing home sales in Singapore and worries over the United States sub-prime mortgage crisis, property analysts say.

While there is no shortage of home owners keen to go en bloc for the sort of record prices seen for most of this year, the number of sites that have successfully been sold has dropped off significantly in recent weeks – coinciding with slower private home sales.

Figures released yesterday by the Urban Redevelopment Authority showed that 611 new units were sold last month, just a tad more than the 590 new units in October.

That compares with a much higher 1,731 units sold in August, for instance.

Said CBRE Research executive director Li Hiaw Ho: ‘Clearly, buyers have become more cautious in view of the volatility in global stock markets resulting from the sub-prime problems in the US, the smaller number of new launches…and tightened en bloc sales rules.’

A new set of collective sale rules kicked in on Oct 4.

In the weeks before that, a wave of potential sellers rushed to go en bloc to avoid the more time-consuming rules. But even some who managed to launch sales under the old rules have not succeeded in closing deals.

Big sites such as Spanish Village in Farrer Road, Villa delle Rose off Holland Road and Elizabeth Towers in Mount Elizabeth all had no takers at the close of their tenders recently. Their indicative prices were $878 million, $700 million and $673 million respectively.

The tender for former Housing and Urban Development Company estate Chancery Court on Dunearn Road also closed earlier this month without any bids. It had an indicative price of $468 million.

The freehold Royalville off Sixth Avenue – with a guidance price of up to $350 million – also failed to attract bidders. Others with unsuccessful tenders include Dunearn Gardens, Cavenagh Gardens, The Village, Amber Glades, Grange Heights and Thomson View Condominium.

‘There are developers who still want to buy but the problem is that some owners are expecting obscene, skyhigh prices,’ said an industry observer.

‘The lull may continue for a while into the first quarter,’ said Credo Real Estate managing director Karamjit Singh.

He said developers have already acquired quite a lot of sites. ‘They don’t need to take extra risks by buying at today’s level unless they believe that there is further upside at current levels.’

Knight Frank’s managing director Tan Tiong Cheng said: ‘Singapore definitely looks very positive… But this external sub-prime problem will affect local and foreign buying so everyone will exercise caution.’

‘Long-term fundamentals still look good… Buying interest should return from mid-January when people return from their holidays,’ said Mr Ku Swee Yong of Savills Singapore.

Others, such as Mr Tan and Mr Lake, believe activity will pick up after Chinese New Year in February.

 

Source: The Straits Times 18 Dec 07

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