Singapore | Investment AUGUST 201 4 Te Collective Sales Market - Boom or Bust? LEONARD TAY Associate Director, Research & Advisory CARISSA CHIN Assistant Manager, Research & Advisory During the 1990s, whenever a strata-titled development resolved to go the “collective sales 1 ” market or en-bloc route, it was like hitting the proverbial jackpot. Having a home or a place of business go en-bloc was almost always associated with overnight riches of the exponential kind, wher e luck or fate or destiny suddenly seemed to smile upon ordinary folk through no effort on their part. And the windfall (or super- normal profits, or fortuitous gains), was indeed substantial in those days. Naturally so, as each revision of the Master Plan (in five-year intervals) designated increases of plot ratios 2 across the board in Singapore and rezoned the land use of various sites islandwide. With the intensification of development potential and change in land use zoning for many sites, some 20 years ago, it was no wonder that developers were willing to pump in what seemed like astronomical sums , many times the value of what property owners would get if they were to sell individually on the open market. Tis was the case for many private residential developments in the Ce ntral Region of Singapore, such as those in t he Newton and Novena areas. However, much has changed since those heady days of striking the en-bloc lottery. Fast forward some 20 years and the collective sales market appears to have come to a standstill in 2014. Te Master Plan, from 2003 onwards, has not had the same magnitude of plot ratio increases as before, and therefore the type of premium devel opers were prepared to pay in the past has shrunk with time to more moderate levels. Many rounds of Government policy measures to curtail speculative real estate activity and to foster financial prudence have also taken much of the froth out of the property markets and consequently the steam out of collective sales activities. Tese reasons combined with perceived challenges by owners in replacing sold en-bloc units with the proceeds from the collective sale, a pervasive tentative wait-and-see herd mentality, and lacklustre interest from developers who have otherwise turned towards the Government Land Sales (GLS) Programme for their source of development land, have made for an anaemic collective sales market in 2014. Tus far, from January to July 2014, not one single real estate investment sale has succeeded in the collective sales route. Tis has raised questions of whether the way of collective sales has had its day, and is now no longer relevant in Singapore’ s real estate landscape. Is the collective sale still a useful and meaningful method of transaction in the mature and developed Singapore of today?
5 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
Owners of offices retail stores medical suites or a combination
of these types of properties in either a strata-titled single-use
or mixed-use development might also wish to consider the en-
bloc route for similar reasons of practical disposal and renewal
Commercial users of strata-titled buildings sometimes are
reluctant to agree to a collective sale citing reasons of legacy
where their clients and customers will still extend their
patronage due to the familiarity of the location and the building
no matter how old or decrepit the property becomes However
locational goodwill is more pertinent for strata-titled property
owners of retail shops which are more location sensitive
than office and medical suite owners Businesses and clinics
relocate regularly with comparatively less impact compared
to retail shops as the brand or reputation of these businesses
and medical practitioners play a more important role than
an existing goodwill associated with a building or location
in supporting their business so long they do not relocate to
inaccessible remote areas
Terefore strata-titled property owners of commercialbuildings would need to also consider that a buildingrsquos lifespan
is finite and everything falls apart with time and neglect A
point will eventually be reached when the building services
mechanical electrical other utilities and finishes will one day
become obsolete with the resolute passing of time Despite any
ownerrsquos sentimental attachment to a place of business practical
functionality will one day overwhelm whatever locational
goodwill a building enjoys in the form of a loyal customer
base Such sentiment can also be dislodged by the often
capricious vagaries of fate as circumstances change and former
fundamentals are rendered moot with countrywide progress
and societal evolution Again the collective sales route offers a
practical way out
Te office and retail owners of the former Midlink Plaza
successfully disposed of the ageing commercial building
in 2011 with the new owner redeveloping the site into a
hotel Te strategic sale consolidation under a single owner
and redevelopment with a modern and updated use that is
complementary to the locality has benefited not only the sellers
but also the buyerdeveloper and the neighbourhood
In the same vein other strata-titled buildings especially in the
central areas can also harness the collective sale route Strata-
titled retail buildings have a tendency to be characterised by a
lack of tenant-mix control Individual owners will let or sell to
the highest paying lessee or buyerinvestor with little regard
as to how the incoming entityrsquos business is going to impact the
other tenants in the building Te increase in incompatible
trades sometimes side by side can potentially increase the
level of conflict among neighbours and create a disjointed
disharmony of unlikely trades within the shopping complex
Tis dissonance could eventually affect public perception of
the mall as a whole where deferential customer goodwill in the
past might turn to a grudging negative avoidance in the future
Sometimes the different and conflicting agendas can also prove
detrimental to the physical building itself especially in the use
of funds for building improvements Te range of problems
include prompt payment of service charges and maintenance
fees by individual shop owners the appropriate usage of funds
and the need for majority consensus Tis not only involves
funds that can be used for advertisements and promotional
campaigns to increase the profile of the entire shopping
complex but also for more basic building maintenance and
improvement issues Te collective sale avenue presents a
practical exit for owners of such ageing buildings in the mannerof Midlink Plaza and Serangoon Plaza Owners of Te Arcade at
Collyer Quay also made a positive attempt to blaze the en-bloc
trail even though it was unsuccessful
Individual owners to
exit an ageing buildingas well as find and fundalternative premises thatbetter suit the needs of
their businesses
The neighbourhood togenerate more tourist
activity
The buyer
developer tocreate economic
value throughredevelopment
The neighbourhoodto progressively
rejuvenate
Peace Centre amp Peace Mansion Another attempt on the way after two failed collectivesale attempts Out of place ageing building in an area undergoing renewal
Tis Midlink Plaza collective sale provided opportunities for
Te Arcade Failed collective sale at high asking price
6 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
For example in Orchard Road there is little land from the
Government for fresh development Terefore it will be the
ageing strata-titled malls that have the best potential for
redevelopment in order to contribute to the continued renewal
of Singaporersquos premier shopping belt Instead of waiting for
the proverbial ldquopot of goldrdquo that may or may not materialise
before the building reaches a stage of terminal disrepair strata-
titled shop owners could at least give some consideration tocollective sales as a way to move on and upgrade their business
environment
recurring income as well as other non-tangible benefits Tis
could include personal enjoyment of a property that does not
require the hassle of repeated repairs and peace of mind in a
newer upgraded environment
It is inconceivable that buyers (developers and landlords)
are going to pay anywhere close to outrageous sums for
development land unless it makes economic sense As real
estate development becomes more competitive and intense
with Singaporersquos urban progress developersrsquo appetite for risk
will moderate to become more conservative Sellers need to
attempt to understand and appreciate that developersbuyers
ndash both now and in the foreseeable future ndash require a higher risk
discount to mitigate the magnitude of property development
in modern Singapore Because if the price is fair and in a range
that the developer stands an even chance at a decent profit
activity will return to the collective sales market
And in the end while nobody really wins in a big dramatic
fashion everyone does benefit in a fashion Individuals
obtain proceeds that are generally better than if they were tosell individually and thereby are able to fund a replacement
property that still has a reasonable length of economic and
functional life Buyersdevelopers continue to be able to obtain
the raw material needed for their development business
Communities are routinely renewed as old buildings make way
for functional up-to-date modern ones And on an islandwide
basis even the privately owned areas of Singapore would be in
a continual state of revitalisation without any neighbourhood
becoming jaded with obsolete properties
Te collective sales route is still relevant and can still be
meaningful for owners and developers despite the changes in
the real estate market in the last 20 years What is most needfulin order to harness the usefulness of the collective sales method
with present circumstances is a paradigm shift of perception
and mindsets Sellers must accept within their collective (no
pun intended) mindsets that making a sudden windfall from
chance is a thing best filed in the annals of history Te way
forward for collective sales should be that of a practical method
of disposal for an ageing asset that is past its functional prime
While not everyone can win big allthe time everyone benefits fromrenewalhellip
Sometimes owners do not wish to sell for sentimental reasons
having formed an indelible bond with their property over a longperiod of time And while this attachment is understandable
the other general perceptions motives and mindsets about
the collective sales market will have to change as Singaporersquos
real estate market evolves and matures If the herd mentality
towards collective sales remains one where sellers expect to
strike it rich in one lucky twist of fate the current impasse
between buyers and sellers will continue with no one
benefiting Eventually this will result in a growing number of
buildings developments neighbourhoods and communities
not being able to renew themselves Te standoff will lead to
sellers on one side wanting their windfall and developers on the
other wanting land for their business
Te way ahead will be more practical considered and
reasonable albeit not nearly as exciting nor as intoxicating as it
was in the past
For sellers the collective sales market must come to represent
a method where they can exit their ageing real estate with
a reasonable sum and perhaps some profits on the side
(reasonable profits are no longer defined as earth shattering
bonanzas) Te premium can no longer be as dramatic as that
of the past as plot ratios have not increased in any substantial
fashion in more than 10 years Te collective disposal of an
obsolete and ageing building allows individual sellers to moveon and right size to another property that is more modern
physically functional and that is better yielding in terms of
anglin Shopping Centre Another attempt on the way after previous failed collectivesale exercises at high asking prices
1 According to Strata itles Boards a collective sale is a combined sale by the owners oftwo or more property units to a common purchaser Te most common collective sale isthe sale of all the units in a strata-titled or flatted development to a purchaser Te sale
proceeds are then divided amongst all the unit owners
2 Te ratio of the gross floor area of a development to its site area
3 Te ABSD was introduced by the Government on 8 December 2011 An ABSD ofbetween 3 and 10 is to be paid by certain groups of buyers of residential properties(including land) Te ABSD rates for the purchase of residential properties were laterraised by between five and seven percentage points in January 2013 Besides Singapor-eans buying their first residential property all other groups of residential property buyersare affected by this increase
4 Effective from 29 June 2013 individuals (including sole proprietorships and vehiclesset up by an individual solely to purchase property) will be subject to a otal DebtServicing Ratio (DSR) framework for all property loans granted by financial institu-tions In addition to the 60 cap on a borrowerrsquos total monthly debt payment certainrules relating to the application of the existing Loan-to-Value (LV) limits on housingloans granted by financial institutions were also refined In particular ldquoguarantorsrdquo arenow to be included as co-borrowers and one of the purchasers on the option to purchase
Additionally the income-weighted average (based on gross monthly income) age of allco-borrowers is to be adopted when applying the rules on loan tenure
5 Te pre-agreed minimum price sellers are prepared to sell their properties for
The information contained herein has been obtained from sources deemed reliable While every reasonable effort has been made to
ensure its accuracy we cannot guarantee it No responsibility is assumed for any inaccuracies Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report
About Colliers International
Colliers International is a global leader in commercial real estate services with over 15800professionals operating out of more than 485 offices in 63 countries A subsidiary of FirstServiceCorporation Colliers International delivers a full range of services to real estate users ownersand investors worldwide including global corporate solutions brokerage property and assetmanagement hotel investment sales and consulting valuation consulting and appraisal servicesmortgage banking and insightful research Te latest annual survey by the Lipsey Company rankedColliers International as the second-most recognized commercial real estate firm in the world
5 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
Owners of offices retail stores medical suites or a combination
of these types of properties in either a strata-titled single-use
or mixed-use development might also wish to consider the en-
bloc route for similar reasons of practical disposal and renewal
Commercial users of strata-titled buildings sometimes are
reluctant to agree to a collective sale citing reasons of legacy
where their clients and customers will still extend their
patronage due to the familiarity of the location and the building
no matter how old or decrepit the property becomes However
locational goodwill is more pertinent for strata-titled property
owners of retail shops which are more location sensitive
than office and medical suite owners Businesses and clinics
relocate regularly with comparatively less impact compared
to retail shops as the brand or reputation of these businesses
and medical practitioners play a more important role than
an existing goodwill associated with a building or location
in supporting their business so long they do not relocate to
inaccessible remote areas
Terefore strata-titled property owners of commercialbuildings would need to also consider that a buildingrsquos lifespan
is finite and everything falls apart with time and neglect A
point will eventually be reached when the building services
mechanical electrical other utilities and finishes will one day
become obsolete with the resolute passing of time Despite any
ownerrsquos sentimental attachment to a place of business practical
functionality will one day overwhelm whatever locational
goodwill a building enjoys in the form of a loyal customer
base Such sentiment can also be dislodged by the often
capricious vagaries of fate as circumstances change and former
fundamentals are rendered moot with countrywide progress
and societal evolution Again the collective sales route offers a
practical way out
Te office and retail owners of the former Midlink Plaza
successfully disposed of the ageing commercial building
in 2011 with the new owner redeveloping the site into a
hotel Te strategic sale consolidation under a single owner
and redevelopment with a modern and updated use that is
complementary to the locality has benefited not only the sellers
but also the buyerdeveloper and the neighbourhood
In the same vein other strata-titled buildings especially in the
central areas can also harness the collective sale route Strata-
titled retail buildings have a tendency to be characterised by a
lack of tenant-mix control Individual owners will let or sell to
the highest paying lessee or buyerinvestor with little regard
as to how the incoming entityrsquos business is going to impact the
other tenants in the building Te increase in incompatible
trades sometimes side by side can potentially increase the
level of conflict among neighbours and create a disjointed
disharmony of unlikely trades within the shopping complex
Tis dissonance could eventually affect public perception of
the mall as a whole where deferential customer goodwill in the
past might turn to a grudging negative avoidance in the future
Sometimes the different and conflicting agendas can also prove
detrimental to the physical building itself especially in the use
of funds for building improvements Te range of problems
include prompt payment of service charges and maintenance
fees by individual shop owners the appropriate usage of funds
and the need for majority consensus Tis not only involves
funds that can be used for advertisements and promotional
campaigns to increase the profile of the entire shopping
complex but also for more basic building maintenance and
improvement issues Te collective sale avenue presents a
practical exit for owners of such ageing buildings in the mannerof Midlink Plaza and Serangoon Plaza Owners of Te Arcade at
Collyer Quay also made a positive attempt to blaze the en-bloc
trail even though it was unsuccessful
Individual owners to
exit an ageing buildingas well as find and fundalternative premises thatbetter suit the needs of
their businesses
The neighbourhood togenerate more tourist
activity
The buyer
developer tocreate economic
value throughredevelopment
The neighbourhoodto progressively
rejuvenate
Peace Centre amp Peace Mansion Another attempt on the way after two failed collectivesale attempts Out of place ageing building in an area undergoing renewal
Tis Midlink Plaza collective sale provided opportunities for
Te Arcade Failed collective sale at high asking price
6 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
For example in Orchard Road there is little land from the
Government for fresh development Terefore it will be the
ageing strata-titled malls that have the best potential for
redevelopment in order to contribute to the continued renewal
of Singaporersquos premier shopping belt Instead of waiting for
the proverbial ldquopot of goldrdquo that may or may not materialise
before the building reaches a stage of terminal disrepair strata-
titled shop owners could at least give some consideration tocollective sales as a way to move on and upgrade their business
environment
recurring income as well as other non-tangible benefits Tis
could include personal enjoyment of a property that does not
require the hassle of repeated repairs and peace of mind in a
newer upgraded environment
It is inconceivable that buyers (developers and landlords)
are going to pay anywhere close to outrageous sums for
development land unless it makes economic sense As real
estate development becomes more competitive and intense
with Singaporersquos urban progress developersrsquo appetite for risk
will moderate to become more conservative Sellers need to
attempt to understand and appreciate that developersbuyers
ndash both now and in the foreseeable future ndash require a higher risk
discount to mitigate the magnitude of property development
in modern Singapore Because if the price is fair and in a range
that the developer stands an even chance at a decent profit
activity will return to the collective sales market
And in the end while nobody really wins in a big dramatic
fashion everyone does benefit in a fashion Individuals
obtain proceeds that are generally better than if they were tosell individually and thereby are able to fund a replacement
property that still has a reasonable length of economic and
functional life Buyersdevelopers continue to be able to obtain
the raw material needed for their development business
Communities are routinely renewed as old buildings make way
for functional up-to-date modern ones And on an islandwide
basis even the privately owned areas of Singapore would be in
a continual state of revitalisation without any neighbourhood
becoming jaded with obsolete properties
Te collective sales route is still relevant and can still be
meaningful for owners and developers despite the changes in
the real estate market in the last 20 years What is most needfulin order to harness the usefulness of the collective sales method
with present circumstances is a paradigm shift of perception
and mindsets Sellers must accept within their collective (no
pun intended) mindsets that making a sudden windfall from
chance is a thing best filed in the annals of history Te way
forward for collective sales should be that of a practical method
of disposal for an ageing asset that is past its functional prime
While not everyone can win big allthe time everyone benefits fromrenewalhellip
Sometimes owners do not wish to sell for sentimental reasons
having formed an indelible bond with their property over a longperiod of time And while this attachment is understandable
the other general perceptions motives and mindsets about
the collective sales market will have to change as Singaporersquos
real estate market evolves and matures If the herd mentality
towards collective sales remains one where sellers expect to
strike it rich in one lucky twist of fate the current impasse
between buyers and sellers will continue with no one
benefiting Eventually this will result in a growing number of
buildings developments neighbourhoods and communities
not being able to renew themselves Te standoff will lead to
sellers on one side wanting their windfall and developers on the
other wanting land for their business
Te way ahead will be more practical considered and
reasonable albeit not nearly as exciting nor as intoxicating as it
was in the past
For sellers the collective sales market must come to represent
a method where they can exit their ageing real estate with
a reasonable sum and perhaps some profits on the side
(reasonable profits are no longer defined as earth shattering
bonanzas) Te premium can no longer be as dramatic as that
of the past as plot ratios have not increased in any substantial
fashion in more than 10 years Te collective disposal of an
obsolete and ageing building allows individual sellers to moveon and right size to another property that is more modern
physically functional and that is better yielding in terms of
anglin Shopping Centre Another attempt on the way after previous failed collectivesale exercises at high asking prices
1 According to Strata itles Boards a collective sale is a combined sale by the owners oftwo or more property units to a common purchaser Te most common collective sale isthe sale of all the units in a strata-titled or flatted development to a purchaser Te sale
proceeds are then divided amongst all the unit owners
2 Te ratio of the gross floor area of a development to its site area
3 Te ABSD was introduced by the Government on 8 December 2011 An ABSD ofbetween 3 and 10 is to be paid by certain groups of buyers of residential properties(including land) Te ABSD rates for the purchase of residential properties were laterraised by between five and seven percentage points in January 2013 Besides Singapor-eans buying their first residential property all other groups of residential property buyersare affected by this increase
4 Effective from 29 June 2013 individuals (including sole proprietorships and vehiclesset up by an individual solely to purchase property) will be subject to a otal DebtServicing Ratio (DSR) framework for all property loans granted by financial institu-tions In addition to the 60 cap on a borrowerrsquos total monthly debt payment certainrules relating to the application of the existing Loan-to-Value (LV) limits on housingloans granted by financial institutions were also refined In particular ldquoguarantorsrdquo arenow to be included as co-borrowers and one of the purchasers on the option to purchase
Additionally the income-weighted average (based on gross monthly income) age of allco-borrowers is to be adopted when applying the rules on loan tenure
5 Te pre-agreed minimum price sellers are prepared to sell their properties for
The information contained herein has been obtained from sources deemed reliable While every reasonable effort has been made to
ensure its accuracy we cannot guarantee it No responsibility is assumed for any inaccuracies Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report
About Colliers International
Colliers International is a global leader in commercial real estate services with over 15800professionals operating out of more than 485 offices in 63 countries A subsidiary of FirstServiceCorporation Colliers International delivers a full range of services to real estate users ownersand investors worldwide including global corporate solutions brokerage property and assetmanagement hotel investment sales and consulting valuation consulting and appraisal servicesmortgage banking and insightful research Te latest annual survey by the Lipsey Company rankedColliers International as the second-most recognized commercial real estate firm in the world
5 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
Owners of offices retail stores medical suites or a combination
of these types of properties in either a strata-titled single-use
or mixed-use development might also wish to consider the en-
bloc route for similar reasons of practical disposal and renewal
Commercial users of strata-titled buildings sometimes are
reluctant to agree to a collective sale citing reasons of legacy
where their clients and customers will still extend their
patronage due to the familiarity of the location and the building
no matter how old or decrepit the property becomes However
locational goodwill is more pertinent for strata-titled property
owners of retail shops which are more location sensitive
than office and medical suite owners Businesses and clinics
relocate regularly with comparatively less impact compared
to retail shops as the brand or reputation of these businesses
and medical practitioners play a more important role than
an existing goodwill associated with a building or location
in supporting their business so long they do not relocate to
inaccessible remote areas
Terefore strata-titled property owners of commercialbuildings would need to also consider that a buildingrsquos lifespan
is finite and everything falls apart with time and neglect A
point will eventually be reached when the building services
mechanical electrical other utilities and finishes will one day
become obsolete with the resolute passing of time Despite any
ownerrsquos sentimental attachment to a place of business practical
functionality will one day overwhelm whatever locational
goodwill a building enjoys in the form of a loyal customer
base Such sentiment can also be dislodged by the often
capricious vagaries of fate as circumstances change and former
fundamentals are rendered moot with countrywide progress
and societal evolution Again the collective sales route offers a
practical way out
Te office and retail owners of the former Midlink Plaza
successfully disposed of the ageing commercial building
in 2011 with the new owner redeveloping the site into a
hotel Te strategic sale consolidation under a single owner
and redevelopment with a modern and updated use that is
complementary to the locality has benefited not only the sellers
but also the buyerdeveloper and the neighbourhood
In the same vein other strata-titled buildings especially in the
central areas can also harness the collective sale route Strata-
titled retail buildings have a tendency to be characterised by a
lack of tenant-mix control Individual owners will let or sell to
the highest paying lessee or buyerinvestor with little regard
as to how the incoming entityrsquos business is going to impact the
other tenants in the building Te increase in incompatible
trades sometimes side by side can potentially increase the
level of conflict among neighbours and create a disjointed
disharmony of unlikely trades within the shopping complex
Tis dissonance could eventually affect public perception of
the mall as a whole where deferential customer goodwill in the
past might turn to a grudging negative avoidance in the future
Sometimes the different and conflicting agendas can also prove
detrimental to the physical building itself especially in the use
of funds for building improvements Te range of problems
include prompt payment of service charges and maintenance
fees by individual shop owners the appropriate usage of funds
and the need for majority consensus Tis not only involves
funds that can be used for advertisements and promotional
campaigns to increase the profile of the entire shopping
complex but also for more basic building maintenance and
improvement issues Te collective sale avenue presents a
practical exit for owners of such ageing buildings in the mannerof Midlink Plaza and Serangoon Plaza Owners of Te Arcade at
Collyer Quay also made a positive attempt to blaze the en-bloc
trail even though it was unsuccessful
Individual owners to
exit an ageing buildingas well as find and fundalternative premises thatbetter suit the needs of
their businesses
The neighbourhood togenerate more tourist
activity
The buyer
developer tocreate economic
value throughredevelopment
The neighbourhoodto progressively
rejuvenate
Peace Centre amp Peace Mansion Another attempt on the way after two failed collectivesale attempts Out of place ageing building in an area undergoing renewal
Tis Midlink Plaza collective sale provided opportunities for
Te Arcade Failed collective sale at high asking price
6 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
For example in Orchard Road there is little land from the
Government for fresh development Terefore it will be the
ageing strata-titled malls that have the best potential for
redevelopment in order to contribute to the continued renewal
of Singaporersquos premier shopping belt Instead of waiting for
the proverbial ldquopot of goldrdquo that may or may not materialise
before the building reaches a stage of terminal disrepair strata-
titled shop owners could at least give some consideration tocollective sales as a way to move on and upgrade their business
environment
recurring income as well as other non-tangible benefits Tis
could include personal enjoyment of a property that does not
require the hassle of repeated repairs and peace of mind in a
newer upgraded environment
It is inconceivable that buyers (developers and landlords)
are going to pay anywhere close to outrageous sums for
development land unless it makes economic sense As real
estate development becomes more competitive and intense
with Singaporersquos urban progress developersrsquo appetite for risk
will moderate to become more conservative Sellers need to
attempt to understand and appreciate that developersbuyers
ndash both now and in the foreseeable future ndash require a higher risk
discount to mitigate the magnitude of property development
in modern Singapore Because if the price is fair and in a range
that the developer stands an even chance at a decent profit
activity will return to the collective sales market
And in the end while nobody really wins in a big dramatic
fashion everyone does benefit in a fashion Individuals
obtain proceeds that are generally better than if they were tosell individually and thereby are able to fund a replacement
property that still has a reasonable length of economic and
functional life Buyersdevelopers continue to be able to obtain
the raw material needed for their development business
Communities are routinely renewed as old buildings make way
for functional up-to-date modern ones And on an islandwide
basis even the privately owned areas of Singapore would be in
a continual state of revitalisation without any neighbourhood
becoming jaded with obsolete properties
Te collective sales route is still relevant and can still be
meaningful for owners and developers despite the changes in
the real estate market in the last 20 years What is most needfulin order to harness the usefulness of the collective sales method
with present circumstances is a paradigm shift of perception
and mindsets Sellers must accept within their collective (no
pun intended) mindsets that making a sudden windfall from
chance is a thing best filed in the annals of history Te way
forward for collective sales should be that of a practical method
of disposal for an ageing asset that is past its functional prime
While not everyone can win big allthe time everyone benefits fromrenewalhellip
Sometimes owners do not wish to sell for sentimental reasons
having formed an indelible bond with their property over a longperiod of time And while this attachment is understandable
the other general perceptions motives and mindsets about
the collective sales market will have to change as Singaporersquos
real estate market evolves and matures If the herd mentality
towards collective sales remains one where sellers expect to
strike it rich in one lucky twist of fate the current impasse
between buyers and sellers will continue with no one
benefiting Eventually this will result in a growing number of
buildings developments neighbourhoods and communities
not being able to renew themselves Te standoff will lead to
sellers on one side wanting their windfall and developers on the
other wanting land for their business
Te way ahead will be more practical considered and
reasonable albeit not nearly as exciting nor as intoxicating as it
was in the past
For sellers the collective sales market must come to represent
a method where they can exit their ageing real estate with
a reasonable sum and perhaps some profits on the side
(reasonable profits are no longer defined as earth shattering
bonanzas) Te premium can no longer be as dramatic as that
of the past as plot ratios have not increased in any substantial
fashion in more than 10 years Te collective disposal of an
obsolete and ageing building allows individual sellers to moveon and right size to another property that is more modern
physically functional and that is better yielding in terms of
anglin Shopping Centre Another attempt on the way after previous failed collectivesale exercises at high asking prices
1 According to Strata itles Boards a collective sale is a combined sale by the owners oftwo or more property units to a common purchaser Te most common collective sale isthe sale of all the units in a strata-titled or flatted development to a purchaser Te sale
proceeds are then divided amongst all the unit owners
2 Te ratio of the gross floor area of a development to its site area
3 Te ABSD was introduced by the Government on 8 December 2011 An ABSD ofbetween 3 and 10 is to be paid by certain groups of buyers of residential properties(including land) Te ABSD rates for the purchase of residential properties were laterraised by between five and seven percentage points in January 2013 Besides Singapor-eans buying their first residential property all other groups of residential property buyersare affected by this increase
4 Effective from 29 June 2013 individuals (including sole proprietorships and vehiclesset up by an individual solely to purchase property) will be subject to a otal DebtServicing Ratio (DSR) framework for all property loans granted by financial institu-tions In addition to the 60 cap on a borrowerrsquos total monthly debt payment certainrules relating to the application of the existing Loan-to-Value (LV) limits on housingloans granted by financial institutions were also refined In particular ldquoguarantorsrdquo arenow to be included as co-borrowers and one of the purchasers on the option to purchase
Additionally the income-weighted average (based on gross monthly income) age of allco-borrowers is to be adopted when applying the rules on loan tenure
5 Te pre-agreed minimum price sellers are prepared to sell their properties for
The information contained herein has been obtained from sources deemed reliable While every reasonable effort has been made to
ensure its accuracy we cannot guarantee it No responsibility is assumed for any inaccuracies Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report
About Colliers International
Colliers International is a global leader in commercial real estate services with over 15800professionals operating out of more than 485 offices in 63 countries A subsidiary of FirstServiceCorporation Colliers International delivers a full range of services to real estate users ownersand investors worldwide including global corporate solutions brokerage property and assetmanagement hotel investment sales and consulting valuation consulting and appraisal servicesmortgage banking and insightful research Te latest annual survey by the Lipsey Company rankedColliers International as the second-most recognized commercial real estate firm in the world
5 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
Owners of offices retail stores medical suites or a combination
of these types of properties in either a strata-titled single-use
or mixed-use development might also wish to consider the en-
bloc route for similar reasons of practical disposal and renewal
Commercial users of strata-titled buildings sometimes are
reluctant to agree to a collective sale citing reasons of legacy
where their clients and customers will still extend their
patronage due to the familiarity of the location and the building
no matter how old or decrepit the property becomes However
locational goodwill is more pertinent for strata-titled property
owners of retail shops which are more location sensitive
than office and medical suite owners Businesses and clinics
relocate regularly with comparatively less impact compared
to retail shops as the brand or reputation of these businesses
and medical practitioners play a more important role than
an existing goodwill associated with a building or location
in supporting their business so long they do not relocate to
inaccessible remote areas
Terefore strata-titled property owners of commercialbuildings would need to also consider that a buildingrsquos lifespan
is finite and everything falls apart with time and neglect A
point will eventually be reached when the building services
mechanical electrical other utilities and finishes will one day
become obsolete with the resolute passing of time Despite any
ownerrsquos sentimental attachment to a place of business practical
functionality will one day overwhelm whatever locational
goodwill a building enjoys in the form of a loyal customer
base Such sentiment can also be dislodged by the often
capricious vagaries of fate as circumstances change and former
fundamentals are rendered moot with countrywide progress
and societal evolution Again the collective sales route offers a
practical way out
Te office and retail owners of the former Midlink Plaza
successfully disposed of the ageing commercial building
in 2011 with the new owner redeveloping the site into a
hotel Te strategic sale consolidation under a single owner
and redevelopment with a modern and updated use that is
complementary to the locality has benefited not only the sellers
but also the buyerdeveloper and the neighbourhood
In the same vein other strata-titled buildings especially in the
central areas can also harness the collective sale route Strata-
titled retail buildings have a tendency to be characterised by a
lack of tenant-mix control Individual owners will let or sell to
the highest paying lessee or buyerinvestor with little regard
as to how the incoming entityrsquos business is going to impact the
other tenants in the building Te increase in incompatible
trades sometimes side by side can potentially increase the
level of conflict among neighbours and create a disjointed
disharmony of unlikely trades within the shopping complex
Tis dissonance could eventually affect public perception of
the mall as a whole where deferential customer goodwill in the
past might turn to a grudging negative avoidance in the future
Sometimes the different and conflicting agendas can also prove
detrimental to the physical building itself especially in the use
of funds for building improvements Te range of problems
include prompt payment of service charges and maintenance
fees by individual shop owners the appropriate usage of funds
and the need for majority consensus Tis not only involves
funds that can be used for advertisements and promotional
campaigns to increase the profile of the entire shopping
complex but also for more basic building maintenance and
improvement issues Te collective sale avenue presents a
practical exit for owners of such ageing buildings in the mannerof Midlink Plaza and Serangoon Plaza Owners of Te Arcade at
Collyer Quay also made a positive attempt to blaze the en-bloc
trail even though it was unsuccessful
Individual owners to
exit an ageing buildingas well as find and fundalternative premises thatbetter suit the needs of
their businesses
The neighbourhood togenerate more tourist
activity
The buyer
developer tocreate economic
value throughredevelopment
The neighbourhoodto progressively
rejuvenate
Peace Centre amp Peace Mansion Another attempt on the way after two failed collectivesale attempts Out of place ageing building in an area undergoing renewal
Tis Midlink Plaza collective sale provided opportunities for
Te Arcade Failed collective sale at high asking price
6 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
For example in Orchard Road there is little land from the
Government for fresh development Terefore it will be the
ageing strata-titled malls that have the best potential for
redevelopment in order to contribute to the continued renewal
of Singaporersquos premier shopping belt Instead of waiting for
the proverbial ldquopot of goldrdquo that may or may not materialise
before the building reaches a stage of terminal disrepair strata-
titled shop owners could at least give some consideration tocollective sales as a way to move on and upgrade their business
environment
recurring income as well as other non-tangible benefits Tis
could include personal enjoyment of a property that does not
require the hassle of repeated repairs and peace of mind in a
newer upgraded environment
It is inconceivable that buyers (developers and landlords)
are going to pay anywhere close to outrageous sums for
development land unless it makes economic sense As real
estate development becomes more competitive and intense
with Singaporersquos urban progress developersrsquo appetite for risk
will moderate to become more conservative Sellers need to
attempt to understand and appreciate that developersbuyers
ndash both now and in the foreseeable future ndash require a higher risk
discount to mitigate the magnitude of property development
in modern Singapore Because if the price is fair and in a range
that the developer stands an even chance at a decent profit
activity will return to the collective sales market
And in the end while nobody really wins in a big dramatic
fashion everyone does benefit in a fashion Individuals
obtain proceeds that are generally better than if they were tosell individually and thereby are able to fund a replacement
property that still has a reasonable length of economic and
functional life Buyersdevelopers continue to be able to obtain
the raw material needed for their development business
Communities are routinely renewed as old buildings make way
for functional up-to-date modern ones And on an islandwide
basis even the privately owned areas of Singapore would be in
a continual state of revitalisation without any neighbourhood
becoming jaded with obsolete properties
Te collective sales route is still relevant and can still be
meaningful for owners and developers despite the changes in
the real estate market in the last 20 years What is most needfulin order to harness the usefulness of the collective sales method
with present circumstances is a paradigm shift of perception
and mindsets Sellers must accept within their collective (no
pun intended) mindsets that making a sudden windfall from
chance is a thing best filed in the annals of history Te way
forward for collective sales should be that of a practical method
of disposal for an ageing asset that is past its functional prime
While not everyone can win big allthe time everyone benefits fromrenewalhellip
Sometimes owners do not wish to sell for sentimental reasons
having formed an indelible bond with their property over a longperiod of time And while this attachment is understandable
the other general perceptions motives and mindsets about
the collective sales market will have to change as Singaporersquos
real estate market evolves and matures If the herd mentality
towards collective sales remains one where sellers expect to
strike it rich in one lucky twist of fate the current impasse
between buyers and sellers will continue with no one
benefiting Eventually this will result in a growing number of
buildings developments neighbourhoods and communities
not being able to renew themselves Te standoff will lead to
sellers on one side wanting their windfall and developers on the
other wanting land for their business
Te way ahead will be more practical considered and
reasonable albeit not nearly as exciting nor as intoxicating as it
was in the past
For sellers the collective sales market must come to represent
a method where they can exit their ageing real estate with
a reasonable sum and perhaps some profits on the side
(reasonable profits are no longer defined as earth shattering
bonanzas) Te premium can no longer be as dramatic as that
of the past as plot ratios have not increased in any substantial
fashion in more than 10 years Te collective disposal of an
obsolete and ageing building allows individual sellers to moveon and right size to another property that is more modern
physically functional and that is better yielding in terms of
anglin Shopping Centre Another attempt on the way after previous failed collectivesale exercises at high asking prices
1 According to Strata itles Boards a collective sale is a combined sale by the owners oftwo or more property units to a common purchaser Te most common collective sale isthe sale of all the units in a strata-titled or flatted development to a purchaser Te sale
proceeds are then divided amongst all the unit owners
2 Te ratio of the gross floor area of a development to its site area
3 Te ABSD was introduced by the Government on 8 December 2011 An ABSD ofbetween 3 and 10 is to be paid by certain groups of buyers of residential properties(including land) Te ABSD rates for the purchase of residential properties were laterraised by between five and seven percentage points in January 2013 Besides Singapor-eans buying their first residential property all other groups of residential property buyersare affected by this increase
4 Effective from 29 June 2013 individuals (including sole proprietorships and vehiclesset up by an individual solely to purchase property) will be subject to a otal DebtServicing Ratio (DSR) framework for all property loans granted by financial institu-tions In addition to the 60 cap on a borrowerrsquos total monthly debt payment certainrules relating to the application of the existing Loan-to-Value (LV) limits on housingloans granted by financial institutions were also refined In particular ldquoguarantorsrdquo arenow to be included as co-borrowers and one of the purchasers on the option to purchase
Additionally the income-weighted average (based on gross monthly income) age of allco-borrowers is to be adopted when applying the rules on loan tenure
5 Te pre-agreed minimum price sellers are prepared to sell their properties for
The information contained herein has been obtained from sources deemed reliable While every reasonable effort has been made to
ensure its accuracy we cannot guarantee it No responsibility is assumed for any inaccuracies Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report
About Colliers International
Colliers International is a global leader in commercial real estate services with over 15800professionals operating out of more than 485 offices in 63 countries A subsidiary of FirstServiceCorporation Colliers International delivers a full range of services to real estate users ownersand investors worldwide including global corporate solutions brokerage property and assetmanagement hotel investment sales and consulting valuation consulting and appraisal servicesmortgage banking and insightful research Te latest annual survey by the Lipsey Company rankedColliers International as the second-most recognized commercial real estate firm in the world
5 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
Owners of offices retail stores medical suites or a combination
of these types of properties in either a strata-titled single-use
or mixed-use development might also wish to consider the en-
bloc route for similar reasons of practical disposal and renewal
Commercial users of strata-titled buildings sometimes are
reluctant to agree to a collective sale citing reasons of legacy
where their clients and customers will still extend their
patronage due to the familiarity of the location and the building
no matter how old or decrepit the property becomes However
locational goodwill is more pertinent for strata-titled property
owners of retail shops which are more location sensitive
than office and medical suite owners Businesses and clinics
relocate regularly with comparatively less impact compared
to retail shops as the brand or reputation of these businesses
and medical practitioners play a more important role than
an existing goodwill associated with a building or location
in supporting their business so long they do not relocate to
inaccessible remote areas
Terefore strata-titled property owners of commercialbuildings would need to also consider that a buildingrsquos lifespan
is finite and everything falls apart with time and neglect A
point will eventually be reached when the building services
mechanical electrical other utilities and finishes will one day
become obsolete with the resolute passing of time Despite any
ownerrsquos sentimental attachment to a place of business practical
functionality will one day overwhelm whatever locational
goodwill a building enjoys in the form of a loyal customer
base Such sentiment can also be dislodged by the often
capricious vagaries of fate as circumstances change and former
fundamentals are rendered moot with countrywide progress
and societal evolution Again the collective sales route offers a
practical way out
Te office and retail owners of the former Midlink Plaza
successfully disposed of the ageing commercial building
in 2011 with the new owner redeveloping the site into a
hotel Te strategic sale consolidation under a single owner
and redevelopment with a modern and updated use that is
complementary to the locality has benefited not only the sellers
but also the buyerdeveloper and the neighbourhood
In the same vein other strata-titled buildings especially in the
central areas can also harness the collective sale route Strata-
titled retail buildings have a tendency to be characterised by a
lack of tenant-mix control Individual owners will let or sell to
the highest paying lessee or buyerinvestor with little regard
as to how the incoming entityrsquos business is going to impact the
other tenants in the building Te increase in incompatible
trades sometimes side by side can potentially increase the
level of conflict among neighbours and create a disjointed
disharmony of unlikely trades within the shopping complex
Tis dissonance could eventually affect public perception of
the mall as a whole where deferential customer goodwill in the
past might turn to a grudging negative avoidance in the future
Sometimes the different and conflicting agendas can also prove
detrimental to the physical building itself especially in the use
of funds for building improvements Te range of problems
include prompt payment of service charges and maintenance
fees by individual shop owners the appropriate usage of funds
and the need for majority consensus Tis not only involves
funds that can be used for advertisements and promotional
campaigns to increase the profile of the entire shopping
complex but also for more basic building maintenance and
improvement issues Te collective sale avenue presents a
practical exit for owners of such ageing buildings in the mannerof Midlink Plaza and Serangoon Plaza Owners of Te Arcade at
Collyer Quay also made a positive attempt to blaze the en-bloc
trail even though it was unsuccessful
Individual owners to
exit an ageing buildingas well as find and fundalternative premises thatbetter suit the needs of
their businesses
The neighbourhood togenerate more tourist
activity
The buyer
developer tocreate economic
value throughredevelopment
The neighbourhoodto progressively
rejuvenate
Peace Centre amp Peace Mansion Another attempt on the way after two failed collectivesale attempts Out of place ageing building in an area undergoing renewal
Tis Midlink Plaza collective sale provided opportunities for
Te Arcade Failed collective sale at high asking price
6 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
For example in Orchard Road there is little land from the
Government for fresh development Terefore it will be the
ageing strata-titled malls that have the best potential for
redevelopment in order to contribute to the continued renewal
of Singaporersquos premier shopping belt Instead of waiting for
the proverbial ldquopot of goldrdquo that may or may not materialise
before the building reaches a stage of terminal disrepair strata-
titled shop owners could at least give some consideration tocollective sales as a way to move on and upgrade their business
environment
recurring income as well as other non-tangible benefits Tis
could include personal enjoyment of a property that does not
require the hassle of repeated repairs and peace of mind in a
newer upgraded environment
It is inconceivable that buyers (developers and landlords)
are going to pay anywhere close to outrageous sums for
development land unless it makes economic sense As real
estate development becomes more competitive and intense
with Singaporersquos urban progress developersrsquo appetite for risk
will moderate to become more conservative Sellers need to
attempt to understand and appreciate that developersbuyers
ndash both now and in the foreseeable future ndash require a higher risk
discount to mitigate the magnitude of property development
in modern Singapore Because if the price is fair and in a range
that the developer stands an even chance at a decent profit
activity will return to the collective sales market
And in the end while nobody really wins in a big dramatic
fashion everyone does benefit in a fashion Individuals
obtain proceeds that are generally better than if they were tosell individually and thereby are able to fund a replacement
property that still has a reasonable length of economic and
functional life Buyersdevelopers continue to be able to obtain
the raw material needed for their development business
Communities are routinely renewed as old buildings make way
for functional up-to-date modern ones And on an islandwide
basis even the privately owned areas of Singapore would be in
a continual state of revitalisation without any neighbourhood
becoming jaded with obsolete properties
Te collective sales route is still relevant and can still be
meaningful for owners and developers despite the changes in
the real estate market in the last 20 years What is most needfulin order to harness the usefulness of the collective sales method
with present circumstances is a paradigm shift of perception
and mindsets Sellers must accept within their collective (no
pun intended) mindsets that making a sudden windfall from
chance is a thing best filed in the annals of history Te way
forward for collective sales should be that of a practical method
of disposal for an ageing asset that is past its functional prime
While not everyone can win big allthe time everyone benefits fromrenewalhellip
Sometimes owners do not wish to sell for sentimental reasons
having formed an indelible bond with their property over a longperiod of time And while this attachment is understandable
the other general perceptions motives and mindsets about
the collective sales market will have to change as Singaporersquos
real estate market evolves and matures If the herd mentality
towards collective sales remains one where sellers expect to
strike it rich in one lucky twist of fate the current impasse
between buyers and sellers will continue with no one
benefiting Eventually this will result in a growing number of
buildings developments neighbourhoods and communities
not being able to renew themselves Te standoff will lead to
sellers on one side wanting their windfall and developers on the
other wanting land for their business
Te way ahead will be more practical considered and
reasonable albeit not nearly as exciting nor as intoxicating as it
was in the past
For sellers the collective sales market must come to represent
a method where they can exit their ageing real estate with
a reasonable sum and perhaps some profits on the side
(reasonable profits are no longer defined as earth shattering
bonanzas) Te premium can no longer be as dramatic as that
of the past as plot ratios have not increased in any substantial
fashion in more than 10 years Te collective disposal of an
obsolete and ageing building allows individual sellers to moveon and right size to another property that is more modern
physically functional and that is better yielding in terms of
anglin Shopping Centre Another attempt on the way after previous failed collectivesale exercises at high asking prices
1 According to Strata itles Boards a collective sale is a combined sale by the owners oftwo or more property units to a common purchaser Te most common collective sale isthe sale of all the units in a strata-titled or flatted development to a purchaser Te sale
proceeds are then divided amongst all the unit owners
2 Te ratio of the gross floor area of a development to its site area
3 Te ABSD was introduced by the Government on 8 December 2011 An ABSD ofbetween 3 and 10 is to be paid by certain groups of buyers of residential properties(including land) Te ABSD rates for the purchase of residential properties were laterraised by between five and seven percentage points in January 2013 Besides Singapor-eans buying their first residential property all other groups of residential property buyersare affected by this increase
4 Effective from 29 June 2013 individuals (including sole proprietorships and vehiclesset up by an individual solely to purchase property) will be subject to a otal DebtServicing Ratio (DSR) framework for all property loans granted by financial institu-tions In addition to the 60 cap on a borrowerrsquos total monthly debt payment certainrules relating to the application of the existing Loan-to-Value (LV) limits on housingloans granted by financial institutions were also refined In particular ldquoguarantorsrdquo arenow to be included as co-borrowers and one of the purchasers on the option to purchase
Additionally the income-weighted average (based on gross monthly income) age of allco-borrowers is to be adopted when applying the rules on loan tenure
5 Te pre-agreed minimum price sellers are prepared to sell their properties for
The information contained herein has been obtained from sources deemed reliable While every reasonable effort has been made to
ensure its accuracy we cannot guarantee it No responsibility is assumed for any inaccuracies Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report
About Colliers International
Colliers International is a global leader in commercial real estate services with over 15800professionals operating out of more than 485 offices in 63 countries A subsidiary of FirstServiceCorporation Colliers International delivers a full range of services to real estate users ownersand investors worldwide including global corporate solutions brokerage property and assetmanagement hotel investment sales and consulting valuation consulting and appraisal servicesmortgage banking and insightful research Te latest annual survey by the Lipsey Company rankedColliers International as the second-most recognized commercial real estate firm in the world
6 Te Collective Sales Market ndash Boom or Bust | August 2014 | Investment | Colliers International
For example in Orchard Road there is little land from the
Government for fresh development Terefore it will be the
ageing strata-titled malls that have the best potential for
redevelopment in order to contribute to the continued renewal
of Singaporersquos premier shopping belt Instead of waiting for
the proverbial ldquopot of goldrdquo that may or may not materialise
before the building reaches a stage of terminal disrepair strata-
titled shop owners could at least give some consideration tocollective sales as a way to move on and upgrade their business
environment
recurring income as well as other non-tangible benefits Tis
could include personal enjoyment of a property that does not
require the hassle of repeated repairs and peace of mind in a
newer upgraded environment
It is inconceivable that buyers (developers and landlords)
are going to pay anywhere close to outrageous sums for
development land unless it makes economic sense As real
estate development becomes more competitive and intense
with Singaporersquos urban progress developersrsquo appetite for risk
will moderate to become more conservative Sellers need to
attempt to understand and appreciate that developersbuyers
ndash both now and in the foreseeable future ndash require a higher risk
discount to mitigate the magnitude of property development
in modern Singapore Because if the price is fair and in a range
that the developer stands an even chance at a decent profit
activity will return to the collective sales market
And in the end while nobody really wins in a big dramatic
fashion everyone does benefit in a fashion Individuals
obtain proceeds that are generally better than if they were tosell individually and thereby are able to fund a replacement
property that still has a reasonable length of economic and
functional life Buyersdevelopers continue to be able to obtain
the raw material needed for their development business
Communities are routinely renewed as old buildings make way
for functional up-to-date modern ones And on an islandwide
basis even the privately owned areas of Singapore would be in
a continual state of revitalisation without any neighbourhood
becoming jaded with obsolete properties
Te collective sales route is still relevant and can still be
meaningful for owners and developers despite the changes in
the real estate market in the last 20 years What is most needfulin order to harness the usefulness of the collective sales method
with present circumstances is a paradigm shift of perception
and mindsets Sellers must accept within their collective (no
pun intended) mindsets that making a sudden windfall from
chance is a thing best filed in the annals of history Te way
forward for collective sales should be that of a practical method
of disposal for an ageing asset that is past its functional prime
While not everyone can win big allthe time everyone benefits fromrenewalhellip
Sometimes owners do not wish to sell for sentimental reasons
having formed an indelible bond with their property over a longperiod of time And while this attachment is understandable
the other general perceptions motives and mindsets about
the collective sales market will have to change as Singaporersquos
real estate market evolves and matures If the herd mentality
towards collective sales remains one where sellers expect to
strike it rich in one lucky twist of fate the current impasse
between buyers and sellers will continue with no one
benefiting Eventually this will result in a growing number of
buildings developments neighbourhoods and communities
not being able to renew themselves Te standoff will lead to
sellers on one side wanting their windfall and developers on the
other wanting land for their business
Te way ahead will be more practical considered and
reasonable albeit not nearly as exciting nor as intoxicating as it
was in the past
For sellers the collective sales market must come to represent
a method where they can exit their ageing real estate with
a reasonable sum and perhaps some profits on the side
(reasonable profits are no longer defined as earth shattering
bonanzas) Te premium can no longer be as dramatic as that
of the past as plot ratios have not increased in any substantial
fashion in more than 10 years Te collective disposal of an
obsolete and ageing building allows individual sellers to moveon and right size to another property that is more modern
physically functional and that is better yielding in terms of
anglin Shopping Centre Another attempt on the way after previous failed collectivesale exercises at high asking prices
1 According to Strata itles Boards a collective sale is a combined sale by the owners oftwo or more property units to a common purchaser Te most common collective sale isthe sale of all the units in a strata-titled or flatted development to a purchaser Te sale
proceeds are then divided amongst all the unit owners
2 Te ratio of the gross floor area of a development to its site area
3 Te ABSD was introduced by the Government on 8 December 2011 An ABSD ofbetween 3 and 10 is to be paid by certain groups of buyers of residential properties(including land) Te ABSD rates for the purchase of residential properties were laterraised by between five and seven percentage points in January 2013 Besides Singapor-eans buying their first residential property all other groups of residential property buyersare affected by this increase
4 Effective from 29 June 2013 individuals (including sole proprietorships and vehiclesset up by an individual solely to purchase property) will be subject to a otal DebtServicing Ratio (DSR) framework for all property loans granted by financial institu-tions In addition to the 60 cap on a borrowerrsquos total monthly debt payment certainrules relating to the application of the existing Loan-to-Value (LV) limits on housingloans granted by financial institutions were also refined In particular ldquoguarantorsrdquo arenow to be included as co-borrowers and one of the purchasers on the option to purchase
Additionally the income-weighted average (based on gross monthly income) age of allco-borrowers is to be adopted when applying the rules on loan tenure
5 Te pre-agreed minimum price sellers are prepared to sell their properties for
The information contained herein has been obtained from sources deemed reliable While every reasonable effort has been made to
ensure its accuracy we cannot guarantee it No responsibility is assumed for any inaccuracies Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report
About Colliers International
Colliers International is a global leader in commercial real estate services with over 15800professionals operating out of more than 485 offices in 63 countries A subsidiary of FirstServiceCorporation Colliers International delivers a full range of services to real estate users ownersand investors worldwide including global corporate solutions brokerage property and assetmanagement hotel investment sales and consulting valuation consulting and appraisal servicesmortgage banking and insightful research Te latest annual survey by the Lipsey Company rankedColliers International as the second-most recognized commercial real estate firm in the world
The information contained herein has been obtained from sources deemed reliable While every reasonable effort has been made to
ensure its accuracy we cannot guarantee it No responsibility is assumed for any inaccuracies Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report
About Colliers International
Colliers International is a global leader in commercial real estate services with over 15800professionals operating out of more than 485 offices in 63 countries A subsidiary of FirstServiceCorporation Colliers International delivers a full range of services to real estate users ownersand investors worldwide including global corporate solutions brokerage property and assetmanagement hotel investment sales and consulting valuation consulting and appraisal servicesmortgage banking and insightful research Te latest annual survey by the Lipsey Company rankedColliers International as the second-most recognized commercial real estate firm in the world
