News: Collective sale fever “sustainable”, says JP Morgan

Oct 9, 2017

View of Amber Park, a 200-unit development in Amber Gardens. (Photo: JLL)

JP Morgan believes the collective sale frenzy in Singapore is “sustainable” as the number of unsold housing units in the pipeline, excluding executive condos, has dropped for three consecutive quarters to an all-time low of 10,303 units as at Q2 2017, reported the Straits Times.

JP Morgan analyst Brandon Lee noted that developers haven’t also replenished their land banks enough in order to offset the units they are selling.

With 25 deals closed, en bloc sales of residential sites have reached $5.2 billion so far this year, making 2017 the third-biggest year of collective sales after 2007 with $12.2 billion and 2006 with $8.2 billion.

This year’s 25 transactions provides “clear evidence of another en bloc cycle in the making, which traditionally lasts at least three years”, said Lee.

“We expect this to result in immediate displacement demand, improved vacancy and higher selling prices,” he added.

In fact, real estate stocks received a boost from the success of two large collective sales last week.

UOL Group emerged as one of the biggest winners as its shares soared 4.3 percent or 35 cents to $8.55, while City Developments Limited (CDL) shares rose 1.7 percent or 19 cents to $11.60. Wheelock Properties shares, on the other hand, increased 3.9 percent or 7.5 cents to $1.98.

On 4 October, CDL via its Cityzens Development unit and a joint-venture partner from Hong Leong Group acquired Amber Park for $906.7 million, which marked the largest freehold en bloc sale deal, while Kingsford Huray Development acquired Normanton Park the following day for $830.1 million.

 

This article was edited by Keshia Faculin.

spacer
agent image
agency logo
Gary Lau
Executive Group Division Director
ERA REALTY NETWORK PTE LTD
garylau@singnet.com.sg
CEA Licence No.:
L3002382K / R025246A
+(65) 9858 7777