BT : En bloc sales have peaked, says CapitaLand - 1 Aug 07

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Published August 2, 2007
En bloc sales have peaked, says CapitaLand
Property owners must be realistic about what is marketable: CEO

(SINGAPORE) CapitaLand Ltd, the biggest buyer of enbloc projects in
Singapore in the past year, said that such property sales have 'peaked', as
owners ask for record prices for their homes. 'There will come a time when

 the market cannot bear' the prices.
- Liew Mun Leong

The market for existing buildings has hit a high 'in terms of pricing', said
Liew Mun Leong, chief executive officer of CapitaLand. The developer,
South-east Asia's largest, had 18.3 per cent share of the $13.49 billion of
such collective sales from July 2006 to June 2007, according to data from
real estate consultant Knight Frank.

A frenzy of redevelopment of prime condos around the main Orchard Road
shopping district and the neighbouring prime residential area of Holland
Road prompted the government to raise the development charge, which must be
paid for enhancing a site's use.

'The problem now is that en bloc owners' expectations are raising the
hurdles,' Mr Liew, 61, said in an interview on Tuesday. 'Going forward, en
bloc owners must be realistic about what is marketable.'

Developers were buying older homes in the city's prime areas to redevelop
and resell at prices that were more than four times higher as demand for
luxury apartments pushed some residential units to record prices.

A record of 70 older apartment developments were sold last year for $8.1
billion, according to data from Knight Frank. In the first half of this
year, there were 48 transactions amounting to $9.48 billion.

'En bloc sales are about derived demand,' said Nicholas Mak, Knight Frank's
research director. 'As long as high-end property demand continues, the en
bloc sales would continue.' CapitaLand in June said that it's buying Farrer
Court, an existing apartment complex in the Holland Road area, which is a
five-minute drive from the shopping district, for a record $1.3 billion.

SC Global Developments, a builder of luxury homes, said earlier in June that
it had agreed to buy apartments next to the shopping district for $262
million, or $2,338 a square foot, the highest price for an existing complex.

'There will come a time when the market cannot bear' the prices,
CapitaLand's Mr Liew said.

SC Global, which paid $1,064 a square foot for a downtown apartment complex
last year, sold new homes on the same site in June for as much as $5,100 a
square foot, a record.

CapitaLand's shares fell 15 cents, or 2 per cent, to $7.35 yesterday. The
stock has risen 19 per cent this year, compared with the 15 per cent gain in
the ST Index.

Some apartment developments in the city's downtown districts are having a
harder time with en bloc sales. Pacific Mansions, a 10-minute walk from the
shopping district, had an asking price of $1.18 billion, or $2,400 a square
foot, its marketing agent Savills Singapore said in June.

The Straits Times reported on Tuesday that the owners didn't get bids that
met their asking price and are negotiating with possible buyers to achieve
their reserve or minimum price, which is 10 to 20 per cent lower than the
asking price.

'We are seeing vendors adapting to be more accommodating,' said Donald Han,
managing director of Cushman & Wakefield.

'Instead of expecting record price after record price, there is some price
stabilisation, which will be good for the market.' - Bloomberg