Singapore

What's next after selling en bloc?

Property owners who profit from a collective sale have to consider carefully how to use the windfall

With the return of collective sale fever since its last wave back in 2007, many property owners are rejoicing at the chance to reel in cash.

So far, over $3 billion has been paid out to collective sales this year alone, exceeding the $1 billion collected last year.

Last month, The Straits Times reported that Jervois Gardens, a freehold development in River Valley, was sold for $72 million. Each apartment owner might receive between $3.3 million and $4.5 million.

In June, Eunosville was sold for $765 million, with each of the 330 owners getting about $2.32 million.

After evaluating other recent collective sale projects such as Shunfu Ville, Raintree Gardens and Rio Casa, each owner walked away with about $1.9 million.

If you were one of these happy owners and you have $2 million in cash and Central Provident Fund savings, what do you do with the money?

You may be close to retirement if you have another home. The property that went en bloc was just your investment property. Thus, you can choose to keep the cash and CPF and plan for a comfortable retirement.

If the property that went en bloc was the home you were living in and you need to consider your next property purchase, here are three steps to follow: (a) Freehold over leasehold, (b) prime districts 9, 10 and 11, (c) then choose your property.

FREEHOLD

All savvy property lovers would agree a freehold property holds its value best as there is negligible depreciation compared to leasehold properties.

With the clock ticking away, 99-year properties could face weaker demand as loan restrictions kick in, especially when the remaining lease is less than 60 years.

Freehold properties make up fewer than 10 per cent of all housing units in Singapore.

Unlike 99-year leasehold properties that are available in abundance from the Government Land Sales and collective sales, developers planning to replenish freehold land in their development pipeline may look towards only collective sales of freehold properties.

PRIME DISTRICTS

Location lends significant weight to the long-term preservation and appreciation of a property's value.

The prime districts of 9, 10 and 11 are home to the top luxury developments with the best building quality.

In the event of long-term structural weakness in the economy, the prestige and demand for homes in these prime districts will allow your homes to weather market conditions and hold their values better than those in non-central locations.

And when the market recovers, the branding and desirability of homes in prime areas will ensure prices rise faster than those in other districts.

TAKE YOUR PICK

The real estate market's recovery remains tentative as new sales lead price advances while prices of resale properties remain in the doldrums.

This presents buyers with the opportunity to strike a good bargain for a freehold, 10- to 15-year-old property in district 9, 10 or 11.

It is important to consider your needs and wants before embarking on the hunt for the perfect property.

Ku Swee Yong is a licensed real estate agent and co-founder of HugProperty, a web-based property platform. His fifth book, Preparing For A Property Upturn, is available at bookstores. Valerie Toh is general manager at HugProperty.

PropertyinvestmentNovena