En bloc sales hit $5.2b in 25 deals this year
Collective sales of residential sites boost property market sentiment
"We expect this to result in immediate displacement demand, improved vacancy and higher selling prices."
- JP Morgan analyst Brandon Lee, saying that the current collective sale fever will continue
Real estate stocks charged ahead yesterday on more signs of an upswing in the property market.
Blue chip UOL Group stood out as one of the day's biggest winners, with its shares surging 4.3 per cent or 35 cents to $8.55 - lifting returns by a whopping 42.7 per cent since the start of the year. City Developments (CDL) added 1.7 per cent or 19 cents to $11.60, while Wheelock Properties shot up 3.9 per cent or 7.5 cents to $1.98.
Market sentiment has been on the mend since the start of the year, and it enjoyed a further boost with the success of two large en bloc sales this week.
On Wednesday, Amber Park, a 200-unit development in Amber Gardens, was sold to CDL through its Cityzens Development unit and a joint-venture partner from parent Hong Leong Group for $906.7 million, marking the biggest freehold collective sale deal here.
A day later, the Normanton Park estate near Kent Ridge Park was sold for a hefty $830.1 million to Chinese firm Kingsford Huray Development.
Collective sales of residential sites have hit $5.2 billion across 25 deals this year, four times the value seen in the same period last year - a figure that could rise further in light of prospective deals for the next three months, said JP Morgan in a report yesterday.
This already puts this year as the third-biggest year of en bloc sales after 2007, which holds the record at $12.2 billion, followed by 2006 at $8.2 billion.
JP Morgan analyst Brandon Lee said that the 25 transactions this year - up on the 10 of last year - provides "clear evidence of another en-bloc cycle in the making, which traditionally lasts at least three years".
He believes the collective sale frenzy is "sustainable" given that the number of unsold near-term residential units in the pipeline, excluding executive condominiums, has fallen for three straight quarters to an all-time low, reaching 10,303 units as at the second quarter of this year. The bank's own estimation puts this figure even lower at 7,749 units as at August.
At the same time, developers are not replenishing their land banks enough to offset the number of units they are selling, a situation worsened due to insufficient government land.
All these factors indicate that the collective sale fever will continue, Mr Lee said, adding: "We expect this to result in immediate displacement demand, improved vacancy and higher selling prices."