Collective sales players in no hurry to bid for sites

Collective sales players in no hurry to bid for sites

Prudence is the word that springs to mind when one talks about the outlook of the collective sales market in 2013.

Given the less-than-buoyant demand for collective sales sites this year, market analysts expect the same in the coming months, with developers favouring smaller sites, as they did throughout 2012.

Chia Siew Chuin, director at Colliers International, said the imposition of a 10 per cent Additional Buyer's Stamp Duty (ABSD) on the acquisition of development land from December 2011, resulted in increased caution among developers who channelled their attention to smaller land parcels.

"Developers find greater flexibility and ease to redevelop on smallish sites within five years, thus enabling these acquisitions to be eligible for remission of the ABSD," she added.

With the ABSD still in place, Ms Chia expects small-to mid-size land parcels of below $200 million to be the most appealing for developers.

Although the ABSD might have resulted in more cautious transactions in the en-bloc market this year, a couple of records were still broken and new highs set.

For example, the sale of Thomson View condominium) at $712 per square foot per plot ratio (psf ppr) or $590 million, was the largest residential collective deal since June 2007 when Farrer Court on King's Road made headlines for its staggering $1.34 billion price tag.

While Thomson View gave a boost to a market that had seen mostly smaller collective sales of under $100 million in recent years, it was a one-off deal and did not set off ripples in the market.

It was successful in its third collective sales attempt partly because of the newly announced Upper Thomson MRT station nearby (part of the upcoming Thomson Line), said market analysts.

Said Jeremy Lake, executive director, investment properties of CBRE: "The developers who paid the heftiest prices to some sites were not the regular players - they could have few land banks in their stable and are willing to pay a premium in order to win the sites and stay in business."

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