Singapore’s unique ‘collective sales’ lose appeal to investors even as housing market shows signs of early recovery

Cheryl Arcibal
·3-min read

The Covid-19 pandemic has dulled investors’ appetite for choice pieces of property in Singapore even as the property market of the Southeast Asian financial hub is likely to be one of the first to recover from the global downturn.

So far this year, there has been only one residential “collective sale” in Singapore. Yuen Sing Mansion in Geylang was sold in August for S$15.2 million (US$11.2 million) to a company owned by a Singaporean citizen and a Chinese national.

Unique to Singapore, a collective sale is a sale of properties that are under multiple ownership to a single buyer, who usually intends to redevelop the site.

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The duo behind that purchase also bought Casa Sophia on Sophia Road last year, according to a register of sales with Singapore authorities. Their company is identified by property portal EdgeProp as East Asia Sophia Development.

The Singapore-based real estate developer is owned by Zhang Zhiming, whose wife, Huang Yanhong, is now a Singaporean citizen, and also a director of the company. Huang’s elder brother, Huang Guangyu, “was once China’s richest man and founder of Hong Kong-listed Gome Electrical Appliances, one of the biggest consumer electrical appliances retailers in China,” according to EdgeProp.

“The collective sales market has been quiet since the cooling measures in July 2018,” said Tricia Song, head of research for Singapore at property consultancy Colliers.

Those measures included a hike in the levy on foreigners buying property to 20 per cent from 15 per cent previously.

The buyer in a collective sale is typically a developer purchasing for redevelopment purposes.

These properties tend to be old and on land that is underdeveloped. By acquiring them, developers and investors hope to get a premium from redeveloping the location.

Collective sales had been slowing since 2018, but last year’s residential collective sales worth about S$200 million dwarfed this year’s as the coronavirus crisis hit demand. Two of the three collective sales sites in 2019 were bought by China’s Qingjian Realty and The Place, backed by The Place Investment Group in China.

“No big companies or prominent investors have bought collective sale plots recently,” Song said. “There has not been a comeback in collective sales yet. However there could be, some time down the road in 2021.”

An uptick in private home sales in Singapore in September, the most since July 2018, offers hope that investors might regain their appetite for collective sales.

Singapore’s home sales soar, driven by demand by Hong Kong, China investors

Boosted by pent-up demand, a low interest rate environment and unprecedented stimulus measures, developers sold 1,329 new private dwellings, excluding government-subsidised flats, last month.

The increase in sales was matched by a quarter on quarter gain of 0.8 per cent in home prices in the July to September period, bringing prices back to their peak seen in the third quarter last year, according to Cushman & Wakefield.

“Investors should look at the collective sale market to replenish their land banks simply because government land sales are getting fewer and further between, and in most cases, these are sites that are less prime,” said Christina Sim, director, capital markets at Cushman. “Apart from collective sales, developers are looking for single-owner residential sites that can accommodate about 100 to 300 apartments to land bank.”

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