Minority homeowners suffer in enbloc sales

The rising price of replacement property is dampening the spirits of some owners in en bloc sales, even though the compensation they get from these collective deals is usually much more than if they had sold on an individual basis.

Gillman Heights condo resident Alan Khew is downgrading to an HDB flat. He wrote to AsiaOne to lament that he could not afford to live in private housing anymore, despite the fact that the largest residential en bloc sale in Singapore earned him about 50 per cent more than if he had sold it on the open market himself.

Mr Khew, 42, an IT consultant who bought his three-bedroom unit there for $560,000 in 2000, reckons that the $900,000 sales proceeds will not be enough for him to buy another condo in the same area of Alexandra. A quick check of the Classified ads shows that similar sized, 99-year leasehold condo apartments in District 4 are all above $1 million.

He said: "I have become worse off. With the proceeds, my only choice is to downgrade to a HDB. I am now forced to sell my condominium apartment with swimming pool and clubhouse facilities to downgrade to a smaller HDB apartment."

Another disgruntled seller, who is moving from his condo in the Newton area to a 5-room HDB flat in Dover after an en bloc sale, will miss the convenience of living a stone's throw away from Orchard Road.

Said the 61-year-old bachelor: "For a person who doesn't drive, this is an important consideration. The proposed en bloc offer - while triple the price I had originally paid - will not, however, be enough to purchase a similar place in the same neighbourhood. I may be able to rent a condo in the same area for now. But will rents continue to be this cheap forever - or at least for my lifetime?"

Savills Singapore's director of business development and marketing Ku Swee Yong observed that as en bloc deals spread, more sellers from these properties will downgrade.

"Collective sales are expected to continue at this pace. The sellers have to look for replacement unit but by the time they receive their money, the prices of similar accomodation would have risen in this bullish market. In particular, those who are nearing their retirement age will not be willing to overspend and borrow from the bank, and instead will move to cheaper housing," said Mr Ku.