Collective sales that are done via auction have been a rare sight in Singapore as most sales have been done in a way of tender.
This coming February 24, a public auction for a three-storey apartment en-bloc along East Coast Road has been scheduled. According to the Business Times, this was the first-ever since 1997.
Collective sales done via auction was first completed in January of 1997. The auction was made for Scotts Tower and was won by DBS Land against Far East Organization.
A public auction for a collective sale has a clearer and receptive process for both potential buyers and property owners, as described by Edmund Tie’s Head of Auction and Sales Joy Tan.
She also added that in Hong Kong, redevelopment sites are usually disposed of during public auctions.
The Business Times quoted her saying “If successful, we will have more alternative modes of sale for en bloc sites.”
The freehold property has 8 parking slots and 6 walk-up apartment units and has an address along Marshall Road.
Ms. Tan said that all 6 owners gave their consent for the public auction as they firmly believe that the sale will be faster and more comprehensible. The residential property has a $12 million guide price.
If anything goes that the bids will be below the guide price, mandated instructions from the owners will be obtained according to Tan.
One of the owners who lived in the property for about 30 years, S. Lee said that about a couple of the owners are retired and would prefer to have a smaller unit.
PROPERTY HIGHLIGHT: The Scotts Tower
Late last year, he suggested the idea of selling the property via a collective sale since it will pretty much yield a better price compared to individually selling it.
In the 2019 URA Masterplan, the land has a record of 1.4 plot ratio with 7,418 square feet area. Zoned as residential, the site exhibits 29.2 meters in depth and 23.4 meters frontage.
In general, sellers will be advised by the consultants with the mode of payment to take into consideration various factors such as the owners’ expectations and the quality of assets, as per Knight Frank Singapore’s Head of Capital Market for Land and Building, Collective Strata Sales Ian Loh.
According to Loh, there is a possibility that a seller’s negotiating power in case the property under auction receives zero bid since the details of bidders are made public.
With buyers in a tender, they have the choice to submit offers for consideration to owners which may be below the asking price, and owners may think about their offer.
An example of sales via tender is Government Land Sales.
Scotts Tower en bloc was handled by Knight Frank in January 1997 via the public auction despite the upsurge in collective sales.
The property was likely predicted to receive about $90 million, yet it was sold to the Far East Consortium for a majestic price of $97 million in amazing bidding.
According to Business Times, all 32 unit owners received a staggering $3 million each which was way over if they sold their units individual the $1.2 million estimated price.