We live in a densely populated island city-state, and making full use of our land space is a priority.
The Government implemented the "en bloc" strategy as a means to encourage the redevelopment of older estates as a practical solution towards enabling a growing population in the future.
Previously, in order for a collective sale of a development to take place, there needed to be 100 per cent agreement by property owners.
The minimum level of agreement to sell has since been changed to 80 per cent of owners.
Though it is an improvement, recent outcomes have shown otherwise.
In recent times, almost all collective sales have fallen through owing to the high reserve prices.
One of the main reasons is that rather unrealistic reserve prices have been set so as to make it attractive to get 80 per cent of owners to agree to the sale.
Therein lies a tension in marketing practices, where if a reasonable price is set, it would be difficult to convince owners to sell.
So, a "future price" is predicted based on an upward market trend.
But if the market is stagnant, then a high reserve price would not be matched.
It may be time to review the current rules, such that the percentage of nods required is based on an estate's age.
For example, for estates 30 years and older, the minimum level of agreement among owners could be set at 70 per cent; this level could be set at 75 per cent for estates 25 years and older.
This will facilitate collective sales where redevelopment is necessary.
A company needs the equivalent of 51 per cent of shares to pass resolutions, so a collective sale proposition that requires 70 per cent of owners to agree seems reasonable.
Eric Ang Teck Sin