Shunfu Ville sale may be one-off

Going by the turnout for Shunfu Ville, most developers do not seem bullish. PHOTO: DANIEL NEO FOR THE STRAITS TIMES

News of the $638 million collective sale of Shunfu Ville last Friday must have been heartening for many owners of flats in ageing condos but the champagne should be kept on ice for a while longer.

Only one collective sale took place last year - mixed-use Thong Sia Building in Orchard - and none was completed in 2014.

This has not been for want of trying. Owners at Normanton Park and Amber Park are among those who have tried their luck in recent years and come up short. So while news of a collective sale could rekindle some excitement in the market, Shunfu Ville is likely to be the exception for some time.

Pricing has been the main stumbling block in most cases.

"While the Shunfu Ville sale could spark some life back into the market, the supply of realistically priced collective-sale opportunities is a key challenge," said Mr Karamjit Singh, international director of JLL, which brokered the Shunfu sale.

Apart from price point, site attributes, the size of a development and developers' outlook on the market are factors, said Mr Desmond Sim, CBRE research head for Singapore and South-east Asia.

Going by the turnout for Shunfu Ville, most developers do not seem bullish. The site, first launched for sale last year, attracted two letters of interest - one of which was from eventual purchaser Qingjian Realty (South Pacific) Group. It again attracted only two parties, including Qingjian, when the site was relaunched in January despite the land cost of about $747 per sq ft per plot ratio being quite reasonable, compared with recent sales nearby.

Would-be bidders were no doubt wary of the large site, given the law now that developers must build and sell all units on a site within five years or face paying Additional Buyer's Stamp Duty. There is also more risk associated with sites sold en bloc, evident from the foiled sale of Gilstead Court, for example.

The market is not ideal for such deals and anybody wishing to sell in this manner will have to price the property accordingly or ride out the current period of uncertainty.

Rennie Whang

A version of this article appeared in the print edition of The Straits Times on May 23, 2016, with the headline 'Shunfu Ville sale may be one-off'. Subscribe