Stop right there, grab a seat, and listen up!
There are challenges facing the en-bloc market, including spiraling interest rates and bewildering regulations. What is actually happening, then? Will the en-bloc frenzy of 2017–2018, in which billions of dollars were exchanged, ever return? Let's examine it!
Why Is the En-Bloc Market Slowing?
The en-bloc market has shifted gears, and here's why:
1. Skyrocketing Costs
Rising inflation and high borrowing costs are putting pressure on developers' profit margins. To put it simply, the profitability of those en-bloc purchases is decreasing.
2. Cooling Measures
The additional buyer's stamp duty (ABSD) and other cooling measures implemented by the government are making things difficult. For instance, a hefty 60% ABSD is currently in place for foreign buyers, making the idea of purchasing en-bloc properties difficult to sell.
3. Unsold Inventory
Developers have unsold units from previous en-bloc transactions sitting around. Consider it like an overflowing closet: You can only purchase additional items once you have cleared out your current collection.
4. Regulation Changes
The amount of space that can be sold in developments is being reduced by new regulations such as the gross floor area (GFA) harmonization. This implies that for en-bloc properties, developers are less inclined to pay top dollar.
5. Wait Times for HDB Resale
Homeowners wishing to downsize to HDB flats after an en-bloc sale must endure lengthy wait periods - up to 30 months for a build-to-order (BTO) unit! Selling as a group is less appealing because of this additional challenge.
What's the Impact?
It will take longer for homeowners to receive those en-bloc payouts and less alluring offers from developers as a result. All developers need to know is that being cautious means making smaller bids, closing deals more slowly, and acquiring land with a more conservative mindset.
The bottom line?
In 2024, the en-bloc market will still be slow. However, by being aware of these elements, you'll be more equipped to negotiate the real estate market and reach wise choices.
