Three signs that your desired en bloc sale might not be happening
19 August 2017
Ah, the en bloc sale. Everyone wants a slice of this profit cake. We’ve
come to associate an en bloc sale with huge windfalls, and the
potential sale of Tampines Court at $970 million is set to be the
latest and the biggest in the past decade.
I vaguely remember how my dad used to scrimp and save just so we could
keep our Faber Garden unit till it enblocs. He believed the condominium
estate had huge potential as the land’s plot ratio was under-utilized,
and there were rumours that an upcoming MRT stop (since revealed to be
the future Springleaf station on the upcoming Thomson-East Coast Line)
will be near the back gates.
So six years ago when a committee was set up and the condo was put up for
an en bloc offer, my family was so excited. We’d talk about it over
dinners and fantasized what we’d do with the profits. This excitement
Poof! There were no takers and the en bloc ultimately failed (oops)!
Having gone through such an experience for the past decade, I'm going
to save you from experiencing the same disappointment. Here’s three signs
why your desired en bloc isn’t going to happen:
1. Your estate is just too big
As we've seen with properties like Faber Garden and Amber Park, an
estate can be too big for developers to afford buying over at a
Furthermore, since 2011, developers in Singapore have to be Qualifying
Certificate (QC) holders. This means they're given 5 years to complete
construction and obtain the Temporary Occupation Permit and Certificate
of Statutory Completion, better known as TOP and CSC. Then, they
have to sell off all the units within two years after completion. This
means they only get five to seven years to do everything.
This includes tearing down the development, building it, marketing and
selling it, and completing the construction. If they don’t meet the
respective deadline, they’ll have to pay what is commonly called an
“extension fee” ranging from 8% to 24% of the land price.
Because of the tight time frame, few developers would want to buy a
large estate, and risk paying expensive extension fees. They’d rather
buy an equally large plot of undeveloped land, and save time because
they don't have to do the extra work of tearing down buildings.
2. There hasn’t been much development or transformation in your area
If there hasn’t been much development or transformation in your area,
chances are the land value around your estate won't have risen much.
Developers will have less reason to purchase your estate if they don't
see any future potential in the surrounding neighbourhood.
On the other hand, it really only takes one major change to your
surroundings to push the value of your land far beyond the imagination.
Take Rio Casa’s recent en bloc acquisition for example. A developer was
willing to pay 27% more than the land’s asking price. Why? Because Paya
Lebar Airbase, which is literally next door, is slated to move to
Changi by 2030. Rio Casa would then be next to both a maturing Hougang
estate, as well as a new estate bigger than Bishan or Toa Payoh.
Which brings me to my next point...
3. The land space in your estate has been maximised
If you’re living in an estate that has 30 to 40 over levels in each
building, and the blocks are closely packed together, there's a high
chance the plot ratio of area your estate is in has already been
At the risk of oversimplifying the definition, the plot ratio
determines how many floors (both above and under ground) you can build
on a site. In an area with a plot ratio of 1.4, for example, buildings
typically won't go beyond five stories, while in an area with a plot ratio
of 2.8, buildings typically go up to 36 stories. Developers naturally
would want to look for land with a high plot ratio, since that way they
can maximise their profits by making their buildings as tall as
In a nutshell, the deciding factor of whether your estate gets an en
bloc offer rests upon several factors, both within your control and
unfortunately, beyond your control. There's no way to say for sure if
your estate is the next Tampines Court or the next Faber Garden, but if
your estate meets these three signs, then it might be time to lower your