En-bloc sales -- the combined sale by the owners of two or more properties to one buyer -- often benefit the sellers, who are usually able to demand more than the market value for their properties.
In tiny Singapore, where apartment buildings are often knocked down and replaced before they are 30 years old, en-bloc sales have become a measure of the residential property market. Prime areas are redeveloped and rental markets enjoy price gains as sellers seek new accommodations.
In 2007, there were 86 en-bloc sales in Singapore, amounting to $11 billion. In 2009, there was only one, amounting to $100 million. This year, however, there have been 21 such deals so far, amounting to $1.09 billion. Industry experts have seen increased en-bloc activity in the mid- to high-end market.
In the last six months, a gauge of the nation’s real estate stocks has gone up 13%, compared with the 11% gain in the benchmark Straits Times index.
The premiums from en-bloc sales can affect the rest of the market. The record number of en-bloc sales in 2007 raised rental rates by an unprecedented 41%.
The property market rose 23% in the third quarter of the year from the same period in 2009. As a result, the government has introduced some cooling measures, including an increase in down payments for second mortgages and a stamp duty on property held less than three years.
En-bloc deals have given rise to disputes whenever some unit owners in the area or apartment building being considered don't want to sell and their neighbours do. And as the residential market gets hotter, these disagreements may get more heated as well.