Are you looking to rent or buy a house in Singapore? If you do not watch yourself you can go crazy about the En Bloc Monster.
En Bloc is the thing that you will hear whenever you are hunting on the real estate market in Singapore. Everybody knows somebody who knows somebody that either became a millionair overnight or was forced out of their home.
This time it started bubbling up in 2016 and by 2017 it had an estimated value of S$ 8.6 billion for just 27 transactions. And imagine what 2018 will be like with the first quarter had a combined value of over S$ 8.2 billion for 25 transactions.
So what is En Bloc
In short En Bloc is the collective sale of an entire complex for redevelopment. The definition of the Ministry of National Development Strata Board is:
A collective sale, also known as an en-bloc sale, is a sale of two or more property units to a common purchaser. A common en-bloc scenario is one where all the units in a strata-titled development are sold to a developer and proceeds are divided amongst all the unit owners. Other variations of en-bloc sales include the sale of all units in a development together with an adjoining development or landed properties.
And three factors highly determine the likelyhood of an En Bloc proces to be started:
- a property’s age (anything over 20 years old is at risk)
- number of units (small number is riskier then high number)
- plot value enhancement. (what is the premium of the newly developed property)
What indicators are there to determine the likelyhood of En Bloc at a particular property? EdgeProp has analysed the recent collective sales transactions an came op with the following matrix.
Why is it important for you as a tenant to be?
The En Bloc can have a big impact on your daily life if you live or are going to live in a development under En Bloc. As the average timeline is about 18 months you should take this into account when entering a lease agreement. Are you offered a 12 month lease then you can be 99.9% sure that the development is going to be in a fase of En Bloc.
In Singapore you are not very well protected as a tenant. If you are a tenant in a development that is considering En Bloc you are facing challenges as more and more people are going to enter the rental market as more and more homes are taken from the market. And once you have received a notice you have an avarage of 9 months to vacate your rented home.
So the next time you are hunting on PropertyGuru.com.sg keep the age of the development in mind and check the rental price per squar feet. And as always…
If it sounds to good to be true it probably is.