En-bloc fever could spur price recovery next year

Three en-bloc deals were closed in the past week.

It seems like the en-bloc fever is back, following the three en-bloc sales that were closed within one week, the latest being MCL Land putting a robust $765m bid for Eunosville.

DBS Group Research said this could mean that developers seem to be pricing in a price recovery in 2018 in their bids, implying the bullish sentiment towards land-banking good quality sites in Singapore. This could imply upward pressure on prices in the medium term.

To recall, the earlier en-bloc sales were Rio Casa and a smaller plot of land, Goh & Goh Building, transacted on 25 May. This brings the total en-bloc sales to four since the beginning of 2017.

"We estimate that from these projects, we could potentially see 3,100 of new residential units (42% of total units from government land sales) coming from the above four land sites," DBS said.

Meanwhile, DBS reckons that the government will stand ready to taper any signs of over-zealousness from developers looking to land-bank in Singapore.

"This will likely come from raising the number of available land sites in the 2H17 government public land tender and/or raising the number of confirmed sites in the pipeline. This will, in our view, signal the government readiness to tackle any unintended “bubble” that could form in Singapore land prices if such aggressive bids continue on. We believe to see such signals as early as in the 2H17 Government land sales (GLS) program," it explained.