SINGAPORE (Oct 7): A rise in the number of en-bloc sales is signalling property developers are hungry for land amid a dearth in land bank supply, according to DBS Research.

The UOL/UIC acquisition of Raintree Gardens in Potong Pasir for $334 million is the second en-bloc sale this year, says lead analyst Rachel Tan in a Friday report.

The sale follows Shunfu Ville’s en-bloc sale for $639 million earlier this year, which was the first en-bloc sale in nine years.

The consideration for Raintree Gardens was 6% above the previously reported indicated price of $315 million, notes the analyst. UOL/UIC could increase the gross floor area by 43%, with Tan estimating the breakeven cost to be $1,650 to $1,260 psf.

This spike in en-bloc sales also indicates developers adopting a more positive medium-term outlook as land banks have tighter rules and Qualifying Certificate (QC) charges in seven years if the units are not fully sold and the en-bloc process will likely be longer.

UOL/UIC has also made its second acquisition of an investment property in midtown London, Holborn Island, for $230 million. Tan highlights that the yield is better than UOL/UIC’s first London property and that the acquisition is in line with UOL’s strategy to grow recurring income.

Another en-bloc sale hitting the headlines is the disposal of iLiv@Grange by Heeton to a group of Singapore private investors for $95 million. This is below the initial asking price of $129 to $135 million, according to Tan.

The property obtained TOP in October 2013 and has already paid the first QC charges estimated at $5.8 million in Oct 2015. Heeton has yet to sell a single unit and QC charges are set to double this month.

Heeton has been hit hard with iLiv@Grange, announcing a profit warning for 3Q16 due to losses from the disposal which Tan estimates to be $11 million.

UOL is up 10 cents at $5.84, UIC is up 2 cents at $2.74 while Heeton is trading flat at 41 cents.

What does the recent spurt in en-bloc sales mean?

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What does the recent spurt in en-bloc sales mean?

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