WHILE some home owners have to wait years for a collective sale windfall, speculative investors can hit the jackpot in just months if their buys pay off.
Last week, Colliers International auctioned off a penthouse at Silver Tower in Cairnhill Road for a whopping $6.12 million - way above its market value of $4.5 million - because it came with the potential reward of collective sale proceeds.
If the collective sale, now at an advanced stage, materialises, the buyer could get $7 million or more.
Properties that could soon be sold en bloc can typically garner a premium of 5 to 15 per cent, said property consultants.
Ms Grace Ng, auctioneer and executive director of property consultancy Colliers International, cited an Aug 16 auction, where she sold a 1,872 sq ft freehold unit in Charlton Garden in the Upper Serangoon Road area for $610,000 - $80,000 more than the opening bid of $530,000.
The four-storey block was put up for collective sale in a tender that closed in May, though the bids did not match the owners' asking price of $1.1 million each.
But there was keen interest at the auction because the bidders were aware of the collective sale attempt, said Ms Ng.
Salesman David Toh, 40, was one lucky 'collective sale' buyer. In 2003, he paid $845,000 for Calrose Garden apartment in Yio Chu Kang Road, well up on the $650,000 opening bid, but made a quick profit of over $200,000.
'About a month after that, the property's agent asked if we will accept the collective sale proceeds of nearly $1.15 million,' said Mr Toh, who did not know about the en bloc sale before his purchase.
The problem, though, is finding such apartments, as canny investors would have swept up most of them early on.
One investor bought a three-bedroom maisonette at 99-year leasehold Gillman Heights, located off Depot Road, for about $580,000 last April. If the collective sale tender for Gillman Heights goes through, the investor could get nearly $900,000.
'The seller wanted to get rid of his apartment quickly as he was migrating. It was advertised and the buyer called at 7.30am to ask my agent to keep it for him. He said he would pay an extra 1 per cent commission,' said PropNex Realty's senior division director, Mr Eric Cheng.
'We found out later that he already had two units there and seven months later, the property proceeded with a collective sale.'
To get ahead of other buyers, potential investors will need to do some homework on their own or with property agents.
'You need to know some basic things such as the plot ratio, development charge and height limit of a site. You have to know how much gross floor area a site can take, for example, to access its potential for a collective sale,' said Mr Cheng.
Of course, a project's collective sale is very much dependent on the owners' wish to sell. Assuming that is not a problem, investors will also need pure luck to pick out the right properties, agents said.
'The rest will also be based on your gut feel of the site's locality,' added Mr Cheng.
joyceteo@sph.com.sg
