FACTORS CONTRIBUTING TO SUCCESSFUL COLLECTIVE SALES

Abstract

To cater for future land development, the Urban Redevelopment Authority has assigned higher plot ratio and building heights to various areas. This increase in development intensity encouraged the start of collective sales. Since 1994, collective sales have renewed Singapore's urban landscape by creating a total of 29,101 new units. In order to facilitate the process of collective sale, Singapore has made amendments to the LT(S)A in 1999 and initiated a new service to grant preliminary approval for the renewal of lease tenure for leasehold residential sites in 2005. Despite these amendments, collective sale deals still meet with difficulties and obstacles. As a result, approximately 37 out of 100 collective sales have failed to be concluded in year 2006. Therefore, it is essential to investigate the reasons behind these failures and determine the crucial factors leading to successful collective sales. Through statistical inference such as covariance and correlation and case studies, it is found that market conditions and owners' expectation have a strong influence on the outcome of collective sales. A bullish market may encourage developers to purchase sites actively in spite of increasing costs but it has also raises owners' expectations concurrently. In addition, the number of owners and physical conditions of the building are not necessary vital to the success of collective sales. Instead, the disparity in interests and expectations among the owners is a deeper concern. Hence, experienced property consultants are needed to manage owners efficiently and adhere closely to the procedural requirements stipulated in LT(S)A.