Property News & Market Trends

How can one be fair to ALL owners in an enbloc sale?

The recent implementation by the Ministry of Law is a good thing. But nevertheless, it will never be “fair” to all.

How could it be? In an enbloc sales, the ones who benefit the least will be a disgruntled party. Sentimental reasons aside, monetary value is always the prime issue.

Out of every successful enbloc sales, there are at least 15 that never see the lights at all! That’s what one Enbloc Sales Trainer estimated. The main reason? Price. The second would be disgruntled minorities.

So, how can one avoid being a party of disgruntled minorities?
Wisdom. Stay away from such unhappiness. Stay away from Enbloc potentials! It’s that simple.

If you really must, look before you leap. Look at the property you are interested in.
- Is it more than 10, 15 or 20 years?
- How big is the project? The larger it is, the easier it may be seconded.
- Check out if the majority of owners had stayed for more than 10 years.
- Avoid buying an Enbloc potential if the average price transacted for more than 20%(more than 10 years project) or 10%(more than 20 years project) of the owners are below the average price of the majority owners.

Eg; The Project is 18 years old, FH with 100 units. The average transacted price is $475psf.

- There are 5 owners that bought at an average high of $610psf, with the highest at $687psf.
- The top 20% average price transacted is about $553psf.
- There are new projects of similar size in the area going for an average of $620psf.
- You are looking at a 1000sqft unit with a price tag of $535psf. Will you buy?
If you think it’s a good buy with an upside of $80-100psf in the short term, you may be in for a surprise.

Firstly, your upside will never be $80-100psf unless the entire market moved upwards by a large margin.
Within the next 2 years, a proposal may be raise to proceed with an Enbloc Sales.
If 80% of the owners agreed to pass the resolution to sell at $550psf, you would have made a miserable 0.5% or even suffer a slight loss due to renovation works, stamp duty, legal costs and bank interest.

To avoid being a disgruntled owner, simply avoid such buys. Unless you are the developer. – Danny ‘Bingo’

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