Ageing malls going for en bloc sale

It may be early days yet but en bloc fever could be making a comeback, and not just for home-owners.

At least two ageing malls are trying for collective sales now that the economic crisis looks to have blown over.

Katong Shopping Centre in East Coast Road has appointed a marketing agent, the Dennis Wee Group. Its collective sale committee has held at least four meetings with the agent in the past three months.

At Golden Mile Complex in Beach Road, unit owners said property agents from PropNex went around a few months ago to collect signatures from anyone interested in selling their shops, offices or residence.

Owners said the agency promised them a high reserve price of $1,300 per sq ft (psf), double what was being transacted then.

Mr Winston Low, chairman of Katong Shopping Centre’s collective sale committee, said the mall’s owners talked about selling as far back as 1996. But it was not until 2007 that they decided to take action.

‘The surrounding area was already developed, and we felt it was a good time to try,’ he said, referring to the many residential projects that have come up in the vicinity. You see a lot of successful stories but also lots of disputes. We were very careful,’ he said.

The committee received approval from more than 80 per cent of the 410 owners. About 30 per cent of the 36-year-old mall is owned by Singapura Developments, a subsidiary of City Developments.

Mr Jimmy Teng, investment sales director at Dennis Wee Group, believes the 90,000 sq ft site might be prime for another mall – one that is less ‘overwhelming’ than the nearby Parkway Parade.

Mr Low said the committee is working out the apportionment details and has set a reserve price of $2,000 psf.

Apportionment is always the biggest challenge facing a collective sale for mixed developments with multiple owners.

For instance, shop units on the ground floor or those with frontage would likely demand a larger share of the pie compared to less visible units.

Relying on share values and strata areas is not enough, and professional valuations are often needed when doing the sums, said property experts.

‘The challenges may be overcome if the profit element is immense. Part of the solution to overcoming that is to incur more money to get valuers in,’ said Mr Karamjit Singh, managing director of Credo Real Estate.

Property consultant Steven Ming thinks there may be a few launches of mixed-development collective sales this year. ‘We will still need to hold our breath and see if a transaction will materialise as there generally is still a disconnect in price expectations between en bloc sellers and buyers,’ said Mr Ming, Savills’ director of investment sales and prestige homes.

Only a few commercial buildings, including Kim Seng Plaza, Kim Tian Plaza and Ming Arcade, have been sold en bloc in the past few years.

Others, like Paramount Hotel and Shopping Centre, Roxy Square and Parklane Shopping Mall, tried to jump on the bandwagon during the last property boom, but with no success – and, for now, are not trying to do so again.

Mr Ho Eng Joo, Colliers International’s executive director for investment sales, believes land values are not high enough yet for most owners of mixed developments to bite.

The old malls sit on prime land, and the owners are in no great hurry. Still, the price must be right to draw interest from developers.

‘If owners can get their act together, fulfil all the amended laws, get consensus, then developers will of course be keen to look at these developments,’ said Mr Ho.