What is Enbloc Sale ?

 What are enbloc sales?

 

Some people view enbloc sale or collective sale of a real estate development as if it is the best thing to come along since the invention of white sliced bread. However, there are more than one perspective on this subject.

 

Enbloc sale is about a group of owners in a development who wants to sell their individual strata units at a price that is higher than what they can achieve individually. This is only possible if the redevelopment value of the land is higher than the sum of the resale price of all the strata-units in the development.

 

However, in the enbloc sale process, they must persuade and cajole a large majority the owners to sell their homes at the reserve price that is initially decided by the Collective Sale Committee.

 

The rest of the objecting owners, if they number less than twenty percent of the owners, are submitted to the tyranny of the majority.

 

In most residential enbloc sales, the property owners can be broadly divided into three groups.

 

The first group: The eager sellers

 

The first group of owners are those who are strongly in favour of the enbloc sale. They could be investors who do not live in the residential development and view the condominium purely as an investment asset. To this group of owners, the financial return from their asset could be the overriding reason for their support of the enbloc sale.

 

In the first group are also some owners who will want to sell their condo units in the near future, even if there is no enbloc sale. Therefore, they will support the enbloc sale because it would bring additional sale proceeds if it succeeds.

 

The owners in this first group are motived mainly by the financial gains. They must get the required number of owners to agree to the enbloc sale, by mean fair or foul.

 

The second group: The home defenders

 

The second group of owners are those who do not support the enbloc sale for various reasons. Some owners may enjoy living in the residential development and has grown attracted to it. They may want to continue to live in the condo and do not wish to move elsewhere. Afterall, the owners and tenants of the property is entitled to the quiet enjoyment of the property under common law.

 

Other owners may not feel that there is any reason to sell their home so that it could be torn down. This is especially if the property is still perfectly liveable and functional. Why destroy a perfectly useable home when there are millions of people around the world who are homeless?

 

Another consideration is that construction damages the environment. The production of cement and the entire construction of a condominium project releases tonnes of carbon dioxide into the atmosphere and contributes to global warming. The damage to the environment is compounded when a useable property is demolished to facilitate the re-construction of another property on the same site. Such activity is a waste of resources.

 

Some owners do not support the enbloc sale because they believe that the reserve price undervalues the real redevelopment value of the property.

 

In addition, the money that the owner in this group would receive may not be enough for them to buy a replacement home of similar size, land tenure and quality.

 

These reasons are not mutually exclusive. The owners in this group can have more than one reason not to support the current enbloc sale attempt.

 

The third group: The undecided

 

The third group of owners are those who have not made up their mind on the enbloc sale. Some are waiting to gather more information so that they can make a more informed choice. While others may support the enbloc sale if the price is high enough.

 

An emotional affair

 

The reasons for each group of owners are not exhaustive. There could be other reasons best known to each property owner.

 

Enbloc sales can become emotional events. It turns neighbours against neighbours. Since the previous failed enbloc sale attempt in 2018, some owners in Teresa Ville have continue to show cold shoulder to other owners who do not share the same opinion about the enbloc sale.

 

But it does not need to be like this.