Enbloc Valuation in Singapore
How does Enbloc Valuation work in Singapore?
In Singapore, an en bloc valuation refers to the valuation of a group of properties or a development as a whole for the purpose of collective sale. The term "en bloc" is derived from French and means "as a whole" or "as a group."
Here's how the en bloc process typically works in Singapore:
Initiation: The process usually starts when a significant number of owners within a development agree to collectively sell their properties. This decision is often prompted by factors such as aging infrastructure, potential redevelopment opportunities, or favorable market conditions.
Appointment of a Sales Committee: Once a sufficient number of owners have expressed interest in a collective sale, a sales committee is formed to represent the interests of all owners involved in the en bloc process. The sales committee is responsible for overseeing the entire process, including selecting a real estate agent and engaging professional valuers.
Engagement of Professional Valuers: Professional valuers are engaged to conduct an independent valuation of the entire development. These valuers assess various factors, including the development's land value, potential redevelopment value, market conditions, and other relevant factors.
En Bloc Agreement: Based on the valuation results and other considerations, the sales committee negotiates an en bloc agreement with prospective buyers, typically developers or investment firms. The agreement outlines the terms and conditions of the sale, including the sale price, payment schedule, and any other relevant provisions.
Approval Process: Once an en bloc agreement is reached, it must be approved by a requisite percentage of owners within the development, usually a supermajority. Additionally, the sale may also require approval from relevant authorities, such as the Strata Titles Board (STB) or the High Court.
Execution and Completion: If the sale is approved, the transaction is executed, and the properties are collectively sold to the buyer(s). The sale proceeds are then distributed among the individual owners according to their share of ownership in the development.
En bloc valuations in Singapore are complex processes that involve multiple stakeholders and legal considerations. Professional valuers play a crucial role in providing accurate and impartial valuations to guide the collective sale process.
How are the Sale Proceeds Divided between the Strata Owners?
In the context of en bloc valuations in Singapore, the method of apportionment refers to the process of determining how the sale proceeds from the collective sale will be distributed among the individual owners within the development. Since each owner typically holds a different share of ownership in the development, the method of apportionment ensures that the distribution of sale proceeds is fair and equitable.
There are several common methods of apportionment used in en bloc valuations in Singapore:
Share Value Method: Under this method, the sale proceeds are distributed based on the share value of each individual unit within the development. The share value is typically calculated by dividing the total valuation of the development by the total number of shares, with each unit assigned a certain number of shares based on its size, location, and other factors.
Strata Area Method: In this method, the sale proceeds are allocated based on the strata area of each individual unit within the development. Larger units receive a proportionally higher share of the sale proceeds compared to smaller units.
Proportional Share Method: This method takes into account both the share value and the strata area of each unit. The sale proceeds are apportioned based on a combination of these factors to ensure a fair distribution among owners.
Modified Share Value Method: Sometimes, adjustments are made to the share values to account for factors such as differences in floor levels, unit orientation, or other unique characteristics of individual units. This method aims to provide a more accurate reflection of each unit's contribution to the overall value of the development.
The method of apportionment chosen for an en bloc valuation depends on various factors, including the terms of the collective sale agreement, the preferences of the owners, and any legal or regulatory requirements. It's essential for the sales committee and the valuers involved in the process to carefully consider these factors to ensure that the distribution of sale proceeds is fair and transparent for all owners involved.
