En-bloc sales refer to the collective sale of an entire strata-titled development, where all the owners agree to sell their units together. This mechanism has been used as a method of strata scheme termination and urban renewal, allowing for the redevelopment of older buildings and the creation of new developments.
These collective sale facilitate the termination of a strata scheme in an efficient manner. It means that the process of acquiring multiple properties in a single transaction allows for a streamlined approach to urban renewal. Additionally, en bloc sales can be carried out in accordance with the planning framework, ensuring that the redevelopment aligns with the overall vision for the area (Zakiah & Khadijah, 2016). This helps to ensure that the urban renewal project is cohesive and contributes to the overall improvement of the neighborhood.
In Singapore, the sale of a property as an en-bloc transaction is regulated by the Land Titles (Strata) Act, which mandates specific majority consent requirements. For developments with less than 10 years of age, a minimum of 90% consent by both share value and strata area is needed. For developments that are 10 years or older, the requirement is a minimum of 80% consent by both share value and strata area.
Between 2017 and 2018, Singapore experienced a surge in en bloc sales, with over 60 projects and a total value of $18.9 billion. While the market slowed in 2019 due to the pandemic and government cooling measures, it showed resilience in 2021, with 11 successful en bloc sales valued at $2.2 billion.
Given the size of Singapore, en-bloc sales play a vital role in the property market and urban renewal in the country. One of the positive impacts of en-bloc sales is the potential for windfall profits for property owners. When a collective sale is successful, property owners can receive a substantial sum of money for their units, often higher than the market value of individual units (Lowe, 2020).
En-bloc sales can also facilitate urban renewal and the redevelopment of older buildings, contributing to the revitalisation of neighbourhoods and the creation of new housing options. However, it is essential to note that not all en-bloc sales are successful, and there can be challenges and disputes among owners during the process (Ling et al., 2022).
For a property developer in Malaysia to proceed with an en bloc sale, the unanimous consent of every resident is mandatory. Remarkably, just a single dissenting voice can entirely disrupt the en bloc sale process and ruin the opportunity for other homeowners, as well as the potential for badly needed urban renewal.
A common case highlighting the challenges of securing an en bloc sale is seen with Desa Kudalari, an ideally situated condominium in KLCC. The building drew the attention of 12 potential bidders at one point. However, this promising opportunity eventually unraveled due to the developer's inability to secure the essential 100% consent from unit owners.
There are rare instances where en bloc sales were obtained, and in this instances the new projects that resulted were successful. In 2013, the 50-year-old Razak Mansion estate achieved a successful en bloc sale with 100% consent from residents, led by developer Impianika Development. A total of 557 residents exchanged their old units for new apartments, while the remaining renters were offered new units at RM42,000. In collaboration with the government, the redevelopment project transformed Razak Mansion into 1Razak Mansion, featuring 658 three-bedroom apartment units, and was completed in 2017.
Later in 2019, Angkatan Koperasi Kebangsaan Malaysia Bhd (Angkasa) acquired 379 units in Datum Jelatek Residences, intending to offer them through a rent-to-own scheme for civil servants. This initiative aims to provide more affordable housing options for civil servants in Kuala Lumpur. Datum Jelatek Residences, located in Taman Keramat, KL, is part of a RM1.2 billion integrated development.
Fortunately, the government has now stated that the consent rate for en bloc sales would be adjusted to a more appropriate figure following an evaluation of international norms, aligning it with the approval rate observed in Singapore. To promote urban redevelopment, Prime Minister Datuk Seri Anwar Ibrahim said during the Budget 2024 announcement that the government will no longer demand 100% approval from current strata title holders for en-bloc sales.
One of the primary advantages of en bloc sales is their capacity to revitalise ageing or inefficient structures and infuse fresh life into urban landscapes, which is especially needed in Malaysia where lack of maintenance and upkeep woes plague low and medium-cost housing.
By consolidating multiple properties and encouraging the development of modern, more efficient, and aesthetically appealing buildings, en bloc sales contribute to the enhancement and rejuvenation of urban environments, promoting sustainable growth and improved living standards.
Ultimately, en bloc sales play a vital role in the process of urban renewal, offering an effective mechanism to revitalize ageing properties and enhance urban landscapes. By promoting the redevelopment of inefficient structures and the creation of modern, attractive buildings, en bloc sales contribute to sustainable growth and improved quality of life in densely populated urban areas. These transactions serve as a dynamic tool that fosters the transformation of cityscapes, making them more vibrant and accommodating for residents and businesses alike.
The benefits of en bloc sales in terms of urban renewal underscore their continued significance in urban planning and development strategies worldwide. However, due process is needed to ensure the rights of individual homeowners are protected.
Ling, G., Suhud, N., Chai, G., Leng, P., Yeo, L., Chau, L., … & Ho, C. (2022). Tragedy of the anticommons (toa) in agricultural land partition involving fragmented co-proprietorships: an analysis of Malaysian case laws. International Journal of Built Environment and Sustainability, 9(2), 11-20. https://doi.org/10.11113/ijbes.v9.n2.921
Lowe, J. (2020). Beyond the spectacle of property windfalls in singapore: lefebvrian spaces of home against profit‐making. Singapore Journal of Tropical Geography, 41(2), 209-225. https://doi.org/10.1111/sjtg.12314
Zakiah, S. and Khadijah, H. (2016). The en bloc sale mechanism as a method of strata scheme termination and urban renewal: a review.. https://doi.org/10.2495/sdp160321