Collective sales and related valuation issues: a Singapore case study

Abstract

PurposeThe sale of a strata titled development collectively by individual owners is a unique experience in Singapore's real estate industry. This collective sale process is legislated by law, which allows dilapidated developments to be redeveloped to take advantage of the site potential. The purpose of this paper is to highlight the nature of strata titled developments, the collective sale process and the various valuation issues encountered.Design/methodology/approachA case study approach is adopted to illustrate the mechanics and the difficulties involved in the collective sale process. The different methods of valuation used to arrive at a fair distribution of the sale proceeds are illustrated.FindingsThe study reveals the appropriate methods of distribution of sales proceeds to be used under different circumstances. A few managerial implications arise from the study. These include the need to adopt a fair and reasonable attitude when approaching collective sales and to be in touch with the property market and the target market in order to arrive at a reasonable distribution method of the sale proceeds in order to satisfy the various stakeholders in the development.Originality/valueThe study provides an overall framework on how future collective sales in Singapore can be successfully conducted.