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Broker's take: JP Morgan says Singapore en bloc frenzy is sustainable

THIS en bloc boom has legs, analysts at JP Morgan reckon. With collective sales having quadrupled year on year to S$5.2 billion year to date, the analysts believe that the Singapore property market is poised for the start of a "sustainable" three-year en bloc cycle, they said in an Oct 5 research report.

The en bloc cycle's sustainability will be driven by the following factors, the analysts said: the record-low unsold near-term pipeline of units, the perpetual fall in developers' replenishment-to-sales ratio, and an insufficient number of confirmed list sites from government tenders with low probability of reserve list sites being triggered.

Even so, en bloc sales momentum could be derailed by hikes in the development charge which will erode developers' margins, or the sizeable launch pipeline in 2019-2020, the JP Morgan analysts warned.

To date, 2017 is the year that saw the third-largest value in en bloc deals after 2007 (S$12.2 billion) and 2006 (S$8.2 billion), the report noted.

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"...but the transaction value could rise as a slew of prospective deals may occur over the next three months," it said.

"Combining projects in varying parts of the en-bloc process and previous failures, we estimate at least 80 more projects in the pipeline."

JP Morgan's top property stock picks are City Developments (CDL) and UOL Group (UOL).

CDL's shares traded 1.9 per cent up at S$11.63, while UOL's shares traded 3.7 per cent higher at S$8.5 as at 3.30pm on Friday.