Apportionment methods in collective sales

Abstract

Due to scarcity of land in Singapore, the authorities are constantly maximizing land use, through measures like re-zoning and increasing of plot ratio.

Individual property owners can benefit from the increase in plot ratio if all owners from the same estate come together with an agreement to sell their properties to a common purchaser. This process is known as Collective Sales (also known as En-Bloc). Through collective sales, owners usually are able to collect a higher premium than selling their apartment individually in the open market.

Collective Sale could actually turn owners into instant millionaires; however the process to accomplishing one is tedious. In order for a development to qualify for collective sales, the majority of the owners must have entered into a conditional Sale and Purchase Agreement which must state the proposed method of distributing the sale proceeds.

One of the main reason why some collective sale attempt fail is because less than 80% (or 90%) the owners of that particular development did not agree to the collective sale.

It leads down to the apportionment method of the sales proceeds. There are various ways of distributing the sales proceeds. However, finding the best apportionment method or the fairest method is crucial in order to get 80% (or 90%) or more owners to agree to sell their properties collectively.

The goal of this project and report is to discover the best apportionment methods that could satisfy the criteria of collective sales for 2 developments as case studies.