Everything you need to know about block sales
What is a block sale ?
For a property developer, a block sale refers to selling their entire real estate program (or an entire building) to a single buyer. This form of sale, still relatively uncommon, is in contrast to the more traditional sale of individual units.
Block sales can involve new or existing properties, whether renovated or not, and can apply to residential buildings as well as mixed-use buildings (e.g. with a commercial space on the ground floor).
These property transactions are often reserved for professional investors, given the significant sums involved and the scale of the rental project. This could be real estate companies, social landlords, or banks and insurance organizations seeking to diversify their investments. The goal is to rent out all units to multiple tenants.
While less common, individual buyers are increasingly interested in block sales. They may look to smaller properties, sometimes already occupied, to receive rental income from the outset. Another form of increasingly popular investment involves renovating properties for sale as individual units.
2. What are the advantages of block sales for developers ?
Securing property transactions
Block sales may seem less attractive to developers due to a lower final sale price compared to individual sales. However, the price difference masks greater profitability, as it secures the commercial viability of the project at a low cost.
Most banks require a percentage of “pre-sales” to ensure the viability of a property project before financing it. In a block sale, this percentage is quickly achieved with a single sales contract. Additionally, isolated risks of unit reservations falling through are limited.
3. Reducing costs related to the sales phase
Selling a property takes time and resources.
This involves advertising listings, meetings with potential buyers, presenting the property, drafting pre-sales contracts or administrative tasks, and signing the authentic deed. These formalities must be repeated for each individual unit. A block sale of a real estate program (or part of it) allows the sales phase to be concluded with minimal effort.
Adapting to changing lifestyles
Block sales offer developers the opportunity to sustain their business while adapting to changes in occupant behavior and new buyer profiles.
Professional mobility and lifestyle changes are reducing the number of owner-occupiers in some cities. Unfamiliarity with future job prospects, lack of solvency, or rising real estate rates mean that individuals are increasingly turning to renting as a primary residence.
Thus, the current period is conducive to rental investment, both for social housing and for high-end T4 or T5 apartments.
4. The benefits of block sales for investors
Reducing management expenses
If block sales constitute a specific market, it is because they also meet the needs of property managers. Like many areas of activity, bulk purchasing often results in more advantageous prices, similar to wholesale purchasing.
But the reduction in expenses does not stop at acquisition.
The costs associated with maintenance and operation are also reduced compared to managing multiple units in multiple buildings. With a substantial surface area, negotiating rental management fees or tariffs with a construction company is made easier.
To effectively sell your real estate programs and quickly study the context of a plot, the Buildrz application provides you with access to all the essential information for decision-making: completed transactions, offers for new housing sales in the area, urban planning regulations, and financial balance simulations. To learn more, don’t hesitate to request your demo!