Singapore Property News Upfront 20

$1.6m for each Pender Court owner
Pender Court, off West Coast Highway and near the Caribbean and Reflections at Keppel Bay condos, has been sold for $80 million or about $872 psf of potential gross floor area. No development charge (DC) is payable. The unit land price for Pender Court surpasses the last collective sale transaction in the location - that of Fairways Condo which was sold in May for about $785 psf per plot ratio, inclusive of DC and the cost of buying an adjoining piece of state land.

Cushman & Wakefield brokered the collective sale of Pender Court through a private treaty deal inked earlier this week. The 65,480 sq ft freehold site is designated for residential use with a 1.4 plot ratio (ratio of maximum potential gross floor area to land area) and a five-storey maximum height under Master Plan 2003. The buyer is Bravo Building Construction, which plans to redevelop the freehold plot into an 80-unit condo slated for launch in the second quarter next year. ‘We should easily be able to sell at an average price of $1,800 psf,’ Bravo director Jenny Tan told BT. She reckons Bravo’s breakeven cost for the project will be around $1,200 psf.
‘The site has excellent ‘feng shui’, with the front facing the sea and having Mount Faber as its backdrop. We’re looking for an architectural firm to design a resort-style boutique condo on this site,’ Mrs Tan added.

Bravo, a five-year-old outfit involved in the construction and property development business, has bought some 15 sites in Singapore since September last year. The sites are predominantly residential plots purchased through collective sales and are mostly located in the eastern part of the island. Most of the sites have land areas of 30,000 to 45,000 sq ft. These include Castle Court at Changi Road, Regent Court in Serangoon and Koon Seng House in the Still Road area. The gross development value of the group’s Singapore residential landbank is around $800 million. ‘We will start launching residential projects from November this year,’ Mrs Tan said.
First off will be an 80-unit condo on the Koon Seng House site, and a residential and small office, home office (Soho) project on the Castle Court plot.

Mrs Tan reveals that Bravo was the party that earlier this week sold eight freehold semi-detached houses along Mountbatten Road to Lian Beng Group for $42 million. The eight houses can be redeveloped into a condominium. Mrs Tan also said that Bravo was the highest tenderer in a Singapore Land Authority tender to lease the former CPIB Building at 150 Cantonment Road on a monthly rental offer of $1.88 psf of gross floor area. ‘If we are awarded this building, we can fit it out as high-tech offices in about three months. We could have about 45,000 sq ft net lettable area of office space,’ Mrs Tan said. Pender Court’s collective sale is subject to approval from the Strata Titles Board. Owners of the existing 48 apartments will each receive over $1.6 million, according to Cushman & Wakefield.

Source: The Business Times, 06 July 2007
Posted by Property Wizkid

Government releases more land for Little India
The Urban Redevelopment Authority (URA) yesterday launched a ‘white site’ at the junction of Race Course Road and Rangoon Road for sale by public tender. Experts believe the 1.36 ha could fetch as much as $280 million.The 99-year leasehold site, which is directly above the Farrer Park MRT Station in Little India, has a 4.2 plot ratio, which means it can generate a maximum gross floor area (GFA) of about 57,225 sq m.

‘Judging by the nearby City Square Residences, the site could fetch $400-$450 per square foot per plot ratio,’ said Lui Seng Fatt, regional director at Jones Lang LaSalle. This works out to $246.4-$277.2 million. The land parcel is zoned white, which means that it can be put to a range of uses including hotel, retail, dining, entertainment, office and residential. The site, however, comes with a URA requirement that at least 40 per cent of its maximum GFA to be allocated for hotel use.

‘The minimum quantum of hotel use will provide opportunities to meet the demand for hotel accommodation in this area given its location near the historic district of Little India, which is popular with tourists and locals,’ the URA said. The successful bidder can then choose to develop the remaining 60 per cent of GFA for additional hotel and/or residential, commercial or hospital uses, the government body added. Allowing hospital use will help meet increased interest in private hospital developments, the URA said.

The land parcel is one of the ten sites that were transferred from the reserve list to the confirmed List of the Government Land Sales Programme for the second half of 2007. The site was first offered in August last year, but saw no takers. The URA then decided to open up the plot to hospital development. Even then, a developer will be most likely to use the remaining 60 per cent GFA for residential and commercial space rather than hospital development, observers said. ‘Residential and commercial use will probably prevail because it provides better opportunities for that area,’ Mr Lui said.

Source: The Business Times, 06 July 2007
Posted by Property Wizkid

Construction boom? Cost boom too!
The construction sector may be hitting the high notes but the simple truth is that one can’t get building materials for a song. Their price has climbed with the boom in the industry.While the cost of concreting sand came under the microscope earlier this year, a detailed study has revealed that, away from the headlines, the cost of other key materials like structural steel, clay bricks and ready mix concrete has also been going up.

Bundling the numbers together, construction cost consultancy Rider Levett Bucknall (RLB) has estimated that costs for Q1 2007 - captured by its in-house Tender Price Index (TPI) - were 15 per cent higher year-on-year (YOY). The index registers changes in the cost of both, materials and labour. Labour costs, incidentally, have risen 15-20 per cent over the past six months.
RLB, formerly Rider Hunt Levett & Bailey, noted the ‘considerable pressure on construction resources, given the current volume of construction demand as well as the anticipated demand over the second half of 2007.’ In fact, it estimates that the previous construction demand peak of $24.4 billion achieved in 1997, ‘will be tested and possibly surpassed based on a projection of current trends’.

The costs have climbed, in part, on account of Indonesia’s decision in February to ban the export of sand. Even though concreting sand comprises only a small portion of the overall construction costs, the move also caused some disruption in aggregate supply, it noted. Other materials also became dearer. The cost of structural steel, for example, has risen by 17.8 per cent. The price of copper, meanwhile, has fluctuated sharply, rising by almost 80 per cent over two years before registering a YOY decrease of 1 per cent in May 2007.

RLB says the prices of many materials are largely determined by the global commodities market which may react to speculation, foreign exchange fluctuations and geopolitical factors. Such gyrations, however, make life difficult for contractors who hope to tender for construction contracts. A recent Goldman Sachs report, which was bullish on the industry in general highlighted certain investment risks, including execution risks, given the very tight project schedules and capacity, and the possibility of default of main contractors.

So far, at least one redevelopment project - Safra Toa Payoh - has been put on hold due to rising costs. The government’s e-procurement portal, GeBiz, also revealed recently that the Housing and Development Board did not award at least four recent public tenders for building contracts. One industry player claimed that this was on account of the prices quoted. Nevertheless, industry players are confident that, given the overall climate, they can weather the rising costs. Property developer United Engineers Group, which also has construction capabilities, believes the outlook will be positive for the next two to three years.

United Engineers group managing director and CEO Jackson Yap added: ‘In a booming property market where property prices are steadily rising, there would still be sufficient or additional margins to buffer against rising costs.’ Woh Hup director Eugene Yong said: ‘There’s uncertainty, but that’s the normal situation. That has not changed. The uncertainty is whether you have correctly priced in the risks,’ he said. The concern, he added, was not with new projects: ‘It’s existing contracts that are the issue.’

The construction boom has given contractors more bargaining power. UE’s Mr Yap says: ‘(Contractors) are able to bargain for more margins from developers as there is currently a shortage for contracting resources. However, due to this shortage in contracting resources, projects will also take a longer time to complete.’ Mr Yap also points out that construction materials are just one component of construction cost. The industry faces other challenges too.
Labour resources are tight particularly for supervisors and project managers, and dormitories and transportation resources for workers are also a constraint, he said. Equipment like cranes and piling machines is also witnessing shortage, and therefore sale and rental prices have also gone up.

Other developers are monitoring prices closely. A spokesman for CapitaLand said: ‘We will continue to review the impact of the increase in materials costs on a case by case basis with the respective consultants and contractors.’ If the rising construction costs have not been met by much alarm, it is probably because the returns from construction and property development are high. Knight Frank director, research and consultancy, Nicholas Mak notes that the prices for new developments have risen faster than the construction costs.

Indeed, the latest official figures reveal that overall private home prices rose 20.6 per cent YOY with the high-end sector rising even higher. When compared to an estimated 2 per cent increase in development cost due to price hikes in sand and granite, increases in construction cost do seem negligible. Mr Mak added: ‘In a booming property market, there is a lot more opportunity to pass on increases in construction costs to buyers.’

Source: The Business Times, 06 July 2007
Posted by Property Wizkid

Showdown at Minton Rise
It was just another day at the Strata Titles Boards (STB) - two groups of residents, lawyers in tow, shouting, arguing, pleading over the proposed sale of their Minton Rise condominium block.
It was the usual standoff: Some residents wanted the sale of the 342-unit development in Hougang to go through, others said no.

Two hours and much raised emotions later, nothing was resolved despite five board members trying to mediate between the factions. The case will now go to a hearing next month. Such showdowns are becoming more common these days. Business has never been brisker for the STB, which has the thankless task of untangling property disputes amid a booming collective sale market that promises untold riches to some but stirs up intense resentment in others.
Often, getting the 80 per cent backing for a collective sale is just the start of the wrangling. The majority owners must still file for an STB order - which binds all owners to the sale - to seal the deal.

This is the point when owners who voted against the sale can file to halt the process. They can cite various grounds such as claiming that they will suffer a financial loss, that the sale proceeds are insufficient to redeem their mortgage or that there was a lack of good faith during the sale process. In such a charged atmosphere of Singapore’s property market, it is no surprise that the STB has received 122 objections against collective sales this year - almost double last year’s 68.
This is on top of the 66 applications for collective sale orders and the more mundane disputes such as water leaks that it must deal with.

STB president Tan Lian Ker, who joined the board when it was set up in 1988, used to turn up for sessions three to four times a month. ‘Now, I come in every other day,’ said Mr Tan, a lawyer in his ‘civilian’ life. Two more deputy presidents and 10 additional members are expected to be added to the 30-member board to help with the workload. Their $100 cheque received for each case heard is also expected to increase.

The members, appointed by the Law Minister, are drawn from various professions, including accountants, architects, engineers, lawyers and land surveyors. All are volunteers but some are struggling to keep up with the increased workload and their day jobs. ‘I was supposed to come up with a book on adjudication education, but I’ll have to put it on hold,’ said Dr Philip Chan, one of the STB’s three deputy presidents.

He spends two days a week teaching at the School of Design and Environment at the National University of Singapore and three days hearing STB cases. When a case comes before the board, a panel of three or five members will convene to hear arguments. Collective sale cases - which have supplanted disputes over water leaks as the main complaint received by STB in the past two years - require five members to hear arguments, given their complexity.

Members with a conflict of interest - family links to the disputed sale, for example - cannot take part. An average case might take two to three mediation sessions lasting about two hours each, but about one in five disputes has to go to court when a settlement proves out of reach. In less-contentious cases such as the recent sale of Phoenix Court at Killiney Road, which had only one objector, judgments can be made in under an hour.

But the hearing over the collective sale order for the Dragon Court condominium in Holland Road four years ago started at noon and dragged on until 10pm before weary members could pass judgment. Emotions run high as well, said Dr Chan, with the parties crying or raising their voices. When the row involves big money, especially collective sales, mediation gets complicated as more people are involved.

Things became so heated at a hearing last September - when an 80-year-old woman tried to block the sale of Eng Lok Mansion over the objections of her 62 neighbours - that fans had to be brought into the room even though it was air-conditioned. More recently, when Gillman Heights residents took their case to the STB, so many people turned up that a bigger room was needed at the Maxwell Road offices and security guards were brought in for ‘crowd control’. Sometimes things can get downright ugly.

Mr Edwin Choo, an architect and an STB member for more than 10 years, has seen minority owners treating mediation sessions as ‘fishing grounds’ for information - minor points such as documents that were not dated or not signed in the presence of a witness - to use against the majority owners in court, when the information shared during mediation is strictly confidential.
In a water leakage dispute, an owner tried to wring money out of his neighbour by renovating his bathroom for $30,000 - way over the usual repair cost of $1,000 - knowing that his lower-unit neighbour had to pay half the cost.

While the disputes may appear petty - such as water leaks - members say there is no issue that is too ‘trivial’. ‘Imagine if you have to put a bucket in your bathroom to collect water from a leakage every night, or worry if your false ceiling may get too wet and collapse on you,’ said Mr Tang Tuck Kim, an STB member and surveyor. Despite the workload and low pay, many of the members have stayed on way beyond their two-year terms. ‘To me, it is a form of national service,’ said Mr Tang.

Growing numbers
The board has received 122 objections against collective sales this year - almost double last year’s 68. This is on top of the 66 applications for collective sale orders and the more mundane disputes such as water leaks that it must deal with. An average case might take two to three mediation sessions lasting about two hours each, but about one in five disputes has to go to court when a settlement proves out of reach.

The members of the board, appointed by the Law Minister, are drawn from various professions, including accountants, architects, engineers, lawyers and land surveyors.

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

Developer heaves signs of relief on Horizon Towers
The Strata Titles Boards (STB) will try to untangle the contentious Horizon Towers collective sale later this month - and before the deal is aborted by a closure deadline. A ruling on Wednesday set the hearing dates for July 27 to Aug 2, confirming a move outlined in a report in The Straits Times two weeks ago.

The initial hearing was set for September but that was after the six-month deadline - the $500 million deal was struck on Feb 12 and must be sealed by Aug 11. A deadline miss could have killed the deal or tied it up in a lengthy process involving the sales committee. Bringing forward the hearing to late this month - after a series of legal arguments was put to the STB recently by lawyers representing various parties - has eased those fears.

They included Senior Counsels Jimmy Yim, C.R.Rajah and K.Shanmugam and senior lawyers from Tan Kok Quan & Partners and Harry Elias Partnership. The two blocks at Leonie Hill have been pledged to be sold en bloc for $500 million to Hotel Properties (HPL), Morgan Stanley Real Estate and Qatar Investment Authority, the investment arm of the Emirate of Qatar.

The deal was backed by 84 per cent of the owners - above the 80 per cent requirement - but it still needs STB approval. Rebellious owners have a range of objections, including price. They also wanted the sales committee to be replaced, but an extraordinary general meeting called for the purpose did not produce the result. It is understood that some of the members have since resigned, including the chairman.

Some owners had wanted the sales committee members out because they were unhappy at the way the deal went through last January without getting back to the owners over the $500 million offer price. They pointed out that the price was set in April last year but the property was sold nine months later when real estate values had surged - so much so that neighbouring Grangeford Apartments sold for far more than the amount that Horizon Towers commanded.
The parties who never agreed to the sale will get their say at the hearing later this month, but there are concerns that the mediation process may drag on longer than the allocated dates and brush up against the Aug 11 deadline.

‘There are those who originally agreed to the sale having second thoughts and this may lead to problems,’ said a source.

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

New lease of life for Old buildings
A growing number of old buildings belonging to the state have been sold - or, more commonly, put out on short leases - to companies or organisations, which have renovated them and put them to new uses. Formerly schools, hospitals or army barracks, the buildings are finding new life as hostels, education centres and business addresses.

10, Hyderabad Road
Formerly: Institute of Dental Health, Now: S.P. Jain Education Centre
History: The pre-war structure dates back to the 1930s, including parts gazetted for conservation.
Cost of renovation: ‘A few million.’

Command House at 17, Kheam Hock Road
Formerly: The home of the Admiral of the Fleet of the Royal Navy. More recently, the home of late Singapore president Ong Teng Cheong. Built in 1938. Now: UBS Wealth Management Campus-Asia Pacific
History: Previous occupants include the Imperial Japanese Army and World War II hero Lord Louis Mountbatten. Now being studied for gazette as a National Monument.
Cost of renovation: Undisclosed

2, Orchard Boulevard
Formerly: The home of the the Singapore Anti-Narcotics Association (Sana), Now: The ninth branch of EtonHouse Preschool
History: Pre-1920s colonial building is conserved. Formerly called the Woodstock Home, it was also used by Sana.
Cost of renovation: $1million

22, Dempsey Road
Formerly: The Quartermasters’ Store, Now: Bar and restaurant nightspot Oosh
History: Tanglin Village was known as Tanglin Barracks and was an army camp for the British troops. Also used by the Singapore Armed Forces.
Cost of renovation: $6million

369, Tanjong Katong Road
Formerly: Tanjong Katong Technical School, Now: Katong Hostel
History: Built and founded in 1956 as Tanjong Katong Technical School. It started as a plot of swampy marsh next to the Tanjong Katong River.
Cost of renovation: $5 million

Sale, rental schemes
THIS is how state properties are sold or rented:
Sale
On a lease of 10 to 99 years by Public tender: For example, Lim Chu Kang agri-tainment sites; or Auction
Rental
Usually on a lease for three to nine years by Public tender; Auction or Direct allocation: For example, the Economic Development Board’s Global Schoolhouse programme;

The Ideas Tender Scheme: Launched by the Singapore Land Authority (SLA) in August 2005, this allows entrepreneurs to suggest innovative re-use ideas for a building, instead of being hemmed in by the pre-approved uses specified by the SLA; or

The Rent Direct Scheme: Launched in March 2005, this allows businesses to make direct offers to the SLA. Leases are awarded on a first-come-first-served basis, which enables entrepreneurs to launch their start-ups fast.

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

What can Roger buy for $22m in Singapore?
Mr Jim Rogers is back in Singapore for a third stint, as he continues his search for a new home in a Mandarin-speaking city for his family. The investment guru, who spent several weeks here last year and in 2005, says Singapore is still high on his list. He has eliminated Hong Kong, Shanghai and Beijing on pollution concerns.

‘Singapore is an easy place to live in as it has the best health-care and education systems in the world,’ he told the media yesterday. He will visit three other Chinese cities - Dalian, Hangzhou and Qingdao - before making a decision in a few months’ time. Mr Rogers, 63, has put his New York home on the market for US$15 million (S$22.9 million) but has not sold it yet despite receiving several offers.

He does not speak Mandarin and his wife is only starting to pick up the language but he wants his family to move to a Mandarin-speaking nation for their daughter’s sake. The three have been Singapore permanent residents for 18 months. He said he wants his four-year-old - Happy or Le Le as she is called in Mandarin - to grow up steeped in Mandarin, as he believes China will be the great power of the 21st century. In that regard, Singapore loses out to Chinese cities as it is ‘not Chinese enough’ for his daughter, he admits.

He said his daughter, who speaks Mandarin as fluently as a native, is the best Mandarin speaker in her kindergarten class in Singapore. ‘We hired a Chinese-speaking nanny to take care of her from birth, and insisted that the nanny speaks only Mandarin to the girl.’ Happy Rogers, who has her own Swiss bank account, will soon have a Singapore bank account too, Mr Rogers said.
Asked if he might consider buying a property amid soaring prices if he decides to settle in Singapore in future, he said he is unlikely to buy immediately.

Instead, he said his family will rent for six months to a year if and when they decide to move to Singapore. ‘Prices may go up by then, but we want to make sure we find the right place.’

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

5R HDB to cost $645k in Boon Keng.
Any suckers, er, sorry.. I mean.. takers?
The article, ‘40-storey condo-like blocks for Boon Keng’ (ST, June 21), stated that it would work out to about $645,000 for a 1,290 sq ft five-room flat, and that a 29th-storey five-room flat in Kim Tian Place was sold for a record $720,000. The property market is all the rage nowadays, with almost-weekly media reports of record prices.

The current less than two-year-old bull market may need to be reflected upon, in view of the fact that we went through an almost decade-long bear market from 1996. At its worst, the private-property index was down by about 40 per cent. Even with all the euphoria now, we should not forget that the market is still about 20 per cent below its peak in 1996.

If we compare Singapore with the United States, ours is one of the longest property bear markets in history, as we are still under water. The worst housing bust in US history took place during the Great Depression when ‘the average price of a home fell 24 per cent from 1929 to 1933′ (’When does a housing slump become a bust?’; International Herald Tribune, June 17).
Singapore’s decade-long bear market, which is still recovering, may pale in comparison. When a market is 20 per cent down, it would take another 25 per cent jump before it breaks even to the 1996 level. When will this happen - after 12, 13 years or longer?

Practically every week in my volunteer work doing financial counselling of bankrupts, I meet people who have lost their homes and CPF and have been made bankrupt by the mortgagee.
How many Singaporeans have lost their homes, CPF, and maybe made bankrupt too through buying property? - Leong Sze Hian

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

Which do you prefer - buy stocks or property?
Having made a living as a fund manager and trader for the past 25 years, I have seen the general investing public hurt numerous times when they invest aggressively near the peak of a bubble, whether in stocks or property.Retail investors should adopt a very long-term horizon to benefit from the stock and property markets.

The starting point of major stock investment or purchasing a property for investment is important. Always try to start major investments during a recession, a global market crisis, a banking crisis or when nobody is interested in stocks, like during the Sars period. The art of investing can be broken down into three quantitative variables of time, price and size. Investors should pick a ‘terrible’ environment/time when prices are distressed and commit big (but definitely without leverage).

The opposite is also true. In a very bullish, ‘good’ environment/time with high prices everywhere, investors should reduce the size of investments and ensure that whatever is outstanding is getting smaller and smaller. Forget about wanting to liquidate all investments at the top of the market. It is an impossible task.

The basic idea is to invest aggressively (without leverage) near the bottom and get out when markets are euphoric, like now, even if they could go higher and carry on longer. Global imbalances are currently at an extreme, making the environment ripe for a market crisis like Oct 19, 1987. Markets (individual share and property) will go up and down over a long period of time, although the general stock index hides this truth as new, strong shares always replace old, declining shares over the years, giving you a misguided view that the index always heads much higher over time.

As Singapore markets become globalised with much foreign participation, Singaporeans would do well to be patient and courageous by investing near the bottom of the down cycle and selling to foreigners near the top of the up cycle and repeating this process. If you have missed the huge bull market, that’s just too bad. Now is not the time to jump in aggressively as the risks are increasing exponentially.

Bull and bear markets always repeat themselves, just like summer and winter. Be very patient and do your homework. You do not need to be a genius to make money in the markets. You need common sense, discipline and a clear long-term workable plan, without which the markets are like a hot fire and will burn fingers. - Chua Soon Hock

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

Who gets money is a matter of contract?
I refer to recent letters to the Forum concerning interest on stakeholders’ monies.As a matter of law, if there is no agreement otherwise among buyer, seller and stakeholder, the interest earned on the stake belongs to the stakeholder.

In collective sales, it is good practice for the lawyer to draw the issue of interest specifically to the attention of the sales committee at the time of entering into the collective-sale agreement. Ultimately, it is a matter of contract. The lawyer’s role as stakeholder is, in fact, a valuable additional service involving responsibilities to both seller and buyer and, notwithstanding the existence of alternatives such as a bank guarantee, remains the most popular mechanism.
Philip JeyaretnamPresidentThe Law Society of Singapore

Source: The Straits Times, 06 July 2007
Posted by Property Wizkid

To En bloc or "disen" bloc? That is the question.
There was a time, not so long ago, that the lines were neatly drawn in en-bloc sales. On one side, the majority of residents, their signatures already on a collective sale agreement (CSA) and waiting to cash in; on the other, a minority bloc with objections.

Not any more. In a growing number of estates, some residents from the majority group are gunning for the same goal as the minority — to scupper the deal. The reason? What were once sweet deals have turned sour, as juicier sales elsewhere are announced with each passing week.
Some majority residents at several estates are finding ways to challenge the legality of their CSAs. Under the law, a majority can only be formed if there is at least 80 per cent of support within the estate.

Take Gillman Heights, a privatised HUDC estate with 608 units in Telok Blangah. About 20 residents, out of the 532 who had signed the CSA, are now opposing the deal. Their main contention is over a compensation fund set aside for minority residents who may receive less than the purchase price of their apartments.

One resident, Mr Jerry Lum, is trying to rally those in the majority to challenge the legality of the CSA as the final figure for the compensation fund was inserted after residents had signed the agreement. According to the estate’s sale committee chairman Robert Wiener, the agreement provided for a formula to calculate the amount of compensation — a mechanism which one lawyer told Today is becoming commonplace — and that residents were alerted about the fund. But Mr Lum is disputing this last point. He said: “I’ll fight this all the way.”

The Strata Titles Board (STB) said it was “inappropriate” to comment on the case as the Gillman Heights application for sale approval is still pending. However, as the STB’s purview is to hear objections of only minority owners, Mr Lum and his neighbours have appealed in writing to the Ministry of Law to intervene.

Besides Mr Lum’s group, another group of majority residents in the estate have changed their minds and declined to approve an extension to the CSA after a $548-million deal with CapitaLand was struck in February. Circulars posted in the estate indicate unhappiness about how the once-blockbuster deal — CapitaLand is paying $19 million above the reserve price — now stacks up against recent en-bloc deals.

For example, CapitaLand recently paid $1.3 billion for Farrer Court, another privatised HUDC estate, which equates to about $2.15 million each for owners of the 618 units there. In comparison, Gillman Heights residents are getting $363 per square foot of potential gross floor area, or about $870,000 to $950,000 per apartment.

“Never, never just sit back and allow others (to) sell your home on the cheap,” one circular stated. One former management council member said the “tension” in the estate has become “a pain”. At Phoenix Court in River Valley — a single block of 47 apartments with only one minority resident — some majority residents were also against an extension to their CSA … but to no avail. The STB last week approved the sale to Hiap Hoe for $88.1 million. Sources said some disgruntled owners are still seeking legal advice.

At Horizon Towers on Leonie Hill — one of the first estates caught out by the fast-moving market when neighbouring estate Grangeford Apartments fetched more than double the former’s price (psf) — some majority residents had been hoping the deal would expire before approval is given. Their deadline is Aug 11. But with the STB hearing brought forward to between July 27 and Aug 2, some residents have engaged lawyers to scrutinise the legality of the CSA in the first place.

More interestingly, at Minton Rise in Hougang, minority residents have secured a higher valuation for their estate than the collective sale price. Some of their majority neighbours are now up in arms about receiving around $100,000 less than they could have. Kheng Leong, a privately-owned property group controlled by the family of banker Wee Cho Yaw, paid $209 million for the estate in January, $31 million less than the latest valuation.

Some majority residents are now trying to call for an extraordinary general meeting to grill the sales committee about the entire en-bloc process. “People used to think an en-bloc exercise equals a windfall, but some people now realise the compensation they receive cannot afford them an equivalent property, resulting in a downgrade,” said lawyer Chia Boon Teck, who represents Minton’s minority.

Bernard & Rada Law Corporation associate director M Kumaran, who oversees his firm’s en-bloc cases, has also noticed the growing incidence of backtracking majority residents. “If the market had remained steady, the people involved in these sales would never have looked back at the sales process. With the sudden realisation that so much money can be made, they discover what they may honestly believe to be flaws in the process,” he said.

But Mr Kumaran warned that majority residents walk a thin line between legitimate objections and obstructing the performance of a contract they had, after all, consented to. It remains to be seen whether this new trend of the majority rejecting the very CSA they had signed will continue. Mr Nicholas Mak, head of research at Knight Frank, told Today that the jury is still out on whether property prices will keep on heading north.

“There are signs this can continue … But the market is cyclical. If prices were to stagnate, that would slow down the en-bloc sale momentum,” he said. In the words of the former management council member from the Gillman Heights sale: “If the market had gone south, we’d all have been heroes. People need to have a sense of realism.”

Source: Today, 06 July 2007
Posted by Property Wizkid

Property boom may spell bust for the uninitiated
Unmanageable mortgages can break up a family. Letter from Gilbert Goh Keow Wah. I refer to the article “Time to play it cool” (July 5). It is timely that the Government has stepped in to cool down the current property fever that is gripping the nation.

Today, the situation is not unlike what it was in 1995 and 1996, when people bought up residences and prices bordered on the ridiculous. People were queueing up, not to view the houses, but just to hand over cheques for the downpayment! Then, Housing Board executive flats in the Bishan and Toa Payoh areas were sold for close to $700,000. Today, those home-buyers have seen prices plummet and they stand to lose about $200,000 if they were to sell their homes at current valuations.

Worse, during the Asian financial crisis of 1997 and 1998, many lost their hard-earned Central Provident Fund savings when they were forced to sell off properties because they could not meet the payments. Some property developers also went bust during that time. I urge Singaporeans to exercise caution. Like equities, property prices do fall when the economy takes a dip. If possible, look for a place that is within your means and always have a mortgage plan in which repayments do not exceed one quarter of your combined household salary. Anything more would be a burden if you were to be retrenched or have your monthly salary reduced for some reason.

A friend of mine had to sell off his private property when both he and his wife were retrenched within a month of each other. They got into financial difficulty and ended up getting divorced. Both were professionals and their situation has been etched in my memory. It was painful for me to see a happy family fall apart over the burden of a huge mortgage loan. As Singapore goes into another economic upswing, let us be mindful of committing to loans.

Always be prudent and frugal, as financial difficulties can affect the harmony of a family.
It is better to have a happy family living under a simple roof, than one living in a big house laced with potential financial woes.

Source: Today, 06 July 2007
Posted by Property Wizkid