http://www.talkingcock.com/html/article.php?sid=2308&mode=thread&order=0
Great Singapore En Bloc Sale?
Posted on Monday, June 18, 2007
by Michael Bloombird
As en bloc sales of condominium estates rage like never before, a developer has made a bid for the entire island of Singapore.
“We think this is very doable,” said HPAPL Properties spokesman Pao Kah Leow. “We believe that the estate of Singapore is less valuable at present, divided as it is into many diffuse, smaller mixed-class units. We believe Singapore would be a much more attractive property if it was transformed into an elite upmarket residential enclave for high net worth individuals.”
If the deal is approved, every resident in Singapore stands a chance to get approximately S$500,000 each.
However, some residents are concerned that if they sell, they will not be able to use the proceeds to get a new home of equivalent size or value.
“That’s a nonsense,” said Mr. Pao. “For that amount, you can get highly desirable properties in Johor , Bintan or Perth.”
Little is known about HPAPL Properties, a newcomer to the field.
“Yes, we’re a newly-incorporated company,” admitted Mr. Pao. “But our principals are experts in real estate development, with around 42 years’ experience in nation-building.”
Still, rumours persist that the amount given to Singaporeans is disproportionately low compared to the amounts the developers will be making from the arrangement.
Mr. Pao declined to comment on the market rumours that HPAPL stands for either ‘Harry’s Partners Allegedly Pay Less’ or ‘Highly Paid Autocrats Plundering Land’.
Plans for the proposed development, tentatively named ‘Elite Towers’, include a private Formula One racing track and gold taps in every bathroom.
“Our prospective tenants desire resort living,” explained Mr. Pao, “preferably of the integrated kind.”
HPAPL Properties hope that residents will confirm the deal and move out as soon as possible, so that preparatory works can commence. “We need them to get out of our Elite preparing phase,” he said.
So ... will Singapore become a playground only for the rich? A place where the not rich are marginalised?
10 years after the last property crash, en-bloc sales is driving the market crazy again.
About 3 years ago, there was a radio talk on en-bloc sales, after the law was amended to require only 80% vote instead of 100%, with lawyers as invited guests to provide clarifications on legal issues on what the Strata Title Boards looks into when deciding whether an objection is valid.
I was listening to the program while waiting in a queue at a carwash. Already, my mind was thinking of a few issues that was not mentioned. Deciding to try my luck, I called during the phone-in Q&A and raised the 2 points.
1. Financial hardship - I pointed out that a recent buyer who has an outstanding mortgage on a property would have grounds for objecting to the sale price, but a buyer who bought the property is not so protected if the purchase price was only a fraction of the current prices.
As an illustration, if 30 years ago, the buyer paid S$100,000 for the apartment deemed as prime property today worth an estimated S$ 2 million, what the STB would deem any price above *his* purchase price as reasonable as it was higher than what he paid for *30 years ago*.
From another angle, the relatively recent buyer who paid more is better protected than a buyer who bought the same property long ago.
The ridiculousness of the loophole is obvious, and the lawyer sheepishly admitted that was how the law phrased it.
2. The sale proceeds from the en-bloc might not enable the seller to acquire a property of similar size in the same neighbourhood. This has an impact as the location could well have a significant effect on his commuting, transportation cost, and perhaps more importantly, being able to secure a place in a desired primary school within the 2 km radius.
A more equitable offer would be for the developer to pay for the owner to get a satisfactory replacement, and the necessary relocation expenses, and some compensation.
Again, the lawyer did not dispute the logic, but just admitted that the law make no provisions for the evaluation of whether an offer is a fair price.
He added that any changes would have to be passed by the Parliament.
I'm no genius, and I wonder why is it that only now these concerns got reported in the Press.
My personal situation is such that I am tied down by an poor decision more than a decade ago to become co-buyers with my parents in a HUDC, just before the market crashed. I was very naive then, and did not consider my future properly. A few years later, after I got a girlfriend, and then got married, it became belatedly obvious to me that living with my parents is no way to form a family of my own. Several traumatic years on, after my first child was born, a friend availed me to an opportunity to buy a tiny single bedroom private apartment. And that is where my family had been living in since ... waiting ... just waiting for a proper home ... just waiting ...
Last year, some interested agents managed to interest more than 80% owners to try to en-bloc the HUDC. To me, it was the chance to finally sell, and be able to get a HDB flat of my own ... and have a normal family life, with something to look forward to in the future.
No, I'm not against en-bloc sales personally.
But I'm still very protective of the rights of owners not to be subjected to tyranny of the majority.
One day, I too would want my own dream home ... in a spacious estate with plenty of trees.
I don't want my home to be threatened by greedy people who saw the spaciousness as a profit potential by maximising the plot ratio through en-bloc re-development.
Errr...yes, Singapore is a playground for the rich. Bleh.
ReplyDeleteWhen satire becomes reality, I hope I can move out.
ReplyDeleteThe reality is that around the world in the developed and newly developed countries, the best property deals were 30-40 years ago during the baby-boomers era. A house bought then adjusted for inflation is worth many times its original value. For the majority of younger people the place they are living in are a liability, not an asset, as is commonly perceived.
ReplyDeleteI truly sympathise with your notion, it is one which I am likely to face as well, that is will I have to give up my future property against my will? Unfortunately it is a reality I have to accept here in Singapore. As the population here continues to grow redevelopment will have to be the norm, and for the majority of Singaporeans, our abodes will at various points in our lives not always up to our preferences or choice, our ability to afford them not withstanding.
As for what is right thing to do in this case, emotionally I am with those who refuse to move. Emotions aside I am more ambivalent.
Well, for one thing, I do not see the necessity of tearing down old buildings which are in good conditions ... not when there are many underutilised golf courses around the island.
ReplyDeleteI think if the debate is purely on logical grounds, the facts and figures will still show alternatives to forcing people to move.
Part of the reason why I want to plant my roots overseas. I don't want to slave my working life away and not see the fruits of it in some real estate, and I mean substantial real estate. With the $600,000 my folks paid for our EA ten years ago, we'd be able to get a larger, more comfortable dwelling in other parts of the world.
ReplyDeleteAs a single, my need for real estate is much smaller, of course, but a space to call my own, even in Singapore, surely isn't too much to ask. If it is, I'll simply head elsewhere.
Btw, that blasted EA is now only valued at $300,000. 50% loss and counting. Worse, the HDB loan is not even half paid out. Bleddy property.
ReplyDeleteThere are usually alternatives but not all solutions are equal and as especially who they benefit, in what way and by how much. If we were to purely use logic we can always argue its better to get them to move for example, just depends on who makes the argument. So at times, logic alone is not the answer.
ReplyDeleteAbout twelve years ago, we received notification from the HDB that the flat my family have been living in for twenty years (since I was two years) will be demolished to make way for new flats. Ours was a three-room flat but compared to many newer flats in Seng Kang ours felt luxurious. Large rooms, large kitchen and a long but slightly too narrow living room. My fondest memories revolved around life there. I was a true heartlander at a time when the term was not yet coined. My flat was raised above the nearest main road, and even though living only on the sixth floor it afforded me a view of the then Bishan forest, that wild domain that was home to many an adventure, catching spiders visiting that eerie broken down temple and basically scaring ourselves series with the lady in white who walks those grounds. the back of the flat was a humongous carpark the likes of which will never be seen ever again (multi-storey carparks in the heartlands were unknown then) The nearest block was distant. Huge common area at the stairways became the playgrounds of children. i could go on but I digress.
The thing is we weren't given a choice when the notification came. We were given a set compensation and were given first choice from a series of flats yet to be built (but nearby). And this is the reality for most Singaporeans. I actually like my new flat, its bigger, I live on the 26th floor and I love the view. But we weren't given the choice, it was simply not up to us. I knew of at least a few neighbours who did not want to move and were intending to spend the remainder of their days at their flat (they argued, they had a 99-year lease) This is the reality I accept and the price I pay for being a Singaporean and more importantly living in Singapore. This is not the lot of all Singaporeans of course but they would be in the minority. Thus it is important we learn to see the situation from different angles. Otherwise frankly speaking, life in Singapore will only get worse, not better, if we do not change our perspectives, which is largely inherited from our parents, but to some extent are no longer feasible for our generation and the rest to come.
A little off-topic, if global warming is not restrained, the equatorial region may in half a century be simply too hot for comfortable living and like it or not we may be forced to move to more temperate regions (which by then may well be tropical).
ReplyDeleteThen my parents were fortunate. Years ago, they received a notification from the government that the residents from the entire block of flats have to move by a certain number of years.. I did not read the letter so I am not sure what plans the government had. But the government explained that they will be building new flats just behind the block my parents were staying, and my parents were given a choice to purchase a unit there with a compensation. Brand new flat! And just behind their current block. Of course my parents accepted the offer without much complains, and took the opportunity to upgrade to a bigger unit. Most of the neighbours chose to do the same.
ReplyDeleteHowever till today, the current blocks of old flats are still there. I used to stay in there and its a nice feeling to see the flats still there.
Definitely, and in fact you don't even have to look far, you can have it from our neighbour Malaysia, just ask your Abang Sayang, his family has property there. If you prefer some place a little more exotic I can recommend Thailand, I have friends there who are property agents. I would have recommended Indonesia for even better deals but I hear their ownership laws are much harder to get pass.
ReplyDeleteIndonesia is out of the question unless it's Bali or some other relatively deserted paradise island - somehow Christians (and the fact that I'm Chinese) are always made a target in Indonesia even if they keep low-key. Too many problems and altercations occurred when my church tried to plant an outreach in one of the islands.
ReplyDeleteAround this region I would choose Malaysia, northern Thailand or Hainan; if in the other hemisphere, Ireland, Isle of Man, Jersey, Guernsey, Channel Islands, Isle of Wight or some other beautiful island.
I do not recommend Indonesia either.
ReplyDeleteAs a matter of fact, every place I can think of will pose its own ... challenges.
It's one thing to live in a place when you don't have growing kids, it's another when you do.
Oh enbloc me please.
ReplyDeleteWhy?
ReplyDeleteThis won't have anything to do with Bayshore being built on reclaimed land, would it?
ReplyDeleteIt has more to do with the fact that he stands to make more money while the property market is hot and Bayshore is not a new estate. And then get his next property when the property goes down again couple of years from now.
ReplyDeleteHis is the pragmatic strategy, and financially more sensible one. After all he has no emotional ties to Bayshore, it is not his 'dream' home andnot where he intends to spend the next twenty years if he can help it.
Yesssss.... preciousss...
ReplyDeleteThat, I think is the key difference between those who see their residence as their (ideal) home and those who do not.
ReplyDeleteBecause of its size, my current place is not my idea of an ideal dream home either, but when I do find one, what I would never feel is that by refusing to sell, I'm hindering my neighbours from getting rich.
Helping neighbours make a fast buck is not an obligation for any home-owner.
The only responsibility I have to others is to contribute positively towards a good living environment of the neighbourhood.
I too would stand to gain if the estate I'm living in is sold en-bloc. But never would I dream of putting any pressure on my neighbours to agree.
Earlier this year, some residents tried to elicit interest from the home-owners to explore the en-bloc potential, the estate being about as old as Bayshore.
I have an American neighbour who live the other side of the estate who rented her place and told my wife, "Please don't agree to it, we love it here."
In the end, me and my wife didn't respond to the solicitation (we figured it wouldn't pass even if we did), effectively giving a negative. And as the results showed, far less than half the owners were interested.
I suspect this is more due to the fact that no minimum sum was mentioned ("Show me the money!!!"), rather than the owners' being attached, as most leased their units out.
One family whose daughter is the same age as Snowylass and attend the same childcare, did just that, and rented another apartment down the road. And they are still paying mortgage for their home. Previously, they had talked about selling and purchasing a landed house.
I think saying that en-bloc price offer is insufficient (and might be never sufficient) to compensate for the sentimental value of a home is misplaced.
The fact is, I believe a man should not have to be forced to sell his home against his will.
It's one thing to have to relocate because the land is acquired to make way for an MRT line. It is quite another to have to move from one's apartment so that developers can tear it down and build a new and more expensive apartment.
I think I mentioned before that Singapore still has far too many unoccupied HDB flats and apartments to justify coerced en-bloc redevelopment.
In the early days of independence, rows and rows of shophouses, villages and farms were forcibly acquired to make way for HDB blocks to meet the urgent shortage in housing for a growing population.
That, is what I call a necessity.
yes but you have to remember that the converse is also just as true. I have a friend who really, really wants to sell but is forced to remain because his condo repeatedly fails to garner enough votes to enbloc. Of course you can say that if he is so keen in selling, he should just sell his unit along on the open market, but that's not the point. Someone who is desperate to sell his unit enbloc should also not be forced to keep his unit or sell for less. This argument is perhaps less pressing then someone who doesn't want to sell for whatever reasons, but is still valid nevertheless. Only the degree here varies.
ReplyDeleteRun that again? I don't think it is a matter of whether the argument is pressing, but how valid it is.
ReplyDeleteRather than saying he is selling for less when he sells his own unit, it would be more accurate to say he is gaining more when there is a quorum of owners selling the entire estate.
In one scenario, the object of sale is the unit itself. That is to be decided by himself. The buyer is, supposedly, interested in the unit, its condition etc.
In the other scenario, the object of sale is the estate, and that is not something he can decide by himself. The buyer is not interested in the unit, its condition etc.
In the former, the seller cannot hold other owners responsible for the sale price, they have no obligation to him, and in no way are they cheating him.
It could be from his perspective, he is forced to sell for less. But he is making an presumption that other owners are somehow beholden to him to be able to sell his unit for more. The validity of his perspective depends on the validity of his assumptions/presumptions. It seems to be a matter of a hope, becoming an expectation, and then a perceived-right.
Or look at corporate takeover ...
ReplyDeleteBuyer offers a premium price each share to acquire a majority stake by buying over from a number of shareholders.
They won't offer the same premium to a solo shareholder who, by himself, cannot give them what they want.
Should a solo shareholder desperate to sell blame other shareholders when he cannot get the premium for selling his shares?
Fundamentally, what is being sold here are different commodities.
It is shares versus majority/controlling stake.
It is a single unit versus the entire estate.
It is a personal decision versus consensual decision.
What if he bought it high and can only recover his investment at enbloc prices? Remember that while we're seeing soaring prices now, they are still far short of the 1996/97 property price peaks. Loads of people are still groaning under high bank loans and holding onto property that are still undervalued compared to what they've paid. A recent news article spoke of people who failed even to recover their original capital EVEN with an enbloc sales.
ReplyDeleteIt's not black and white obviously, but a full spectrum scale of greys.
Either way, your argument is still valid. I'm just pointing out that it runs both ways. It is a personal decision versus consensual decision.
That's what I'm facing too with my HUDC. In fact, for many like me, enbloc prices don't even recover what has been paid, cash+CPF, including the mortgage interests, and it's a matter of trying to cut losses, something I'm prepared to grit my teeth and bear it. (The Bedok guy who lost his case wuz robbed.)
ReplyDeleteI am crossing my fingers that the enbloc will get through all the redtapes and there is a buyer who will get me out of my mess ...
All I'm saying is, at the end of the day, the principle don't to others what you don't want others to do to you means I'll stick with each owner decide for himself, 'cos someday I want to have my own dream home that I will not want to sell and move.
Arguably, it's part of the social contract that any condo buyer must understand. It's like the case of The Bayshore when they lost their seaview when the Great Wall of Costa del Sol was built right in front of them blocking out 90% of their seaviews and hence, dropping all their property values by 10-20%. Owners complained too. They cried foul, but that's life.
ReplyDeleteYou buy a condo/apartment, you have to understand and accept the consequences. Enbloc is also one of them. One must always go in to any property purchase with both eyes wide open. Buy a new condo if enbloc bugs you. Better still, don't even buy communal properties like condos and apartments. Everyone buys HDB knowing all the HDB rules and regulations. Don't like the rules, don't buy HDB. Same thing with condos, apartments etc. If one is not prepared to face what buying communal properties entail, go buy your own plot of freehold land in a country with "suitable" land rules and build your own house because shit happens and that's life.
Yeah, but not when they change the rules in the middle of the game.
ReplyDeleteFor most buyers who dissented, at the time of their property purchase, the statutes required 100% of the owners to give consent.
Being forced into enbloc for them is not a consequence, it is an injustice.
Which is no guarantee either if the powers-that-be are bribed by the moneys-that-be to keep changing the rules.
ReplyDeleteWhich of course is the reason why some people decide the only thing to do is to conquer the earth and become ruler of the whole world.
ReplyDeleteWhich of course is still no guarantee, not if you've read The Hitchhiker's Guide to the Galaxy by Douglas Adams ...
ReplyDeletehttp://spring.ura.gov.sg/lad/ore/real_estate/transaction.cfm
ReplyDeleteThe most "recent" caveats lodged with URA for property sold. (about 1-2 months behind actually but good enough to monitor the price trends.
Got a letter from the prop agent trying to set up my HUDC enbloc yesterday ...
ReplyDeletea couple of months ago, the news was the ministry didn't want to allow privatisation+enbloc to be done in 1 single step ...
yesterday, the letter announced that "a fund" had expressed interest and willing to underwrite the privatisation cost ... and ... get this ... in view of the recent price trends, the agent looking into an increase of 20-25% of the original asking price ...
25% ... I am not complaining if it is sold for more, but from a long-term perspective, it's going to be part of a vicious cycle of the property bubble which I believe will hurt a lot of Singaporeans.
there's a group of owners at my place who are against enbloc. They've even setup a website to fight it. www.bayshoreparklifestyle.com
ReplyDeleteI read some of their comments. They do make quite a bit of sense but everyone there seems to be avoiding what I think is a more pressing issue and that is the age of the condominium. At 20+ years on a 99 year lease, there IS a lifespan on the condo's value.
I guess no one is going to look at my flat with enbloc thoughts, we are already into the 40th year of our lease, so, I guess we are off the hook and I can look forward to dying in my flat... Yeah!
ReplyDeleteCentaur, your site might not be off the hook.
ReplyDeleteI think there're 2 issues here, though they are also interlinked.
First, any condo more than 20 years old would show its age, whether it is a 99 year lease, 999 years or freehold.
My current resident is about the same age as Bayshore, so the MC has been looking into refurbishing the exterior, including providing a sheltered drop-off for those living in tower blocks (something which the Bayshore block already have from the original design).
Last year, there was a proposal to do-up the pool area, but the cost was too high and the design ... personally, I thought it could be a lot better ... defeated 'cos we felt there were more pressing issues such as sheltered drop-off and ramp access.
But whether residents will cough up the dough depends on their intentions towards their property, which in turn is also influenced by the lease.
Which is the second issue - remaining lease. I can understand the reluctance of many owners of aged 99 year lease condos to pour money when the lease is running out. When there is less than 60 years left on the lease, CPF can no longer be used to pay for a private property. This affected the resale value of many properties in Singapore, and hence, as Kit Meng put it, a lifespan on the condo's value.
The question then is why are there developers willing to fork out $$$ to buy up these properties? They buy it not for the remaining lease, but only after working out an agreement with the government to "top up" the lease after they redevelop the property.
No developer is going to buy Bayshore with only 70+ years left to its lease, spend a few years redeveloping a new condo there, and sell it with only 60+ years lease left.
Technically, existing 99 year lease properties can also apply for top-up without having to redevelop (and thereby boosting its resale value), but this has its own challenges.
First, it is subject to approval, and while there is still a substantial portion of the lease left (like in Bayshore's case), the civil servants will not give the go-ahead readily.
In the first place, why these places are designated as 99 year lease is, technically, so that the government acquire them back and redevelop it in the future according to how their urban planning development is at that time.
The anguish of forced enbloc is felt most by those who lived in freehold or 999 year lease, because theirs was supposed to be an estate to be held in virtual perpetuity, a legacy which could have been passed down from generation to generation, unlike a 99 year lease property.
I guess when my parents bought the house, they were thinking since it would be on 99year lease, it should last at least their lifetime and mine... I suppose they never did expect the possibilities of enbloc to happen.
ReplyDeleteOur place had been upgraded about 10 years ago, and we are on prime area, as the block I am staying is near the MRT station. I am certain we would fetch a nice sum, but personally, I rather not move, as I have wonderful neighbors, although I am also getting a new lot of them, so far, the old ones are the best.
If it had to happen, I only hope that it happens after I am gone, and not before.
Singapore IS making itself out to become the playground of the rich.
ReplyDeleteWith the two IRs, F1, luxury marinas, seaside homes on Sentosa, hub for offshore Islamic banking etc... Singapore is aimed at becoming something closer to Monaco than anything. Where that leaves the rest of us is yet to be seen
Ah zee missing piglet is back!
ReplyDeletethe Moon! or Mars.
ReplyDeleteWell, good thing then, that I don't see anything but myself as far away from here when that time comes.
ReplyDelete