Rights of all owners adequately protected

I REFER to last Saturday’s letters by Mr Dennis Butler (‘En bloc sales: Adopt HK’s 50-year limit’) and Mr Augustine Cheah (‘The difference’).

In 1999, the Land Titles (Strata) Act was amended to allow collective property sales by majority consent. One of the key considerations in this amendment was to facilitate urban renewal and avoid situations where a small minority of owners can hold up the sale of the development where the use of the land could be optimised.

We have taken steps under the Act to ensure the rights of all owners are adequately protected and provide recourse for those who feel aggrieved for any reason. For example, all collective sales applications have to be considered by the Strata Titles Board. Minority owners who object to the sale can raise their objections to the board, and the board is required to consider these objections before it decides on the outcome of the sales application.

In 2004 and 2007, we refined and updated the Act to provide more safeguards to owners in a collective sale process. For example, owners will have a mandatory five-day cooling-off period after signing a collective sales agreement to reconsider their consent.

Mr Butler has suggested that only developments that are more than 50 years old should be considered for collective sale redevelopment. It would be too rigid to set such an age limit. There could be other factors that warrant redevelopment like its state of disrepair. It is better to leave it to the owners in each development to determine the viability and timing of collective sales.

The current policy has resulted in a better use of our limited land to create more quality housing units for Singaporeans.

For example, the 390-unit Goldenhill Park Condominium sits on the site formerly occupied by the 95-unit Goldenhill Condominium; and the 100-unit The Ansley used to be occupied by the 44-unit Mandalay Court. These former developments were less than 50 years old at the time of the collective sale and redevelopment – Goldenhill Condominium was 15 years old and Mandalay Court was 31 years old. Collective sales also offer a viable alternative for owners to seek new accommodation with new and better facilities.

We thank Mr Butler and Mr Cheah for their feedback. The Ministry of Law will continue to monitor the impact of collective sales rules, and would review the law as and when appropriate.

Source, Straits Times 21 Aug 2009

Hong Kong’s 50-yr rule has marred skyline

COLLECTIVE property sales opponents like Mr Dennis Butler (‘En bloc sales: Adopt HK’s 50-year limit’, last Saturday) and Mr Augustine Cheah (‘The difference’, last Saturday) have quickly latched on to Ms Tan Hui Yee’s piece, ‘En bloc debate, HK style’ (Aug 10) and hailed it as a ‘well-argued commentary’.

Few people in Singapore know that all Hong Kong properties are on a 50-year leasehold term, beginning from the handover date July 1, 1998, except the land on which St John’s Cathedral stands in Central, which is the only freehold land in Hong Kong.

That may be one reason why the Hong Kong administration proposed a condition to lower the 90 per cent consent threshold to 80 per cent – that the building be at least 50 years old. For example, if a 30-year-old building was demolished after a collective sale, the remaining lease on the land would be below 20 years.

From Hong Kong’s international airport, you take a ride through the scenic beauty of the New Territories. Then you pass through downtown Kowloon and Hong Kong Island on the way to Central, and your opinion changes as you see many dirty and derelict buildings along the way. Many note that Hong Kong is a city of great contrast: modern skyscrapers exist side by side with rundown buildings.

With Mr Butler’s suggestion of a 50-year age limit before a collective sale can take place, the Hong Kong scenario could well be part of our skyline in time to come.

Still, I believe buildings under 20 years old, in particular those under 10 years old, should be barred from collective sales unless there are structural problems.

Mr Butler and Mr Cheah latch on to a comment from a Hong Kong letter writer: ‘Making a profit for developers is not a public purpose.’ I do not dispute the sentiment but I am surprised they left out those who also make money: home owners who sell out, voluntarily or not.

There have been more than 100 collective sales in Singapore over the years, with 80 to 90 per cent consenters and 10 to 20 per cent objectors in each sale. Thus the proportion of proponents to opponents is four to one or higher. I hope the authorities will take note of this point if they see fit to fiddle with the collective sales rules yet again.

Ace Matthews

Source: Straits Times, 21 Aug 2009

Rights of all owners adequately protected

I REFER to last Saturday’s letters by Mr Dennis Butler (‘En bloc sales: Adopt HK’s 50-year limit’) and Mr Augustine Cheah (‘The difference’).

In 1999, the Land Titles (Strata) Act was amended to allow collective property sales by majority consent. One of the key considerations in this amendment was to facilitate urban renewal and avoid situations where a small minority of owners can hold up the sale of the development where the use of the land could be optimised.

We have taken steps under the Act to ensure the rights of all owners are adequately protected and provide recourse for those who feel aggrieved for any reason. For example, all collective sales applications have to be considered by the Strata Titles Board. Minority owners who object to the sale can raise their objections to the board, and the board is required to consider these objections before it decides on the outcome of the sales application.

In 2004 and 2007, we refined and updated the Act to provide more safeguards to owners in a collective sale process. For example, owners will have a mandatory five-day cooling-off period after signing a collective sales agreement to reconsider their consent.

Mr Butler has suggested that only developments that are more than 50 years old should be considered for collective sale redevelopment. It would be too rigid to set such an age limit. There could be other factors that warrant redevelopment like its state of disrepair. It is better to leave it to the owners in each development to determine the viability and timing of collective sales.

The current policy has resulted in a better use of our limited land to create more quality housing units for Singaporeans.

For example, the 390-unit Goldenhill Park Condominium sits on the site formerly occupied by the 95-unit Goldenhill Condominium; and the 100-unit The Ansley used to be occupied by the 44-unit Mandalay Court. These former developments were less than 50 years old at the time of the collective sale and redevelopment – Goldenhill Condominium was 15 years old and Mandalay Court was 31 years old. Collective sales also offer a viable alternative for owners to seek new accommodation with new and better facilities.

We thank Mr Butler and Mr Cheah for their feedback. The Ministry of Law will continue to monitor the impact of collective sales rules, and would review the law as and when appropriate.

Chong Wan Yieng (Ms)
Head (Corporate Communications)
Ministry of Law

Source: Straits Times, 21 Aug 2009

Interest in residential land picks up

But market for en bloc sales is not going to take off just yet, say property analysts

The year’s only collective sale tender so far has closed with more than one interested bidder, indicating demand for residential land may be returning.

Dragon Mansion, at 18 Spottiswoode Park Road, was last month the first collective sale site to be launched for sale this year.

The freehold site, which is more than 30 years old, is designated for residential use with a plot ratio of 2.8 and could potentially yield an estimated 120 units of 1,000 sq ft apartments in a new development.

CKS Property Consultants, which is marketing the site, said it saw interest from developers because ‘basically there are no freehold collective sale sites on the market right now’.

However, the firm declined to comment if the asking price of more than $120 million had been offered.

‘Developers are still cautious at this moment because there is no way to tell how the market moves, so they are still price-sensitive. There are no transactions yet, so it’s hard to tell,’ said CKS.

Property consultancy Credo Real Estate said last month that some five to 10 collective sales may take place this year, but they will probably involve small to mid-sized sites. Dragon Mansion, at 41,874 sq ft, is considered such a site.

Ms Chua Chor Hoon, property consultancy DTZ’s head of South-east Asia research, said: ‘In this economy, the appetite is for smaller, more digestible pieces of land, simply because they cost less.’

To be sure, the collective sale market is not going to take off right away, say property analysts. Since the collapse of Lehman Brothers, the number of en bloc sales has fallen like a house of cards – from 116 collective sales completed in 2007 to just eight last year.

Said Ms Chua: ‘Interest is returning from developers because they sold so many units in the last few months. Some of them need to replenish their land banks.

‘But for collective sales, time is needed to put together the sales committee and get the required quota of people to agree to sell. If this process has not started by now, it’s unlikely the sites will enter the market this year.’

The good news is that private home sales have been on the rise since February, leading to greater optimism in the industry. Developers sold 1,825 new units in June – more than double the number sold a year ago.

A research note by the Royal Bank of Scotland Asia Securities Singapore said ‘the residential market is peaking’, as prices for private residences rose 16 per cent to 26 per cent last month from March lows.

It also said this was ‘driven by a 200 per cent year-on-year surge in primary volumes that, when annualised, matched 2007 record levels’.

This newfound optimism in the market has prompted a 20-storey freehold residential development located at 320 Guillemard Road to be put up for sale by expression of interest last Wednesday.

Cassia View, which is owned by the Lee family of Hotel Royal, sits on a 35,511 sq ft site and comprises 72 two- to three-bedroom apartments and penthouse units, with a total strata area of 89,362 sq ft.

Property consultancy Colliers International, which is marketing the property, said it has received nearly 10 preliminary inquiries about the site and expects to have at least three serious bids by the time the offer closes on Sept 2.

Mr Ho Eng Joo, executive director of investment sales at Colliers International, said: ‘Right now there are not too many freehold sites on the market. The successful buyer could either redevelop the property or carry out minimal refurbishment works on the property and put the individual units up in the market later for strata sale.’

He also pointed out: ‘Demand has been so strong that even the Government’s reserve sites have been triggered for sale.’

Three government land parcels were triggered for sale in the last month, after developers indicated interest by committing to minimum bids.

They are plots located at the corner of Yio Chu Kang and Seletar roads (the minimum bid is $40.5 million); at Dakota Crescent, near the upcoming Dakota MRT station on the Circle Line ($130 million); and Chestnut Avenue in Bukit Panjang ($62 million).

CB Richard Ellis executive director Jeremy Lake said: ‘The fact that private-sector land is not readily available and not easy to obtain means bidding for these plots will be very competitive.

‘Each may get more than 10 bids perhaps, and pricing should surprise on the upside rather than on the downside.’

He added: ‘As for collective sales, a few months ago, they were a non-starter. If Dragon Mansion is successful, it may be a positive sign for the market.’

Source: Sunday Times, 16 Aug 2009

The difference

‘Hong Kong protects minority rights while, in Singapore, money largely decides the fate of a collective sale.’
‘Hong Kong protects minority rights while, in Singapore, money largely decides the fate of a collective sale.’

MR AUGUSTINE CHEAH: ‘As Ms Tan Hui Yee pointed out on Monday (‘En bloc debate, HK style’), the key difference between Hong Kong and Singapore regarding collective property sales is that Hong Kong protects minority rights while, in Singapore, money largely decides the fate of a collective sale. One gets far more home ownership security in public housing than in expensive private housing. With more Singaporeans moving from public housing into condos, the deficiency in our collective sale laws must be addressed properly as it will affect a larger number of people in time to come. The authorities such as the Law Ministry and the Urban Redevelopment Authority have received many suggestions over the past two years, but official replies have been few. Certainly, we have not seen any changes. To proponents of the comparatively liberal collective sale laws who argue that these laws are no different from compulsory government acquisitions of the past, Ms Tan’s explanation nails the difference neatly: Private developers make a profit at the expense of someone’s home in collective sales, while government acquisition is a sacrifice made for the public good.’

Source: Straits Times, 15 Aug 2009

En bloc sales: Adopt HK’s 50-year limit

I APPLAUD Monday’s well-argued commentary, ‘En bloc debate, HK style’, which highlighted the disparity between Hong Kong’s code of practice for collective property sales and that in Singapore where the rights of minority secondary proprietors are plainly prejudiced in comparison.

I particularly admire that quotation from a South China Morning Post correspondent: ‘The powers to compulsorily take away private homes are a draconian statutory provision that should be vested only in government – and used only for a defined purpose. Making a profit for developers is not a public purpose.’

I also endorse the environmental concerns of Hong Kong over the needless destruction of good architecture with perhaps decades of useful longevity ahead, and the subsequent costly redevelopment of any such site. For example, I would welcome the introduction of a 50-year age limit before any development could be considered for collective sale; that would at least relieve me of the incessant worry of enforced eviction from my treasured dwelling for the rest of my anticipated lifespan.

I would probably be categorised as one of the ‘eccentric seniors unduly attached to their property’ which I have occupied contentedly since August 1986, but I earnestly hope the Singapore Government will review legislation relating to collective sales without the unanimous consent of all secondary proprietors to alleviate the disadvantages they face compared to owners of both landed property and HDB flats.

Dennis Butler

Source: Straits Times, 15 Aug 2009

Hotel Royal family offering Guillemard apt block for sale

Fragrance Group picks up freehold site at Changi Road for $33.56m

(SINGAPORE) Melodies Limited, controlled by the Lee family of Hotel Royal, is selling a 20-storey freehold apartment block in Guillemard Road which it developed 11 years ago.
The price is about $70 million, reflecting $783 per sq ft based on existing strata area of 89,362 sq ft.

Colliers International, which is marketing the property, Cassia View, through an expression-of-interest exercise, says that the buyer could either spruce up the 72 units and sell them individually or tear down the property and redevelop it.

Cassia View is understood to have utilised the maximum gross floor area (GFA) allowed for the site based on a 2.8 plot ratio under Master Plan 2008. The site is zoned for residential use.

Nevertheless, Colliers executive director (investment sales) Ho Eng Joo reckons the buyer could redevelop the property, given its age, as there may be scope for improving the layout to better suit current tastes.

Based on Cassia View’s GFA of 105,823 sq ft, the $70 million price reflects a land cost of $661 psf per plot ratio if the new owner chooses to redevelop it.

Some 28 of Cassia View’s existing 72 units are currently let on short-term leases of up to a year.

Dakota Residences, a 99-year leasehold condo nearby, is now selling for about $900 psf on average.

The expression-of-interest exercise for Cassia View closes on Sept 2.

Separately, Fragrance Group last week picked up a freehold site in Changi Road for $33.56 million.

The deal was brokered by DTZ. The land area is 28,545 sq ft.

Fragrance said that it plans to develop the site into a five-storey mixed development comprising commercial space and apartments.

It intends to start construction and sale of the project in the second half of financial year 2009.

Source: Business Times, 13 Aug 2009

En bloc debate, HK style

Territory’s discussion holds up a useful mirror to practices in Singapore

WHEN land is scarce, your right to live in your home ends when your neighbours sell theirs.

This logic applies not just to Singapore – which defied expectations by recently producing its first collective sale offer since the recession took hold – but also to Hong Kong, which is now deep in debate over proposed changes to its compulsory property sale rules.

On the surface, the operative concept in both cities is the same: Urban renewal is expensive, and private capital speeds up the process. The government lends a hand by allowing an estate to be sold even if the sale does not get the unanimous approval of all the owners.

But Hong Kong and Singapore differ in the weight each accords to minority owners. Singapore requires an 80 per cent consent for a sale of a property at least 10 years old, and a 90 per cent approval for a development less than 10 years old.

Meanwhile, Hong Kong has maintained a 90 per cent threshold since the 1990s, with a tribunal giving the final go-ahead after considering a host of factors, including the property’s age and state of repair.

The Hong Kong administration has recently proposed that the threshold be lowered to 80 per cent – but only in cases where all but one unit has been acquired by one party, and where the development is at least 50 years old.

A observer may think this is just a case of laissez-faire Hong Kong playing catch-up, but the territory’s deliberations on the matter actually hold many lessons for the Republic.

For starters, Hong Kong remains protective of minority rights. Even if the proposed change is passed, it would still be harder for the majority of owners in a Hong Kong estate to push though a sale, compared with those in Singapore.

And yet, the opposition to the proposed change in some quarters in Hong Kong has been fierce. The change, they say, is tantamount to a subsidy for developers as it would mean that they would not need to entice as many home owners with a good sale price.

One South China Morning Post reader declared in a letter published on Aug 3: ‘The powers to compulsorily take away private homes are a draconian statutory provision that should be vested only in government – and used only for a defined public purpose. Making a profit for developers is not a public purpose.’

The language is refreshing, considering the tendency here to cast in a negative light those opposing an en bloc sale.

At times, they are made out to seem as greedy home owners holding out for more money, or eccentric seniors unduly attached to their property, or simply stubborn people who will not let their neighbours get on with their lives elsewhere.

Some here may point to Singapore’s public housing programme, where upgrading works are passed with a 75 per cent vote. If the majority can rule in public housing, why can’t it rule in private estates?

But that is hardly a parallel, given that public flat owners who have their homes renovated via a majority vote get to keep their homes whether they approved the upgrade or no. Private home owners have no such comfort.

Another interesting point about the Hong Kong debate is that it gives weight to environmental concerns.

The proposal notes that the normal working life of reinforced concrete buildings – during which they are unlikely to require major repairs – is assumed to be 50 years. Consequently, it sets 50 years as the minimum age for a building which may be subject to a compulsory sale application under the relaxed guidelines.

Given the huge amount of energy and material that erecting a building requires, this safeguard reduces the likelihood of unnecessary demolition waste.

In Singapore, money is by far the biggest measure used to determine whether a collective sale can go ahead.

The Strata Titles Board, which gives such sales the final nod, takes into account the transaction’s sale price, the method of distributing the sale proceeds and the relationship of the buyer to any of the unit owners.

Objections to the sale have to be couched in the language of dollars and cents. The minority owner has to suffer a financial loss or be unable to redeem the mortgage against his home in order for the sale to be called off.

The potential loss of built heritage or good architecture is not a consideration. Neither is the environmental cost of demolishing a building that is in good working condition.

There are mitigating factors of course.

Singapore has a pro-active conservation authority which keeps a look-out for historically and architecturally valuable buildings, and adds them to its protected list. This may lessen somewhat the need for stringent collective sale rules to protect urban heritage.

Singapore is also two-thirds the size of Hong Kong. This means the Republic has a smaller buffer of land and cannot afford to leave decaying buildings untouched for long.

Still, the debate in Hong Kong does hold up a useful mirror to our practices, whichever way that debate pans out.

It has been 10 years since the laws were amended here to allow a private estate to be sold without the unanimous consent of all its owners.

In the most recent property peak in 2007, 111 estates changed hands for $12.4 billion, according to property consultancy CB Richard Ellis.

As the Republic braces itself for the next en bloc wave, it could also cast its eye beyond its shores for clues as to how else it might reshape the Singapore skyline.

Urban renewal, after all, is far from being only a numbers game.

Source: Straits Times, 10 Aug 2009

Balmoral, Tagore sites for sale

SAVILLS Singapore has launched for sale two residential properties – the freehold No 3 Balmoral Road with an indicative price of $65 million; and an 86,402 square foot plot at No 162 Tagore Avenue, within the Teachers Housing Estate, with an indicative price of $15 million. The latter is being sold on a 99-year leasehold tenure by the Singapore Teachers’ Union, which holds the freehold interest in the property.

No 3 Balmoral Road currently comprises a development of 11 apartments, all leased out, but Savills is marketing the property for its redevelopment potential. The property is owned by an investment company and has a land area of 23,821 sq ft, a permissible plot ratio (ratio of maximum gross floor area to land area) of 1.6 and a height restriction of 12 storeys.

The site has been granted written permission by the Urban Redevelopment Authority for the development of 30 residential units. Savills said that such a development would have an estimated total potential saleable area of about 45,000 sq ft. The figure is understood to include bay windows and planter boxes. Development charge has been fully paid, up to a gross floor area (GFA) of about 41,918 sq ft, which includes 10 per cent additional GFA allowed for balconies.

The $65 million price works out to $1,705 per square foot per plot ratio (psf ppr) based on the 1.6 plot ratio. However, inclusive of the balcony allowance, the land price translates to a lower $1,551 psf ppr. Savills said that the $65 million works out to about $1,450 psf on the 45,000 sq ft potential saleable area.

Market watchers note that Keppel Land’s 18-storey Madison Residences on the former Naga Court site along Bukit Timah Road, which starts selling today, is expected to be priced at about $1,700 psf on average.

The Tagore Avenue site, although currently zoned as ‘civil & community institution’, has approval for a three-storey mixed landed development, allowing a potential development of either 33 landed homes or 40 cluster houses. The tender for this site closes on Sept 1 while the expression of interest for the Balmoral property closes on Sept 3.

Source: Business Times, 6 Aug 2009

One more bid for privatisation

Some residents angry that panelis trying again

IT HAD completed eight sessions for residents to sign their consent for privatisation and, needing the consent of only an additional 5 per cent of households to undertake the exercise, the Lagoon View Owners’ Association arranged for one more session on Saturday.

As sentiment in the property market inches up, could this attempt to privatise the 480-unit estate be the first step in the launch of an en bloc sale?

Most of the residents in the HUDC estate in Marine Parade who favour privatisation say they merely want to increase the value of their flats. However, those not in favour say they fear privatisation will lead to an eventual collective sale.

The head of consultancy and research at Chesterton International, Mr Colin Tan, believes the privatisation exercise is in response to the improved property market and with the intention of eventually offering a collective sale.

Developers triggering the bid for two sites on the Government reserve list could be an indication, to some people, of recovering interest in the property market, at least on the part of developers, he added.

By privatising now, residents “lock in” their payment to the Government at a lower rate and when the market improves they can sell the estate at a higher rate.

Currently, the estimated cost of buying the land back from the Ministry of Finance is $12 million. Each household will have to fork out $28,000.

Notices pasted near the lifts inform residents that 70.8 per cent have consented to privatisation, while another 2.9 per cent need the co-owner’s signature before full consent can be given. The committee needs 75 per cent approval to privatise the estate.

The push for another session for residents to sign up for privatisation has angered some of them, such as semi-retiree John, 60, who feel that the committee has already tried – and failed – in its bid for privatisation.

John says his neighbours, who are retirees, will have difficulty footing the $28,000 bill.

But some residents are open to the idea of an en bloc sale. Senior executive S H Tan, 49, says that if her unit is old and giving problems, and she gets a good price for the sale, she will consider selling it.

Residents say the committee mooted the idea of privatisation at its annual general meeting in April. Weekend Today was unable to contact the committee for its response.

After a poll of those present at the AGM showed that some 80 per cent were in favour of privatisation, the committee organised eight sessions, from June 20 to July 12, for residents to sign their consent with lawyers.

Earlier this month, Dragon Mansion in Spottiswoode Park Road was the first estate, after nine months, to place a tender for a collective sale.

Laguna Park, which is next to Lagoon View, may also be put up for en bloc next month, according to previous reports. Its asking price of $1.2 billion was decided in late 2007.

Source: Today, 25 July 2009