Source : Straits Times - 22 Jul 2008
Majority owners’ last-ditch bid to push through collective sale may bear fruit
AN ELEVENTH-HOUR bid by the owners of Tampines Court to save their collective sale from petering out seems to be paying off.
The deal was in danger of collapsing after the sales committee delayed seeking mandatory Strata Titles Board (STB) approval for the sale.
The STB had scheduled to hear the case only next month, but the sales agreement with Far East Organization and Frasers Centrepoint expires this Friday. The two property giants do not look keen to grant an extension.
As a result, the sales committee last week applied successfully to the High Court to have the STB hear the case earlier.
At yesterday’s hearing, those who objected to the sale had their say, clearing the way for lawyers for majority and minority owners to submit closing statements in writing by Thursday.
The STB had initially set yesterday’s hearing for Aug 7, but that would have killed the $405 million collective sale as it would come after the July 25 deadline.
The deadline fix stemmed from the sales committee’s decision to delay seeking mandatory STB approval for the deal until Jan 7, although all the necessary conditions had been met as early as July 25 last year.
It wanted to wait until the board had ruled on the Gillman Heights sale. Any ruling could have had a bearing on the fate of the Tampines Court deal as both are former Housing and Urban Development Company estates.
The squeeze on dates became potentially disastrous when the STB dismissed an appeal to bring forward the Aug 7 hearing, forcing majority owners to appeal to the High Court last week.
Lawyer N. Sreenivasan, who represents the minority owners, said yesterday the High Court did not explicitly order the STB to rule by Friday. But the board’s deputy president, Mr Alfonso Ang, said it was likely to, in the ’spirit’ of the court’s order.
Sales committee chairman Mathew Lee, who spent the most time on the witness stand yesterday, was grilled on whether he had acted in the owners’ best interests on the issue of the estate’s valuation and the method of distribution of sale proceeds.
The lively session also drew a few laughs, particularly when Senior Counsel Andre Yeap, who represents the majority owners, said Mr Sreenivasan was ‘highly intelligent’, to which the latter interjected: ‘No, I am not.’
Resident Niamh Choo, who also took the stand, told The Straits Times later that one of the minority owners’ biggest concern was that some of the proceeds would be distributed unfairly.
In his closing statement, Mr Yeap said there was insufficient evidence that the sale lacked good faith.
Mr Sreenivasan will make his closing statements to the board today.
Wednesday, July 23, 2008
July 21 hearing for Tampines Court case
Source : Straits Times - 19 Jul 2008
THE Tampines Court en-bloc sale was handed a lifeline by the High Court yesterday when it ordered the Strata Titles Board (STB) to bring forward a crucial hearing date.
Just a week ago, the sale had seemed as good as dead when the STB refused to change an Aug 7 hearing date. This meant the hearing would take place after the July 25 expiry date of the sales deal.
And the buyers - Far East Organization and Frasers Centrepoint - had already said they were unlikely to extend the deadline.
But the court yesterday granted an appeal by the majority owners. This means the STB must now hear remaining objections to the sale on Monday, four days before the deal expires.
Even with the new hearing date, STB registrar Bryan Chew said there was no guarantee a decision will be made by July 25.
‘(It) depends on how long the witnesses take on the stand,’ he said.
Thereafter, lawyers have to make their submissions and the board has to deliberate.
Senior counsel Michael Hwang, who was acting for the majority owners, told The Straits Times that the High Court application was made on two grounds.
First, that the hearing was set for a date beyond the six- month life of the specific board constituted to hear the estate’s sale.
The owners also contended that it was wrong for STB to fix that date when it knew the sales agreement would expire on July 25.
Lawyer N. Sreenivasan argued for the minority owners and said that the STB was not obliged to complete a sale by a date set by the sellers and buyers.
The estate’s deadline squeeze stemmed from a sales committee decision to delay seeking STB approval for the deal until the board had ruled on the Gillman Heights sale.
The decision on Gillman Heights could have had a bearing on the fate of the Tampines Court deal as both were former HUDC estates.
The Tampines Court committee eventually applied for sale approval on Jan 7, although all the necessary conditions had been met as early as July 25 last year.
Meanwhile, the sale has caused much tension and division in the estate.
‘The whole en-bloc process has been dragging for too long and is upsetting residents,’ said owner Mansur Husain.
Majority owners feel the sale price - about $700,000 for each unit - is above what the homes could get on the open market. But minority owners believe the amount is too low, given that private home prices in Tampines have shot up in the last year.
An independent analyst, Savills’ director of marketing and business development Ku Swee Yong, said fair value is likely from $500,000 to $700,000.
Some homes can command premiums based on individual attributes, he said. Comparing prices of Tampines Court to those of new condos in the area is ‘not too accurate’ as the estate does not have comparable facilities, he pointed out.
THE Tampines Court en-bloc sale was handed a lifeline by the High Court yesterday when it ordered the Strata Titles Board (STB) to bring forward a crucial hearing date.
Just a week ago, the sale had seemed as good as dead when the STB refused to change an Aug 7 hearing date. This meant the hearing would take place after the July 25 expiry date of the sales deal.
And the buyers - Far East Organization and Frasers Centrepoint - had already said they were unlikely to extend the deadline.
But the court yesterday granted an appeal by the majority owners. This means the STB must now hear remaining objections to the sale on Monday, four days before the deal expires.
Even with the new hearing date, STB registrar Bryan Chew said there was no guarantee a decision will be made by July 25.
‘(It) depends on how long the witnesses take on the stand,’ he said.
Thereafter, lawyers have to make their submissions and the board has to deliberate.
Senior counsel Michael Hwang, who was acting for the majority owners, told The Straits Times that the High Court application was made on two grounds.
First, that the hearing was set for a date beyond the six- month life of the specific board constituted to hear the estate’s sale.
The owners also contended that it was wrong for STB to fix that date when it knew the sales agreement would expire on July 25.
Lawyer N. Sreenivasan argued for the minority owners and said that the STB was not obliged to complete a sale by a date set by the sellers and buyers.
The estate’s deadline squeeze stemmed from a sales committee decision to delay seeking STB approval for the deal until the board had ruled on the Gillman Heights sale.
The decision on Gillman Heights could have had a bearing on the fate of the Tampines Court deal as both were former HUDC estates.
The Tampines Court committee eventually applied for sale approval on Jan 7, although all the necessary conditions had been met as early as July 25 last year.
Meanwhile, the sale has caused much tension and division in the estate.
‘The whole en-bloc process has been dragging for too long and is upsetting residents,’ said owner Mansur Husain.
Majority owners feel the sale price - about $700,000 for each unit - is above what the homes could get on the open market. But minority owners believe the amount is too low, given that private home prices in Tampines have shot up in the last year.
An independent analyst, Savills’ director of marketing and business development Ku Swee Yong, said fair value is likely from $500,000 to $700,000.
Some homes can command premiums based on individual attributes, he said. Comparing prices of Tampines Court to those of new condos in the area is ‘not too accurate’ as the estate does not have comparable facilities, he pointed out.
Tampines Court owners file appeal
Source : Straits Times - 16 Jul 2008
ANGRY owners at Tampines Court have opened up two fronts in their battle to save their estate’s $405 million collective sale.
One bid saw the sales committee lodge a High Court appeal to overturn a ruling by the Strata Titles Board (STB), while some owners made a direct plea to National Development Minister Mah Bow Tan.
The 10 or so owners went to a weekly Meet-The-People session on Monday night to voice their concerns to Mr Mah, the MP for the Tampines ward.
The Straits Times understands that Mr Mah, in his capacity as a local MP, has agreed to appeal to the STB on the owners’ behalf to bring forward a crucial hearing date.
The timing of that hearing - scheduled to let some sale objectors have a say - is also at the centre of the sales committee’s legal appeal.
The committee wants the High Court to overturn an STB ruling on when the hearing should be held.
The board said on Friday the hearing should go ahead as planned on Aug 7.
The date, however, comes after the sales agreement legally expires on July 25. If the hearing is held on Aug 7, the sale cannot be done as scheduled on July 25, effectively killing it.
Two sales committee members said in an affidavit filed on Monday that the STB failed to take into account that any hearing after July 25 ‘will be academic’, as the sales agreement would expire and the buyers were unlikely to extend the deadline.
The buyers - Far East Organization and Frasers Centrepoint - have already said they ‘are ready to complete the deal’, but ‘the onus was upon the vendors to secure the STB order within the agreed timeframe’.
The estate’s tight deadline stemmed from a sales committee decision to delay lodging its application for STB approval of the sale until Jan 7 this year although all the necessary conditions had already been met as early as July 25 last year.
It told the board that it wanted to await the outcome of legal challenges over the contentious Gillman Heights sale, as this could have a bearing on the fate of the Tampines Court deal.
As it turned out, the High Court last month cleared the way for the Gillman Heights deal and, in so doing, removed any potential obstacle to the Tampines Court sale as well.
Some owners told The Straits Times that they felt this deadline mess was the STB’s fault.
Madam Irene Cheang said it was the board’s duty to see the sale through within the six-month guideline, and that it had been inefficient in processing the sale.
STB registrar Bryan Chew stood by the board’s decision on the date of the hearing.
The time needed to get a sale approved depends on a variety of factors, including the number of objectors, the size of the estate and the complexity of the case, he said.
‘This is not the first time that we’ve taken more than six months,’ he added.
The STB said it had pencilled in the Aug 7 date after listening to sale objectors from June 16 to 18 and ‘taking into account the availability of all parties and the board’.
It has become a nerve-wracking time for the owners, as many have committed themselves to other properties.
Owner K. Balasubramaniam, 55, said residents could lose about $200,000 should the sale fail. He said the average open market value of a typical unit was $500,000 - while each owner would get about $700,000 should the sale go through.
Lawyers for the majority and minority owners declined to comment.
The Straits Times understands that there will be a High Court hearing this afternoon. It will be closed to the public.
ANGRY owners at Tampines Court have opened up two fronts in their battle to save their estate’s $405 million collective sale.
One bid saw the sales committee lodge a High Court appeal to overturn a ruling by the Strata Titles Board (STB), while some owners made a direct plea to National Development Minister Mah Bow Tan.
The 10 or so owners went to a weekly Meet-The-People session on Monday night to voice their concerns to Mr Mah, the MP for the Tampines ward.
The Straits Times understands that Mr Mah, in his capacity as a local MP, has agreed to appeal to the STB on the owners’ behalf to bring forward a crucial hearing date.
The timing of that hearing - scheduled to let some sale objectors have a say - is also at the centre of the sales committee’s legal appeal.
The committee wants the High Court to overturn an STB ruling on when the hearing should be held.
The board said on Friday the hearing should go ahead as planned on Aug 7.
The date, however, comes after the sales agreement legally expires on July 25. If the hearing is held on Aug 7, the sale cannot be done as scheduled on July 25, effectively killing it.
Two sales committee members said in an affidavit filed on Monday that the STB failed to take into account that any hearing after July 25 ‘will be academic’, as the sales agreement would expire and the buyers were unlikely to extend the deadline.
The buyers - Far East Organization and Frasers Centrepoint - have already said they ‘are ready to complete the deal’, but ‘the onus was upon the vendors to secure the STB order within the agreed timeframe’.
The estate’s tight deadline stemmed from a sales committee decision to delay lodging its application for STB approval of the sale until Jan 7 this year although all the necessary conditions had already been met as early as July 25 last year.
It told the board that it wanted to await the outcome of legal challenges over the contentious Gillman Heights sale, as this could have a bearing on the fate of the Tampines Court deal.
As it turned out, the High Court last month cleared the way for the Gillman Heights deal and, in so doing, removed any potential obstacle to the Tampines Court sale as well.
Some owners told The Straits Times that they felt this deadline mess was the STB’s fault.
Madam Irene Cheang said it was the board’s duty to see the sale through within the six-month guideline, and that it had been inefficient in processing the sale.
STB registrar Bryan Chew stood by the board’s decision on the date of the hearing.
The time needed to get a sale approved depends on a variety of factors, including the number of objectors, the size of the estate and the complexity of the case, he said.
‘This is not the first time that we’ve taken more than six months,’ he added.
The STB said it had pencilled in the Aug 7 date after listening to sale objectors from June 16 to 18 and ‘taking into account the availability of all parties and the board’.
It has become a nerve-wracking time for the owners, as many have committed themselves to other properties.
Owner K. Balasubramaniam, 55, said residents could lose about $200,000 should the sale fail. He said the average open market value of a typical unit was $500,000 - while each owner would get about $700,000 should the sale go through.
Lawyers for the majority and minority owners declined to comment.
The Straits Times understands that there will be a High Court hearing this afternoon. It will be closed to the public.
Tampines Court collective sale in peril
Straits Times July 12, 2008
STB rules not to bring forward Aug 7 hearing, which must take place before deal is signed by July 25 deadline
By Jessica Cheam
CRUCIAL: With no extension, the Tampines Court sale agreement will likely lapse on July 25. -- PHOTO: WWW.CHANKOKHONG.COM.SG
THE sales committee at Tampines Court looks to have shot itself in the foot after a ruling by the Strata Titles Board (STB) yesterday almost certainly killed off its estate's $405 million collective sale.
It delayed seeking mandatory STB approval for the deal and is now caught in a deadline trap of its own making.
The key date is July 25, that is when the estate's sales committee must complete the deal. However, that looks impossible now after yesterday's STB decision.
The board ruled that it would not bring forward an Aug 7 hearing set to allow testimony from witnesses that have yet to be called.
The STB had pencilled in the date after listening to sale objectors on June 16 to 18 and 'taking into account the availability of all parties and the board', it said.
Until that Aug 7 hearing is conducted, the sale cannot be signed and sealed
The Straits Times understands that the sales committee wanted a date change as the buyers - Frasers Centrepoint and Far East Organization - will not extend the completion deadline.
With no extension, the sale agreement will likely lapse on July 25. This means the developers can walk away from a deal that looks far less compelling now than last July, given souring homebuyer sentiment and escalating construction costs.
However, this might be a blessing in disguise for some owners at the estate. The deal was inked just before the property boom at prices around $430 per sq ft (psf), but private homes in Tampines now go from $550 to $700 psf.
The deadline crunch seems to be of the sales committee's own making.
The conditions of the sales agreement were met on July 25 last year but the committee delayed applying for the standard STB approval until Jan 7.
The committee told the STB that it wanted to await the outcome of legal challenges over the contentious Gillman Heights sale.
The committee argued that if the Gillman Heights sale was halted over issues of majority consent, it would have made a Tampines Court application futile.
In the Gillman Heights case, minority owners appealed all the way to the High Court, claiming that collective sale rules did not apply to former Housing and Urban Development Company (HUDC) estates.
Tampines Court is also a former HUDC estate so any ruling could have killed its own collective sale.
But Justice Choo Han Teck ruled last month that a privatised HUDC estate can be sold collectively if the requisite conditions are met.
While that also cleared the way for the Tampines Court sale, it left the sales committee with little time to tie up loose ends, including objections by minority owners.
The STB registrar had some sympathy yesterday for the committee's argument about why it delayed applying for sale approval.
But he pointed out that a sale agreement has a deadline and, by waiting for the High Court ruling, the committtee took the risk that it would not have enough time to get a ruling from the board before the expiry date.
'This is a calculated risk, whose consequences they will have to bear,' he said.
'The board should not be pressured to accommodate a deadline set by the applicants and the buyer.'
A lawyer acting for the minority owners told The Straits Times that he did not want to comment on the outcome.
The one lifeline for the majority owners would be if the buyers extend the deadline but that also looks a lost cause.
Far East Organization and Frasers Centrepoint told The Straits Times last night that they are ready to complete the deal, but 'the onus was upon the vendors to secure the STB order within the agreed timeframe, which is about 16 months from the date of the agreement'.
Savills director of marketing and business development Ku Swee Yong said since the deal was inked last July, construction costs have escalated a lot faster than mass market property prices.
'The project, unsurprisingly, has become less attractive,' he said.
Tampines Court is a sizeable 702,162 sq ft site with 560 units. It could be redeveloped into a new condominium with around 1,580 units averaging 1,300 sq ft.
Key proceedings
March 25, 2007: Tampines Court's sales committee enters a sale and purchase agreement with Far East Organization and Frasers Centrepoint.
July 25, 2007: The conditions of the sales agreement are fulfilled.
Jan 7: The sales committee applies to the Strata Titles Board (STB) for sale approval and the minority owners then file their objections.
June 16 to 18: The STB hears the objections and sets the next hearing for Aug 7.
June 30: The sales committee applies to bring the Aug 7 hearing forward to before the sale's July 25 expiry date.
July 11: STB dismisses the sales committee's request
STB rules not to bring forward Aug 7 hearing, which must take place before deal is signed by July 25 deadline
By Jessica Cheam
CRUCIAL: With no extension, the Tampines Court sale agreement will likely lapse on July 25. -- PHOTO: WWW.CHANKOKHONG.COM.SG
THE sales committee at Tampines Court looks to have shot itself in the foot after a ruling by the Strata Titles Board (STB) yesterday almost certainly killed off its estate's $405 million collective sale.
It delayed seeking mandatory STB approval for the deal and is now caught in a deadline trap of its own making.
The key date is July 25, that is when the estate's sales committee must complete the deal. However, that looks impossible now after yesterday's STB decision.
The board ruled that it would not bring forward an Aug 7 hearing set to allow testimony from witnesses that have yet to be called.
The STB had pencilled in the date after listening to sale objectors on June 16 to 18 and 'taking into account the availability of all parties and the board', it said.
Until that Aug 7 hearing is conducted, the sale cannot be signed and sealed
The Straits Times understands that the sales committee wanted a date change as the buyers - Frasers Centrepoint and Far East Organization - will not extend the completion deadline.
With no extension, the sale agreement will likely lapse on July 25. This means the developers can walk away from a deal that looks far less compelling now than last July, given souring homebuyer sentiment and escalating construction costs.
However, this might be a blessing in disguise for some owners at the estate. The deal was inked just before the property boom at prices around $430 per sq ft (psf), but private homes in Tampines now go from $550 to $700 psf.
The deadline crunch seems to be of the sales committee's own making.
The conditions of the sales agreement were met on July 25 last year but the committee delayed applying for the standard STB approval until Jan 7.
The committee told the STB that it wanted to await the outcome of legal challenges over the contentious Gillman Heights sale.
The committee argued that if the Gillman Heights sale was halted over issues of majority consent, it would have made a Tampines Court application futile.
In the Gillman Heights case, minority owners appealed all the way to the High Court, claiming that collective sale rules did not apply to former Housing and Urban Development Company (HUDC) estates.
Tampines Court is also a former HUDC estate so any ruling could have killed its own collective sale.
But Justice Choo Han Teck ruled last month that a privatised HUDC estate can be sold collectively if the requisite conditions are met.
While that also cleared the way for the Tampines Court sale, it left the sales committee with little time to tie up loose ends, including objections by minority owners.
The STB registrar had some sympathy yesterday for the committee's argument about why it delayed applying for sale approval.
But he pointed out that a sale agreement has a deadline and, by waiting for the High Court ruling, the committtee took the risk that it would not have enough time to get a ruling from the board before the expiry date.
'This is a calculated risk, whose consequences they will have to bear,' he said.
'The board should not be pressured to accommodate a deadline set by the applicants and the buyer.'
A lawyer acting for the minority owners told The Straits Times that he did not want to comment on the outcome.
The one lifeline for the majority owners would be if the buyers extend the deadline but that also looks a lost cause.
Far East Organization and Frasers Centrepoint told The Straits Times last night that they are ready to complete the deal, but 'the onus was upon the vendors to secure the STB order within the agreed timeframe, which is about 16 months from the date of the agreement'.
Savills director of marketing and business development Ku Swee Yong said since the deal was inked last July, construction costs have escalated a lot faster than mass market property prices.
'The project, unsurprisingly, has become less attractive,' he said.
Tampines Court is a sizeable 702,162 sq ft site with 560 units. It could be redeveloped into a new condominium with around 1,580 units averaging 1,300 sq ft.
Key proceedings
March 25, 2007: Tampines Court's sales committee enters a sale and purchase agreement with Far East Organization and Frasers Centrepoint.
July 25, 2007: The conditions of the sales agreement are fulfilled.
Jan 7: The sales committee applies to the Strata Titles Board (STB) for sale approval and the minority owners then file their objections.
June 16 to 18: The STB hears the objections and sets the next hearing for Aug 7.
June 30: The sales committee applies to bring the Aug 7 hearing forward to before the sale's July 25 expiry date.
July 11: STB dismisses the sales committee's request
Time to relook en bloc rules
Source : Weekend Today - 19 Jul 2008
I REFER to “Landmark ruling” (July 18).
The judge has ruled that the fact that a higher offer was received for the en bloc sale of Horizon Towers is not within the purview of the Strata Title Board (STB); neither are any allegations of less-than-stellar conduct among the parties.
And that if the STB has to hear such matters, it would never get its job done.
So, if I get an offer for my home of say, $7 million and the en bloc sales committee of my condo gets an offer of $5 million, would my recourse be to sue in the courts while the STB can rule in favour of the $5-million sale and proceed? This defies logic and good business sense.
Moreover, if the STB is not equipped to handle matters pertinent to good faith, the highest sale price, the conduct of sales committee, et cetera, it is time that the approval of en bloc sales be given to a specialised legal tribunal which is equipped to do so.
Further, if the Land Titles (Strata) Act does not provide sufficient coverage to protect the rights of a subsidiaryproprietor who expects a fair and holistic hearing of their grievances, it is time for all en bloc sales to be held inabatement until such matters can be seriously addressed.
Horizon Towers is a mega test case for en bloc sales and it is time to take stock of our laws.
Ong Cher Meng
I REFER to “Landmark ruling” (July 18).
The judge has ruled that the fact that a higher offer was received for the en bloc sale of Horizon Towers is not within the purview of the Strata Title Board (STB); neither are any allegations of less-than-stellar conduct among the parties.
And that if the STB has to hear such matters, it would never get its job done.
So, if I get an offer for my home of say, $7 million and the en bloc sales committee of my condo gets an offer of $5 million, would my recourse be to sue in the courts while the STB can rule in favour of the $5-million sale and proceed? This defies logic and good business sense.
Moreover, if the STB is not equipped to handle matters pertinent to good faith, the highest sale price, the conduct of sales committee, et cetera, it is time that the approval of en bloc sales be given to a specialised legal tribunal which is equipped to do so.
Further, if the Land Titles (Strata) Act does not provide sufficient coverage to protect the rights of a subsidiaryproprietor who expects a fair and holistic hearing of their grievances, it is time for all en bloc sales to be held inabatement until such matters can be seriously addressed.
Horizon Towers is a mega test case for en bloc sales and it is time to take stock of our laws.
Ong Cher Meng
Landmark en bloc ruling
Source : Today - 18 Jul 2008
Judge sets out role of Strata Titles Board and which of its findings can be challenged
IT IS a situation that may apply to some en bloc deals: The selling price could have been higher if the sales committee or its agent had tried harder to secure a better deal.
In the case of Horizon Towers, a potential buyer was even standing by with a higher price than the one that was eventually chosen.
But that cannot be reason enough to disallow an en bloc sale, according to Justice Choo Han Teck as he brought a protracted saga to an end.
In a landmark decision, the judge set out the role of the Strata Titles Board as well as which of its findings can be challenged, and which ones cannot.
When it comes to price, as long as the STB finds that a purchase price is fair, which would make it a “finding of fact” in legal parlance, it would have fulfilled its duty and is entitled to approve an en bloc sale.
Minority residents at Horizon Towers who argued that the $500-million sale to Horizon Partners Private Limited (HPPL) was done in bad faith - as evidenced by Vineyard Holdings’ higher offer of $510 million :- had failed to prove their case.
Justice Choo found “no error of law” and said the High Court “cannot and will not” interfere in findings of fact made by the STB.
“Whether it was the right time to sell, or that the sales committee ought to have made a little more effort to persuade the purchaser to offer more, are not crucial matters that oblige the STB to withhold approval.
“Nor would it be the concern of the STB that some, or all, of the appellants might have consented had the Vineyard offer been made known to all of them,” he said.
If the STB were to make such enquiries, it “would never get its job done within the time limited”.
The minority owners had appealed to reverse a Dec 7 decision by STB to approve the sale. But if residents believe that the sales committee had “deliberately or negligently” not pursued a higher offer, resulting in a financial loss to them, the recourse is through litigation in the courts, said Justice Choo.
“It is necessary for this point to be made, not to encourage further litigation, but to emphasise that a subsidiary proprietor who does not wish to sell his unit can only object to the en bloc sale on such grounds as the relevant statutes allow,” he said.
And, the statutes do not allow the STB to deal with “allegations and counter-allegations against parties” as its tribunal hearing does not give such parties “the full recourse of trial to defend themselves”.
He concluded that all sides were treated fairly in this deal as “fairness requires only that the rules and regulations of each en bloc deal to be properly and duly administered”.
Judge sets out role of Strata Titles Board and which of its findings can be challenged
IT IS a situation that may apply to some en bloc deals: The selling price could have been higher if the sales committee or its agent had tried harder to secure a better deal.
In the case of Horizon Towers, a potential buyer was even standing by with a higher price than the one that was eventually chosen.
But that cannot be reason enough to disallow an en bloc sale, according to Justice Choo Han Teck as he brought a protracted saga to an end.
In a landmark decision, the judge set out the role of the Strata Titles Board as well as which of its findings can be challenged, and which ones cannot.
When it comes to price, as long as the STB finds that a purchase price is fair, which would make it a “finding of fact” in legal parlance, it would have fulfilled its duty and is entitled to approve an en bloc sale.
Minority residents at Horizon Towers who argued that the $500-million sale to Horizon Partners Private Limited (HPPL) was done in bad faith - as evidenced by Vineyard Holdings’ higher offer of $510 million :- had failed to prove their case.
Justice Choo found “no error of law” and said the High Court “cannot and will not” interfere in findings of fact made by the STB.
“Whether it was the right time to sell, or that the sales committee ought to have made a little more effort to persuade the purchaser to offer more, are not crucial matters that oblige the STB to withhold approval.
“Nor would it be the concern of the STB that some, or all, of the appellants might have consented had the Vineyard offer been made known to all of them,” he said.
If the STB were to make such enquiries, it “would never get its job done within the time limited”.
The minority owners had appealed to reverse a Dec 7 decision by STB to approve the sale. But if residents believe that the sales committee had “deliberately or negligently” not pursued a higher offer, resulting in a financial loss to them, the recourse is through litigation in the courts, said Justice Choo.
“It is necessary for this point to be made, not to encourage further litigation, but to emphasise that a subsidiary proprietor who does not wish to sell his unit can only object to the en bloc sale on such grounds as the relevant statutes allow,” he said.
And, the statutes do not allow the STB to deal with “allegations and counter-allegations against parties” as its tribunal hearing does not give such parties “the full recourse of trial to defend themselves”.
He concluded that all sides were treated fairly in this deal as “fairness requires only that the rules and regulations of each en bloc deal to be properly and duly administered”.
High Court dismisses Horizon Towers en bloc appeals
Source : Business Times - 17 Jul 2008
Hotel Properties Limited on Thursday said Singapore’s High Court has dismissed the appeals by the minority sellers in Horizon Towers’ en bloc sale.
The minority sellers had made the appeal in January 2008 against the Strata Titles Board’s decision delivered on December 7, 2007 which would allow the en bloc sale of the condominium to proceed.
HPL, Morgan Stanley Real Estate and Qatar Investment Authority agreed to pay $500 million for the condo located in the prime district. The deal was inked in January last year, before the property prices shot up.
But the closure of the collective sale was delayed after a group of minority owners put up an appeal saying the sale was carried out in bad faith. — BT Newsroom
Hotel Properties Limited on Thursday said Singapore’s High Court has dismissed the appeals by the minority sellers in Horizon Towers’ en bloc sale.
The minority sellers had made the appeal in January 2008 against the Strata Titles Board’s decision delivered on December 7, 2007 which would allow the en bloc sale of the condominium to proceed.
HPL, Morgan Stanley Real Estate and Qatar Investment Authority agreed to pay $500 million for the condo located in the prime district. The deal was inked in January last year, before the property prices shot up.
But the closure of the collective sale was delayed after a group of minority owners put up an appeal saying the sale was carried out in bad faith. — BT Newsroom
Monday, June 30, 2008
TAMPINES COURT - AN OWNERS VIEW
I am an owner in Tampines Court and would like to raise my views on the misleading facts happening in my estate by the minority owners on the following:
"The developer buyer will NOT EXTEND the Sales and Purchase Agreement.
The enbloc sale of Tampines Court is dead if the STB does not approve the sale by the 24 July 2008. Wonders will never cease! "
My view:
The STB heard the case from 16th to 18th June 2008. At the end of the hearing, two more witnesses had yet to be cross-examined.
The objectors had also raised the issue that the unused beta sum should be distributed amongst all owners. The sale committee agreed that the unused beta sum would be so distributed.
The STB has fixed 7th Aug 2008 for the continued hearing. It is estimated that only one more day would be needed to complete the cross-examination of these two witnesses.
The sale committee endeavoured to obtain an extension of the 25th July 2008 deadline from the Purchaser. At the moment, Far East has reverted to say that they are not minded to agree to the extension.
The sale committee has applied to the STB this morning for the hearing date to be brought forward. This application is being closely monitored.
I believe the Sale Committee will update the majority owners on the development.
I will correct a piece of information put up by the objectors on their blogsite.
Far East obtained the Residential Property Approval (the RPA approval) on 25th July 2007 and served it on our lawyers on 26th July 2007.
At that time, the STB of Gillman Heights was being fought in the STB. The STB dismissed this argument in the Gillman Height decision on 21 December 2007.
The Tampines Court advertisements appeared 6 days later, on 27th December 2007.
The STB application was filed on 7th January 2008.
It is therefore not correct to say that the STB application was not filed for 9 months.
I respect the objectors' point of views.
Throughout this exercise, before the STB, special efforts were made to try and engage the objectors in a constructive manner.
There were many dialogues.
Moreover, even at the STB stage, when the objectors for the first time raised the issue of the distribution of the unused beta sum, the sale committee agreed that the unused sum should be shared by all.
However, this was objected to as well.
It is incorrect to say that the unpaid maintenance and sinking funds contributions would be paid from the beta sum. The beta sum is utilised for the privatisation cost.
It is hoped that this information would be corrected as well.
"The developer buyer will NOT EXTEND the Sales and Purchase Agreement.
The enbloc sale of Tampines Court is dead if the STB does not approve the sale by the 24 July 2008. Wonders will never cease! "
My view:
The STB heard the case from 16th to 18th June 2008. At the end of the hearing, two more witnesses had yet to be cross-examined.
The objectors had also raised the issue that the unused beta sum should be distributed amongst all owners. The sale committee agreed that the unused beta sum would be so distributed.
The STB has fixed 7th Aug 2008 for the continued hearing. It is estimated that only one more day would be needed to complete the cross-examination of these two witnesses.
The sale committee endeavoured to obtain an extension of the 25th July 2008 deadline from the Purchaser. At the moment, Far East has reverted to say that they are not minded to agree to the extension.
The sale committee has applied to the STB this morning for the hearing date to be brought forward. This application is being closely monitored.
I believe the Sale Committee will update the majority owners on the development.
I will correct a piece of information put up by the objectors on their blogsite.
Far East obtained the Residential Property Approval (the RPA approval) on 25th July 2007 and served it on our lawyers on 26th July 2007.
At that time, the STB of Gillman Heights was being fought in the STB. The STB dismissed this argument in the Gillman Height decision on 21 December 2007.
The Tampines Court advertisements appeared 6 days later, on 27th December 2007.
The STB application was filed on 7th January 2008.
It is therefore not correct to say that the STB application was not filed for 9 months.
I respect the objectors' point of views.
Throughout this exercise, before the STB, special efforts were made to try and engage the objectors in a constructive manner.
There were many dialogues.
Moreover, even at the STB stage, when the objectors for the first time raised the issue of the distribution of the unused beta sum, the sale committee agreed that the unused sum should be shared by all.
However, this was objected to as well.
It is incorrect to say that the unpaid maintenance and sinking funds contributions would be paid from the beta sum. The beta sum is utilised for the privatisation cost.
It is hoped that this information would be corrected as well.
Friday, June 27, 2008
Developers turn landlords as property market stays quiet
PROPERTY developers such as Koh Brothers and GuocoLand, which bought collective sale sites during boom times, are now becoming landlords as they wait out the market slowdown.
They are leasing out apartments they bought to existing occupants as a way to generate some income instead of simply leaving them vacant.
If the property upswing had continued, these developers might well have moved quickly to tear down the older homes to put up new developments.
But the sharp slowdown in home sales has put paid to such thoughts for now.
Market observers say renting is a nimble move given present market conditions.
For sellers of units in collective deals who have yet to buy a new home, it is a win- win situation as they would have collected their sale proceeds.
Take, for example, the consortium that bought freehold Lincoln Lodge for $243 million in June last year.
It has decided to allow occupants to keep renting homes for six months from the sale completion date of July 8, and thereafter on a monthly extension basis.
‘Upon requests by some of the sellers to stay on, and while waiting for approvals, we have decided to grant them this request by extending a lease,’ said Mr Francis Koh, Koh Brothers’ managing director and chief executive.
Rents at Lincoln Lodge range from $2,700 to about $4,500 for larger units.
In the middle of last year, at the height of the collective sale frenzy, Koh Brothers bought the Newton site with Heeton Holdings, KSH Holdings and Lian Beng Group for a record $1,449.30 per sq ft (psf) per plot ratio.
A Lincoln Lodge seller, who wished to be known only as Mr Tan, welcomed the rental move as sellers had collected sale proceeds in January, and those who had not bought a home could take their time.
‘It’s an option…I know someone who negotiated the rent down to $2,500,’ he said.
GuocoLand seems to be the early rental front runner.
It offered residents short-term leases at Sophia Court in Adis Road last year, followed by Leedon Heights off Holland Road earlier this year. The leases started in March at Sophia Court and yesterday at Leedon Heights. Both last till Jan 31 next year.
A three-bedroom unit at Leedon Heights costs $2,850 a month, while rents at Sophia Court range from $800 to more than $4,000 a month.
GuocoLand bought Leedon Heights in April last year for $835 million and Sophia Court in late 2006 for $230 million.
Renting out units is a way to ‘wait out the current quiet in the market’, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.
‘If developers were to launch their projects now, it may be challenging for them to reach their target price for some of the projects.’
Frasers Centrepoint said it may offer short-term leases to the former owners of the 185-unit Flamingo Valley, a freehold site in Siglap Road that it bought for $194 million in February last year.
‘We had 50 owners who wrote to ask us to extend their lease…They haven’t found anything suitable,’ said the firm’s general manager of development and property, Mr Cheang Kok Kheong.
He said the firm was likely to extend a lease of six months to a year. This would ‘give us more time to think about our plans’.
City Developments (CDL) has said it is still exploring the renting option.
Renting out apartments bought in collective sales is not new. CDL did so a few years back, when it rented out all 124 apartments in Kim Lin Mansion in Grange Road.
It had bought it in late 1999 for $251 million, or $996 psf of potential built-up area, but pushed it out for sale only at the height of the property boom last year. It fetched prices of $3,600 psf.
Win-win deal
· Developers lease out units to generate income instead of leaving them empty as they sit out the market slowdown.
· Sellers of collective sale projects who have yet to buy new homes can stay on in their existing units as tenants.
TOUGH TARGET
‘If developers were to launch their projects now, it may be challenging for them to reach their target price for some of the projects.’ - MR MAK of Knight Frank, on companies holding out for better prices
Source : Straits Times - 4 Jun 2008
They are leasing out apartments they bought to existing occupants as a way to generate some income instead of simply leaving them vacant.
If the property upswing had continued, these developers might well have moved quickly to tear down the older homes to put up new developments.
But the sharp slowdown in home sales has put paid to such thoughts for now.
Market observers say renting is a nimble move given present market conditions.
For sellers of units in collective deals who have yet to buy a new home, it is a win- win situation as they would have collected their sale proceeds.
Take, for example, the consortium that bought freehold Lincoln Lodge for $243 million in June last year.
It has decided to allow occupants to keep renting homes for six months from the sale completion date of July 8, and thereafter on a monthly extension basis.
‘Upon requests by some of the sellers to stay on, and while waiting for approvals, we have decided to grant them this request by extending a lease,’ said Mr Francis Koh, Koh Brothers’ managing director and chief executive.
Rents at Lincoln Lodge range from $2,700 to about $4,500 for larger units.
In the middle of last year, at the height of the collective sale frenzy, Koh Brothers bought the Newton site with Heeton Holdings, KSH Holdings and Lian Beng Group for a record $1,449.30 per sq ft (psf) per plot ratio.
A Lincoln Lodge seller, who wished to be known only as Mr Tan, welcomed the rental move as sellers had collected sale proceeds in January, and those who had not bought a home could take their time.
‘It’s an option…I know someone who negotiated the rent down to $2,500,’ he said.
GuocoLand seems to be the early rental front runner.
It offered residents short-term leases at Sophia Court in Adis Road last year, followed by Leedon Heights off Holland Road earlier this year. The leases started in March at Sophia Court and yesterday at Leedon Heights. Both last till Jan 31 next year.
A three-bedroom unit at Leedon Heights costs $2,850 a month, while rents at Sophia Court range from $800 to more than $4,000 a month.
GuocoLand bought Leedon Heights in April last year for $835 million and Sophia Court in late 2006 for $230 million.
Renting out units is a way to ‘wait out the current quiet in the market’, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.
‘If developers were to launch their projects now, it may be challenging for them to reach their target price for some of the projects.’
Frasers Centrepoint said it may offer short-term leases to the former owners of the 185-unit Flamingo Valley, a freehold site in Siglap Road that it bought for $194 million in February last year.
‘We had 50 owners who wrote to ask us to extend their lease…They haven’t found anything suitable,’ said the firm’s general manager of development and property, Mr Cheang Kok Kheong.
He said the firm was likely to extend a lease of six months to a year. This would ‘give us more time to think about our plans’.
City Developments (CDL) has said it is still exploring the renting option.
Renting out apartments bought in collective sales is not new. CDL did so a few years back, when it rented out all 124 apartments in Kim Lin Mansion in Grange Road.
It had bought it in late 1999 for $251 million, or $996 psf of potential built-up area, but pushed it out for sale only at the height of the property boom last year. It fetched prices of $3,600 psf.
Win-win deal
· Developers lease out units to generate income instead of leaving them empty as they sit out the market slowdown.
· Sellers of collective sale projects who have yet to buy new homes can stay on in their existing units as tenants.
TOUGH TARGET
‘If developers were to launch their projects now, it may be challenging for them to reach their target price for some of the projects.’ - MR MAK of Knight Frank, on companies holding out for better prices
Source : Straits Times - 4 Jun 2008
4 sites relaunched for collective sale at lower prices
PropNex hopes 30% cut in asking price will attract buyers, as demand is ’still there’
A BOLD property firm is defying market trends with a renewed bid to sell four housing sites en bloc, even though the market appears dead for now.
PropNex Realty admits its move is ‘contrarian’ but hopes a hefty asking price cut of up to 30 per cent will attract buyers.
Even then, developers may not bite, given market uncertainties, property consultants say.
Some other sites were relaunched for collective sale this year, but none was sold. Any bids that did emerge were below the owners’ expectations.
PropNex is relaunching four sites: Cavenagh Gardens in Cavenagh Road, Novena Hill in the Novena area, Seletar Gardens along Yio Chu Kang Road and Hong Thye in Geylang.
‘We are trying to take a contrarian view,’ said the firm’s head of investment sales and commercial department, Mr Charles Chua. ‘We believe the demand is still there. Someone has to take the lead and kick-start the market.’
The four estates were first launched for sale around September and October last year. Their owners had since lowered their expectations, but not their reserve prices. This was the minimum sale price fixed when the owners first agreed to a collective sale.
In the case of the 130,000 sq ft Cavenagh Gardens, the asking price is now $450 million to $455 million, well down from $619 million in October.
Mr Chua hopes the prospect of combining the freehold site with an adjoining piece of state land will be an added attraction.
That will lower the price to as little as $1,481 per sq ft per plot ratio (psf ppr). Last year, the price was $2,308 psf ppr, excluding the state land. A developer could then sell the new units at about $2,200 psf, said Mr Chua.
Seletar Gardens is also heavily discounted now. The asking price is $50 million to $55 million from $75 million last year.
The asking price at Novena Hill is now at $42 million to $45 million, down from up to $60 million last year.
And the price tag on the Geylang plot has had about $3 million lopped off and is now going for up to $13 million.
However, even if the sellers have lowered their pricing expectations, there are other issues to consider, observers say.
‘It depends on how reasonable the seller’s price is. It is quite meaningless to lower just the asking prices and not the reserve,’ said a market observer. ‘If developers were interested in buying below the asking prices, they would already have asked for it.’
Most developers already have some projects on their books, so they may not be keen, said Mr Colin Tan, Chesterton International’s head of research and consultancy.
‘The issue is the construction bottleneck,’ he said. ‘For new sites, they have to consider rising construction costs, in addition to the risk of a declining market.’
Mr Karamjit Singh, the managing director of Credo Real Estate, which has handled a significant amount of collective sales, said developers would need a greater profit margin in the event selling prices soften even further.
Source : Sraits Times - 5 Jun 2008
A BOLD property firm is defying market trends with a renewed bid to sell four housing sites en bloc, even though the market appears dead for now.
PropNex Realty admits its move is ‘contrarian’ but hopes a hefty asking price cut of up to 30 per cent will attract buyers.
Even then, developers may not bite, given market uncertainties, property consultants say.
Some other sites were relaunched for collective sale this year, but none was sold. Any bids that did emerge were below the owners’ expectations.
PropNex is relaunching four sites: Cavenagh Gardens in Cavenagh Road, Novena Hill in the Novena area, Seletar Gardens along Yio Chu Kang Road and Hong Thye in Geylang.
‘We are trying to take a contrarian view,’ said the firm’s head of investment sales and commercial department, Mr Charles Chua. ‘We believe the demand is still there. Someone has to take the lead and kick-start the market.’
The four estates were first launched for sale around September and October last year. Their owners had since lowered their expectations, but not their reserve prices. This was the minimum sale price fixed when the owners first agreed to a collective sale.
In the case of the 130,000 sq ft Cavenagh Gardens, the asking price is now $450 million to $455 million, well down from $619 million in October.
Mr Chua hopes the prospect of combining the freehold site with an adjoining piece of state land will be an added attraction.
That will lower the price to as little as $1,481 per sq ft per plot ratio (psf ppr). Last year, the price was $2,308 psf ppr, excluding the state land. A developer could then sell the new units at about $2,200 psf, said Mr Chua.
Seletar Gardens is also heavily discounted now. The asking price is $50 million to $55 million from $75 million last year.
The asking price at Novena Hill is now at $42 million to $45 million, down from up to $60 million last year.
And the price tag on the Geylang plot has had about $3 million lopped off and is now going for up to $13 million.
However, even if the sellers have lowered their pricing expectations, there are other issues to consider, observers say.
‘It depends on how reasonable the seller’s price is. It is quite meaningless to lower just the asking prices and not the reserve,’ said a market observer. ‘If developers were interested in buying below the asking prices, they would already have asked for it.’
Most developers already have some projects on their books, so they may not be keen, said Mr Colin Tan, Chesterton International’s head of research and consultancy.
‘The issue is the construction bottleneck,’ he said. ‘For new sites, they have to consider rising construction costs, in addition to the risk of a declining market.’
Mr Karamjit Singh, the managing director of Credo Real Estate, which has handled a significant amount of collective sales, said developers would need a greater profit margin in the event selling prices soften even further.
Source : Sraits Times - 5 Jun 2008
Four en bloc sites back on market with lower tags
Cavenagh Gardens, Novena Hill, Seletar Garden, Hong Thye offered in Q4 2007
FOUR collective sale sites are back on the market, with price expectations much lower than when they were offered in Q4 last year. Cavenagh Gardens, Novena Hill, Seletar Garden and Hong Thye are for sale after attracting weak bids the last time round.
The freehold Cavenagh Gardens near the Istana could fetch $450-$455 million or $1,671 to $1,689 per sq ft per plot ratio (psf ppr). This is 27 per cent lower than the expected price of $619 million or $2,308 psf ppr last October.
The buyer may be able to alienate adjoining parcels of state land for a further $10 million. If approved, the combined site would have a potential gross floor area (GFA) of 310,649 sq ft, bringing the price down to $1,481 to $1,497 psf ppr.
The site could yield 155 units with an expected breakeven cost of $1,915 psf and an expected selling price of $2,200 psf.
If the authorities allow redevelopment with a plot ratio equivalent to the development baseline of 3.24, the site’s potential GFA could increase to 479,287 sq ft.
Riding on the back of redevelopment plans for Paya Lebar Central under Draft Master Plan 2008, Hong Thye at Lorong 39 Geylang is also up for sale again. The freehold site could fetch $12-$13 million, which translates to $359 to $385 psf ppr including an estimated $1.9 million development charge (DC).
With a potential GFA of 38,702 sq ft, the site could house 40 units with an expected breakeven cost of $709 to $735 psf, and an expected selling price of $780 to $809 psf.
Last October, the site was up for sale at $15-$17 million or $438 to $489 psf ppr including DC.
The expected price for a freehold residential site at Novena Hill is $42-$45 million or $1,170 to $1,254 psf ppr. The site, with a potential GFA of 35,885 sq ft, could yield 40 boutique apartments. The site was up for sale last October at $56-$60 million.
The last site, Seletar Garden in Yio Chu Kang Road, is an estate in perpetuity. Located near the Seletar Aerospace Park, the mixed-development site could fetch $50-$55 million or $488 to $537 psf ppr. The expected price was $70-$75 million last September.
There is also the possibility of alienating three parcels of adjoining state land at an estimated additional cost of $7.9 million. The combined site would have a potential GFA of 132,219 sq ft, lowering the price to $438 to $476 psf ppr.
Propnex is marketing the four sites. According to its head of investment sales Charles Chua, although the property market is relatively quiet, ‘we do believe that there are pockets of pent-up demand’.
Source : Business Times - 5 Jun 2008
FOUR collective sale sites are back on the market, with price expectations much lower than when they were offered in Q4 last year. Cavenagh Gardens, Novena Hill, Seletar Garden and Hong Thye are for sale after attracting weak bids the last time round.
The freehold Cavenagh Gardens near the Istana could fetch $450-$455 million or $1,671 to $1,689 per sq ft per plot ratio (psf ppr). This is 27 per cent lower than the expected price of $619 million or $2,308 psf ppr last October.
The buyer may be able to alienate adjoining parcels of state land for a further $10 million. If approved, the combined site would have a potential gross floor area (GFA) of 310,649 sq ft, bringing the price down to $1,481 to $1,497 psf ppr.
The site could yield 155 units with an expected breakeven cost of $1,915 psf and an expected selling price of $2,200 psf.
If the authorities allow redevelopment with a plot ratio equivalent to the development baseline of 3.24, the site’s potential GFA could increase to 479,287 sq ft.
Riding on the back of redevelopment plans for Paya Lebar Central under Draft Master Plan 2008, Hong Thye at Lorong 39 Geylang is also up for sale again. The freehold site could fetch $12-$13 million, which translates to $359 to $385 psf ppr including an estimated $1.9 million development charge (DC).
With a potential GFA of 38,702 sq ft, the site could house 40 units with an expected breakeven cost of $709 to $735 psf, and an expected selling price of $780 to $809 psf.
Last October, the site was up for sale at $15-$17 million or $438 to $489 psf ppr including DC.
The expected price for a freehold residential site at Novena Hill is $42-$45 million or $1,170 to $1,254 psf ppr. The site, with a potential GFA of 35,885 sq ft, could yield 40 boutique apartments. The site was up for sale last October at $56-$60 million.
The last site, Seletar Garden in Yio Chu Kang Road, is an estate in perpetuity. Located near the Seletar Aerospace Park, the mixed-development site could fetch $50-$55 million or $488 to $537 psf ppr. The expected price was $70-$75 million last September.
There is also the possibility of alienating three parcels of adjoining state land at an estimated additional cost of $7.9 million. The combined site would have a potential GFA of 132,219 sq ft, lowering the price to $438 to $476 psf ppr.
Propnex is marketing the four sites. According to its head of investment sales Charles Chua, although the property market is relatively quiet, ‘we do believe that there are pockets of pent-up demand’.
Source : Business Times - 5 Jun 2008
Prices of some new properties coming down
Move may signal end of months-long stand-off between buyers and sellers
GOOD news for homebuyers: The prices of some new developments are finally starting to come down.
At least two new projects have been tagged with prices below what they were expected to fetch just months ago.
Shelford Suites (left)Sold in March for: $1,869 psf - $1,905 psfCurrent price: $1,600 psf
Dakota ResidencesPlanned price: $1,000 psf - $1,100 psfCurrent price: $950 psf — PHOTO: CITY DEVELOPMENTS
This may be because developers are faced with no sign of improvement in the cooling property market, consultants say. They may be choosing to move units by making their projects more affordable rather than continuing to wait out the gloomy sentiment.
One example is Dakota Residences in Dakota Crescent, a 99-year leasehold project by Ho Bee Investment and NTUC Choice Homes.
Sales of its 348 units will start next Saturday at an average of about $950 per sq ft (psf) - below the $1,000 psf to $1,100 psf that Ho Bee had previously targeted.
This means a 1,300 sq ft three-bedroom unit would cost about $1.24 million, down from as much as $1.43 million previously.
‘After the land cost and building cost, the break-even price is actually almost $900 psf,’ said a property agent, who asked not to be named.
The Straits Times understands that about 120 units will be released in the first phase, and prices may go up by at least 5 per cent for the remaining units, depending on demand.
For now, the two- and three-bedroom units that face away from Geylang River are said to cost $950 psf to $970 psf, while the bigger four-bedroom units facing the river will go for $1,000 psf.
City Developments’ (CDL) Shelford Suites in Shelford Road has also started previews for its 77 units at about $1,600 psf on average.
Market watchers said this was lower than expected, as two units were sold in March for $1,869 psf and $1,905 psf.
Shelford Suites’ launch had been delayed for months as CDL waited for sentiment to improve.
Property consultants say the act of lowering prices may be the beginning of the end of a months-long stand-off between homebuyers and home sellers that has led to a slump in transactions.
Would-be buyers have proved strongly resistant to current property prices, which have jumped 36 per cent in the last five quarters, while sellers have refused to reduce their prices until now.
But while lowering prices may jump-start the market, a one-off reduction may not be enough to sustain sales, said Mr Colin Tan, the head of research and consultancy at Chesterton International.
‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers,’ he said.
Meanwhile, developers are gearing up to launch more mid-tier projects for an increasingly price-sensitive market.
East Bay, a 40-unit condominium at Tay Lian Teck Road off Upper East Coast Road, will be on sale in the coming weeks. Prices average $1,100 psf, starting at about $600,000.
Also in the east, Ivory at Ceylon Road has sold about five of its 28 units. Prices start at $558,000 for a 640 sq ft two-bedroom apartment, averaging $800 psf.
At 353 Pasir Panjang Road, a 19-unit boutique project will be completed soon, though sales have just started. A handful of units have been sold so far, with one-bedroom apartments going for $550,000, and three-bedroom units priced at $1.4 million to $1.5 million.
ONE-TIME PRICE CUT NOT ENOUGH
‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers.’ - MR COLIN TAN, head of research and consultancy at Chesterton International, who thinks one-off price reductions may not be enough to sustain sales
Source : Straits Times - 12 Jun 2008
GOOD news for homebuyers: The prices of some new developments are finally starting to come down.
At least two new projects have been tagged with prices below what they were expected to fetch just months ago.
Shelford Suites (left)Sold in March for: $1,869 psf - $1,905 psfCurrent price: $1,600 psf
Dakota ResidencesPlanned price: $1,000 psf - $1,100 psfCurrent price: $950 psf — PHOTO: CITY DEVELOPMENTS
This may be because developers are faced with no sign of improvement in the cooling property market, consultants say. They may be choosing to move units by making their projects more affordable rather than continuing to wait out the gloomy sentiment.
One example is Dakota Residences in Dakota Crescent, a 99-year leasehold project by Ho Bee Investment and NTUC Choice Homes.
Sales of its 348 units will start next Saturday at an average of about $950 per sq ft (psf) - below the $1,000 psf to $1,100 psf that Ho Bee had previously targeted.
This means a 1,300 sq ft three-bedroom unit would cost about $1.24 million, down from as much as $1.43 million previously.
‘After the land cost and building cost, the break-even price is actually almost $900 psf,’ said a property agent, who asked not to be named.
The Straits Times understands that about 120 units will be released in the first phase, and prices may go up by at least 5 per cent for the remaining units, depending on demand.
For now, the two- and three-bedroom units that face away from Geylang River are said to cost $950 psf to $970 psf, while the bigger four-bedroom units facing the river will go for $1,000 psf.
City Developments’ (CDL) Shelford Suites in Shelford Road has also started previews for its 77 units at about $1,600 psf on average.
Market watchers said this was lower than expected, as two units were sold in March for $1,869 psf and $1,905 psf.
Shelford Suites’ launch had been delayed for months as CDL waited for sentiment to improve.
Property consultants say the act of lowering prices may be the beginning of the end of a months-long stand-off between homebuyers and home sellers that has led to a slump in transactions.
Would-be buyers have proved strongly resistant to current property prices, which have jumped 36 per cent in the last five quarters, while sellers have refused to reduce their prices until now.
But while lowering prices may jump-start the market, a one-off reduction may not be enough to sustain sales, said Mr Colin Tan, the head of research and consultancy at Chesterton International.
‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers,’ he said.
Meanwhile, developers are gearing up to launch more mid-tier projects for an increasingly price-sensitive market.
East Bay, a 40-unit condominium at Tay Lian Teck Road off Upper East Coast Road, will be on sale in the coming weeks. Prices average $1,100 psf, starting at about $600,000.
Also in the east, Ivory at Ceylon Road has sold about five of its 28 units. Prices start at $558,000 for a 640 sq ft two-bedroom apartment, averaging $800 psf.
At 353 Pasir Panjang Road, a 19-unit boutique project will be completed soon, though sales have just started. A handful of units have been sold so far, with one-bedroom apartments going for $550,000, and three-bedroom units priced at $1.4 million to $1.5 million.
ONE-TIME PRICE CUT NOT ENOUGH
‘Developers will have to continue to reduce prices if they want to maintain sales, as many projects are still out of the reach of owner-occupiers.’ - MR COLIN TAN, head of research and consultancy at Chesterton International, who thinks one-off price reductions may not be enough to sustain sales
Source : Straits Times - 12 Jun 2008
Singapore private home sales down 40% in Q1
Sentiments in the Singapore residential property market continued to weaken in the first quarter on the back of a possible recession in the United States.
Private home sales dropped by 40 percent in the first quarter of this year compared with the last quarter of 2007, according to a report by DTZ Research.
Transactions of private condominium units, based on caveats lodged, fell 41 percent to 2,500, while sales of landed homes declined 38 percent to 566.
Analysts said the poor sales were due to a stand-off between buyers and sellers’ price expectations.
“A lot of these sellers are still looking for prices at the peak of the market, which is probably in the middle of last year. They are still confident that the market would trend up in the mid term, and that the current slowdown is likely to be temporary,” said Tay Huey Ying, Director of Research & Advisory at Colliers International.
But the slowdown looks set to stay for a while. Developers are launching fewer units. Only 487 private condominium units were released for sale in the first quarter of this year, down 49 percent compared with the previous quarter. This is the lowest since the SARS period in the first three months of 2003.
The number of new properties resold before completion continued to decline, by 40 percent in the first quarter, the lowest in one and a half years.
“I think sub-sales will continue to remain at a very low volume in the coming quarters…..Speculators are likely to continue to stay away from the market at this point because the road ahead is still very uncertain - the uncertainty in the US economy, as well as the global financial market turmoil,” said Tan.
Going forward, analysts expect overall prices in the private residential property market to increase by between 0.5 and 1.5 percent in the second quarter of this year. - CNA /ls
Source : Channel NewsAsia - 12 Jun 2008
Private home sales dropped by 40 percent in the first quarter of this year compared with the last quarter of 2007, according to a report by DTZ Research.
Transactions of private condominium units, based on caveats lodged, fell 41 percent to 2,500, while sales of landed homes declined 38 percent to 566.
Analysts said the poor sales were due to a stand-off between buyers and sellers’ price expectations.
“A lot of these sellers are still looking for prices at the peak of the market, which is probably in the middle of last year. They are still confident that the market would trend up in the mid term, and that the current slowdown is likely to be temporary,” said Tay Huey Ying, Director of Research & Advisory at Colliers International.
But the slowdown looks set to stay for a while. Developers are launching fewer units. Only 487 private condominium units were released for sale in the first quarter of this year, down 49 percent compared with the previous quarter. This is the lowest since the SARS period in the first three months of 2003.
The number of new properties resold before completion continued to decline, by 40 percent in the first quarter, the lowest in one and a half years.
“I think sub-sales will continue to remain at a very low volume in the coming quarters…..Speculators are likely to continue to stay away from the market at this point because the road ahead is still very uncertain - the uncertainty in the US economy, as well as the global financial market turmoil,” said Tan.
Going forward, analysts expect overall prices in the private residential property market to increase by between 0.5 and 1.5 percent in the second quarter of this year. - CNA /ls
Source : Channel NewsAsia - 12 Jun 2008
Low demand so fewer govt sites for sale
THE Government’s latest half-yearly release of land for sale takes into consideration current low demand, but also anticipates a possible recovery in the medium or long term. National Development Minister Mah Bow Tan said that the Government’s decision to cut back on the number of development sites being released for outright sale in the second half of this year reflected feedback from the market.
‘Demand is currently slow and the market is quiet, so based on feedback we received, we decided to reduce the supply,’ he said on the sidelines of a dialogue in Tampines yesterday.
The Government announced on Thursday that only eight sites would be put up for outright sale in the next six months following poor interest in the 37 sites that have been available since the start of the year.
Of the 11 sites on the confirmed list, five sites have been sold, tenders for three sites have not closed and one site has not been launched. The other two were not sold.
The remaining 26 sites on the reserve list were not released for sale. These sites go on sale only if a developer makes a minimum bid.
For the second half of the year, 13 new sites were added, with 27 carried over from the first six months.
Of this batch of 40, eight are on the confirmed list with the rest on reserve.
Despite the flagging demand at the moment, Mr Mah said: ‘There may be some demand that could be waiting on the sidelines that we do not know about.
‘So we have to make sure that there is enough supply in the medium term.’
And while the Government does not want to put pressure on the market by flooding it with a supply of space in the short term, Mr Mah believed that land on the reserve list would meet requirements in the months ahead.
‘In the medium term, based on Singapore’s projected economic growth, population growth and demand for hotels and offices, we have worked to make sure that there will be enough supply on the reserve list.
‘We want steady and sustainable growth,’ he said.
Source : Sunday Times - 22 Jun 2008
‘Demand is currently slow and the market is quiet, so based on feedback we received, we decided to reduce the supply,’ he said on the sidelines of a dialogue in Tampines yesterday.
The Government announced on Thursday that only eight sites would be put up for outright sale in the next six months following poor interest in the 37 sites that have been available since the start of the year.
Of the 11 sites on the confirmed list, five sites have been sold, tenders for three sites have not closed and one site has not been launched. The other two were not sold.
The remaining 26 sites on the reserve list were not released for sale. These sites go on sale only if a developer makes a minimum bid.
For the second half of the year, 13 new sites were added, with 27 carried over from the first six months.
Of this batch of 40, eight are on the confirmed list with the rest on reserve.
Despite the flagging demand at the moment, Mr Mah said: ‘There may be some demand that could be waiting on the sidelines that we do not know about.
‘So we have to make sure that there is enough supply in the medium term.’
And while the Government does not want to put pressure on the market by flooding it with a supply of space in the short term, Mr Mah believed that land on the reserve list would meet requirements in the months ahead.
‘In the medium term, based on Singapore’s projected economic growth, population growth and demand for hotels and offices, we have worked to make sure that there will be enough supply on the reserve list.
‘We want steady and sustainable growth,’ he said.
Source : Sunday Times - 22 Jun 2008
Gillman Heights enbloc sale to move ahead following court’s ruling
AFTER three months of deliberation, Justice Choo Han Teck has delivered a 31-page judgment that - for now - signals the end of the Gillman Heights en-bloc saga.
However, it was not the outcome hoped for by the 22 minority owners seeking to scupper the S$548 million deal.
The judge said the specific issue was not one concerning protection for the minority, but “whether a privatised HUDC estate can participate in the benefits of an en-bloc sale if the requisite conditions are met”.
Under current laws, a 90 per cent approval is required for estates less than 10 years old and 80 per cent for those older.
Some 87.5 per cent of the 608 unit owners had agreed to the sale of Gillman Heights, built in 1984.
On the issue of the estate’s age, which the plaintiffs claimed was less than 10 years old since the condo only underwent privatisation in 1995 and acquired the Temporary Occupation Permits or Certificates of Strata Completion (CSC) in 2002, the judge ruled that the estate was more than 10 years old.
He said that there was also no bad faith and breach of natural justice due to the involvement of the National University of Singapore (NUS), which held 46.86 per cent share at the development.
Five months after the en-bloc sale was inked in February last year, it emerged that NUS was also a shareholder of Gillman Heights’ purchaser Ankerite Pte Ltd.
While some owners claimed this was a conflict of interest, Justice Choo said NUS was entitled to exercise its right as a consenting subsidiary proprietor (CSP) to vote for the collective sale.
He added: “The minority CSPs were duly noted of the NUS vote and execution of the collective sale agreement about six weeks before the application for approval was submitted to the Strata Titles Board.”
Futhermore, Gillman Heights was sold before property prices skyrocketed last year, so “it would not be appropriate for the Board or this court to assess good faith with regard to the sale price of the development through the lens of hindsight”.
Despite the setback, one minority owner - who declined to be named - said he is not giving up the fight.
“Many of us are still disappointed by the conflict of interest and we will stick it out till the end and take this case to the Court of Appeals.”
But Lee & Lee senior partner Quek Mong Hua, who represented the majority owners, said: “They have every right to appeal, but they have to consider if it is in their interest bearing in mind the cost.”
For now, Mr Quek said his clients were happy the judgement is out and they are hoping to complete the sale. - TODAY
Source : Channel NewsAsia - 25 Jun 2008
However, it was not the outcome hoped for by the 22 minority owners seeking to scupper the S$548 million deal.
The judge said the specific issue was not one concerning protection for the minority, but “whether a privatised HUDC estate can participate in the benefits of an en-bloc sale if the requisite conditions are met”.
Under current laws, a 90 per cent approval is required for estates less than 10 years old and 80 per cent for those older.
Some 87.5 per cent of the 608 unit owners had agreed to the sale of Gillman Heights, built in 1984.
On the issue of the estate’s age, which the plaintiffs claimed was less than 10 years old since the condo only underwent privatisation in 1995 and acquired the Temporary Occupation Permits or Certificates of Strata Completion (CSC) in 2002, the judge ruled that the estate was more than 10 years old.
He said that there was also no bad faith and breach of natural justice due to the involvement of the National University of Singapore (NUS), which held 46.86 per cent share at the development.
Five months after the en-bloc sale was inked in February last year, it emerged that NUS was also a shareholder of Gillman Heights’ purchaser Ankerite Pte Ltd.
While some owners claimed this was a conflict of interest, Justice Choo said NUS was entitled to exercise its right as a consenting subsidiary proprietor (CSP) to vote for the collective sale.
He added: “The minority CSPs were duly noted of the NUS vote and execution of the collective sale agreement about six weeks before the application for approval was submitted to the Strata Titles Board.”
Futhermore, Gillman Heights was sold before property prices skyrocketed last year, so “it would not be appropriate for the Board or this court to assess good faith with regard to the sale price of the development through the lens of hindsight”.
Despite the setback, one minority owner - who declined to be named - said he is not giving up the fight.
“Many of us are still disappointed by the conflict of interest and we will stick it out till the end and take this case to the Court of Appeals.”
But Lee & Lee senior partner Quek Mong Hua, who represented the majority owners, said: “They have every right to appeal, but they have to consider if it is in their interest bearing in mind the cost.”
For now, Mr Quek said his clients were happy the judgement is out and they are hoping to complete the sale. - TODAY
Source : Channel NewsAsia - 25 Jun 2008
Gillman en bloc sale to proceed
High rise tussle: Gillman Heights is set to be sold to CapitaLand, Hotel Properties and two private funds
Business Times - 26 Jun 2008
Judge says minority owners did not provide adequate reasons to stop sale
By MICHELLE QUAH
THE High Court has dismissed an appeal by minority owners of Gillman Heights Condominium to stop its en bloc sale.
This means that the $548 million sale of the development to CapitaLand, Hotel Properties and two private funds is set to go through.
Justice Choo Han Teck, in his judgment yesterday, said that he was 'satisfied' that the appeal by the minority owners 'must fail', as they did not provide adequate reasons as to why he should stop the sale.
The Strata Titles Board (STB) had approved the collective sale of the 607-unit, 99-year leasehold estate late last year. But a group of minority owners, represented by Senior Counsel Michael Hwang, had appealed that decision.
They argued that the STB had erred in approving the sale. They said that collective sale rules do not apply to Gillman Heights, which is an former HUDC estate. They also argued that insufficient notices were put up informing owners of the proposed sale and that the collective sale agreement - signed by the consenting owners - was not validly extended before the deal was brokered with the CapitaLand consortium.
Justice Choo ruled yesterday that the law does not mean to treat privatised HUDC estates differently from other private strata developments with a management corporation. He said that a privatised HUDC estate can participate in the benefits of an en bloc sale if the requisite conditions are met. He also agreed with the STB's ruling that sufficient notices had been posted and that the collective sale agreement had been validly extended.
The minorities had also argued that the sale was done in bad faith. They said that the National University of Singapore (NUS), which owns a sizeable chunk of Gillman Heights and had agreed to the en bloc sale, has a 15 per cent stake in Ankerite, the entity that purchased Gillman Heights.
Justice Choo noted yesterday that NUS's relationship with the buyer - which came to light after the STB approval - was not presented before the STB at the relevant time. 'A court deliberates only on the basis of the evidence before it,' he said. He said that it was strictly up to the STB to judge if there was an act of bad faith by reason of the relationship between NUS and Ankerite - but that he was not persuaded that the board should hear the issue again.
Justice Choo also agreed with the STB that there was no bad faith regarding the sale price of Gillman Heights, as it was $20 million above the reserve price.
The minorities had also argued that one of the STB board members, Michael Ng of Savills (Singapore), was a real estate valuation professional who had worked on projects involving the consenting owners' lawyers.
But Justice Choo said: 'I am of the view that it is too tenuous an objection. Professionals cannot avoid working on the same projects. It does not follow that they necessarily agree or have reasons to be biased or prejudiced against other professionals.'
Gillman Heights owners will get between $870,000 and $950,000 per unit in the en-bloc sale. But many of those objecting to the sale say that it is more important for them to be able to keep their homes.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved
Business Times - 26 Jun 2008
Judge says minority owners did not provide adequate reasons to stop sale
By MICHELLE QUAH
THE High Court has dismissed an appeal by minority owners of Gillman Heights Condominium to stop its en bloc sale.
This means that the $548 million sale of the development to CapitaLand, Hotel Properties and two private funds is set to go through.
Justice Choo Han Teck, in his judgment yesterday, said that he was 'satisfied' that the appeal by the minority owners 'must fail', as they did not provide adequate reasons as to why he should stop the sale.
The Strata Titles Board (STB) had approved the collective sale of the 607-unit, 99-year leasehold estate late last year. But a group of minority owners, represented by Senior Counsel Michael Hwang, had appealed that decision.
They argued that the STB had erred in approving the sale. They said that collective sale rules do not apply to Gillman Heights, which is an former HUDC estate. They also argued that insufficient notices were put up informing owners of the proposed sale and that the collective sale agreement - signed by the consenting owners - was not validly extended before the deal was brokered with the CapitaLand consortium.
Justice Choo ruled yesterday that the law does not mean to treat privatised HUDC estates differently from other private strata developments with a management corporation. He said that a privatised HUDC estate can participate in the benefits of an en bloc sale if the requisite conditions are met. He also agreed with the STB's ruling that sufficient notices had been posted and that the collective sale agreement had been validly extended.
The minorities had also argued that the sale was done in bad faith. They said that the National University of Singapore (NUS), which owns a sizeable chunk of Gillman Heights and had agreed to the en bloc sale, has a 15 per cent stake in Ankerite, the entity that purchased Gillman Heights.
Justice Choo noted yesterday that NUS's relationship with the buyer - which came to light after the STB approval - was not presented before the STB at the relevant time. 'A court deliberates only on the basis of the evidence before it,' he said. He said that it was strictly up to the STB to judge if there was an act of bad faith by reason of the relationship between NUS and Ankerite - but that he was not persuaded that the board should hear the issue again.
Justice Choo also agreed with the STB that there was no bad faith regarding the sale price of Gillman Heights, as it was $20 million above the reserve price.
The minorities had also argued that one of the STB board members, Michael Ng of Savills (Singapore), was a real estate valuation professional who had worked on projects involving the consenting owners' lawyers.
But Justice Choo said: 'I am of the view that it is too tenuous an objection. Professionals cannot avoid working on the same projects. It does not follow that they necessarily agree or have reasons to be biased or prejudiced against other professionals.'
Gillman Heights owners will get between $870,000 and $950,000 per unit in the en-bloc sale. But many of those objecting to the sale say that it is more important for them to be able to keep their homes.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved
Saturday, May 24, 2008
Hopes of property market rebound fading
Source : Business Times - 22 May 200
Uncertain economy, housing glut fears seen taking toll on developers
HOPES that a slowdown in Singapore’s property market is temporary are fading as an uncertain economic outlook and a looming housing glut threaten to plunge the sector into a prolonged downturn.
Homebuilders such as CapitaLand, Keppel Land and GuocoLand have delayed launching new projects in the moribund market, taking a hit to first-quarter earnings as they hoped for a rebound later this year.
Prospects could be dented further in coming months if smaller developers face financing troubles and have to unload properties at massive discounts. Some have gorged themselves on expensive land acquisitions over the past two years.
With home prices expected to fall 30 to 40 per cent over the next three years, Singapore’s developers could be badly hit and analysts may slash their earnings estimates further.
‘This is the start of a multi-year price correction. Private residential property prices could easily fall by up to 30 per cent by 2010,’ said Barclays Capital economist Leong Wai Ho.
Credit Suisse in a report this month saw rents and property prices falling even more steeply by as much as 40 per cent, and downgraded its investment recommendation for the sector to ‘underweight’.
Warning signs have been flashing as first quarter 2008 sales volumes slumped to the lowest in five years and price growth slowed for two straight quarters, with concerns about a global economic slowdown and the US sub-prime mortgage crisis scaring off potential homebuyers.
Mr Leong said an impending oversupply will worsen the problem, with 66,000 new homes expected to be completed over the next four years, against forecast demand for 50,000 in the same period.
The three-month Singapore Interbank Offered Rate - a benchmark for mortgage loans - has fallen to near record lows below 1.3 per cent, but that may not be enough to revive buyers’ flagging confidence, economists say.
‘Negative real interest rates will be at best a cushion, rather than a boost to housing demand in the near term, although they could lift property demand if and when sentiment turns,’ said Citi analyst Kit Wei Zheng.
‘The worst is yet to come and price cuts are imminent,’ said ABN Amro analyst Fera Wirawan.
BNP Paribas has flagged high financial risks for small developers including Bukit Sembawang, Low Keng Huat and Lian Beng, which have almost all their debts due within a year. Even major builders such as Allgreen, Keppel Land and GuocoLand could face difficulties after steep drops in profit in the last quarter as they launch fewer projects, analysts say.
Slower sales and rising costs could raise developers’ gearing or debt-to-equity ratio to dangerous levels above 70 per cent, up from the industry average of about 62 per cent.
‘We identify three developers, namely Allgreen, GuocoLand and Keppel Land, that could face some pressures on cash flow,’ JPMorgan analyst Christopher Gee said in a report, noting that gearing levels could be pushed up to between 80 and 130 per cent.
The risk of price falls has been heightened by property speculators buying in recent years with little upfront cash, relying on a deferred payment scheme. The government scrapped the scheme last October in a bid to cool down the sector.
Analysts expect speculators will dispose of about 700 units on the cheap this year, and another 2,000 next year, as the properties near completion and instalments are due.
Some developers are still counting on home prices in the city state to rise for at least another year, as they see the market in the middle of an upswing even as the US housing market grapples with its worst downturn since the Great Depression.
‘This is a temporary hiccup. We just had a boom starting in 2006 and it’s usually a seven-year cycle,’ property tycoon Kwek Leng Beng, who heads Singapore’s No 2 developer City Developments, told Reuters. The property market will be supported by greater foreign investments as Singapore sees the completion of two casino projects and the influx of major events such as Formula One races and the Youth Olympics over the next few years, Mr Kwek argued.
But Barclays’ Mr Leong said his bearish scenario, which calls for a near one-third drop in property value, already takes into account any boost resulting from these economic developments. ‘It’s not the worst-case scenario. This is the most likely scenario based on the numbers,’ he said. — Reuters
Uncertain economy, housing glut fears seen taking toll on developers
HOPES that a slowdown in Singapore’s property market is temporary are fading as an uncertain economic outlook and a looming housing glut threaten to plunge the sector into a prolonged downturn.
Homebuilders such as CapitaLand, Keppel Land and GuocoLand have delayed launching new projects in the moribund market, taking a hit to first-quarter earnings as they hoped for a rebound later this year.
Prospects could be dented further in coming months if smaller developers face financing troubles and have to unload properties at massive discounts. Some have gorged themselves on expensive land acquisitions over the past two years.
With home prices expected to fall 30 to 40 per cent over the next three years, Singapore’s developers could be badly hit and analysts may slash their earnings estimates further.
‘This is the start of a multi-year price correction. Private residential property prices could easily fall by up to 30 per cent by 2010,’ said Barclays Capital economist Leong Wai Ho.
Credit Suisse in a report this month saw rents and property prices falling even more steeply by as much as 40 per cent, and downgraded its investment recommendation for the sector to ‘underweight’.
Warning signs have been flashing as first quarter 2008 sales volumes slumped to the lowest in five years and price growth slowed for two straight quarters, with concerns about a global economic slowdown and the US sub-prime mortgage crisis scaring off potential homebuyers.
Mr Leong said an impending oversupply will worsen the problem, with 66,000 new homes expected to be completed over the next four years, against forecast demand for 50,000 in the same period.
The three-month Singapore Interbank Offered Rate - a benchmark for mortgage loans - has fallen to near record lows below 1.3 per cent, but that may not be enough to revive buyers’ flagging confidence, economists say.
‘Negative real interest rates will be at best a cushion, rather than a boost to housing demand in the near term, although they could lift property demand if and when sentiment turns,’ said Citi analyst Kit Wei Zheng.
‘The worst is yet to come and price cuts are imminent,’ said ABN Amro analyst Fera Wirawan.
BNP Paribas has flagged high financial risks for small developers including Bukit Sembawang, Low Keng Huat and Lian Beng, which have almost all their debts due within a year. Even major builders such as Allgreen, Keppel Land and GuocoLand could face difficulties after steep drops in profit in the last quarter as they launch fewer projects, analysts say.
Slower sales and rising costs could raise developers’ gearing or debt-to-equity ratio to dangerous levels above 70 per cent, up from the industry average of about 62 per cent.
‘We identify three developers, namely Allgreen, GuocoLand and Keppel Land, that could face some pressures on cash flow,’ JPMorgan analyst Christopher Gee said in a report, noting that gearing levels could be pushed up to between 80 and 130 per cent.
The risk of price falls has been heightened by property speculators buying in recent years with little upfront cash, relying on a deferred payment scheme. The government scrapped the scheme last October in a bid to cool down the sector.
Analysts expect speculators will dispose of about 700 units on the cheap this year, and another 2,000 next year, as the properties near completion and instalments are due.
Some developers are still counting on home prices in the city state to rise for at least another year, as they see the market in the middle of an upswing even as the US housing market grapples with its worst downturn since the Great Depression.
‘This is a temporary hiccup. We just had a boom starting in 2006 and it’s usually a seven-year cycle,’ property tycoon Kwek Leng Beng, who heads Singapore’s No 2 developer City Developments, told Reuters. The property market will be supported by greater foreign investments as Singapore sees the completion of two casino projects and the influx of major events such as Formula One races and the Youth Olympics over the next few years, Mr Kwek argued.
But Barclays’ Mr Leong said his bearish scenario, which calls for a near one-third drop in property value, already takes into account any boost resulting from these economic developments. ‘It’s not the worst-case scenario. This is the most likely scenario based on the numbers,’ he said. — Reuters
Singapore inflation rate hits new 26-year high of 7.5% in April
Source : Channel NewsAsia - 23 May 2008
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore inflation rate hits new 26-year high of 7.5% in April
Source : Channel NewsAsia - 23 May 2008
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore inflation rate hits new 26-year high of 7.5% in April
Source : Channel NewsAsia - 23 May 2008
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
Singapore’s annual inflation rate rose to a new 26-year high of 7.5 percent in April as food, housing and transportation costs soared and is now a risk to the economy, the government said on Friday.
Food prices alone rose 8.5 percent, transportation and communication were 7.0 percent higher and housing costs became 11.8 percent more expensive, the statistics department said.
It said April’s inflation rate is the highest since February 1982, when it stood at 9.0 percent.
“External price pressures have continued to contribute significantly to our domestic headline inflation numbers,” the Ministry of Trade and Industry (MTI) said in a separate statement.
“Oil and food prices have risen more rapidly and are expected to remain elevated over the near term.”
Oil prices surged to unprecedented record peaks of more than US$135 a barrel on Thursday and analysts said it could still go higher.
MTI and the Monetary Authority of Singapore (MAS) have bumped up their forecast for inflation this year to 5-6 percent from 4.5-5.5 percent.
Ravi Menon, second permanent secretary at the trade ministry, said inflation is emerging as a bigger risk to the economy than growth.
“Inflation has been running ahead of what we expected… We are facing risks on both fronts but the balance has shifted towards inflation,” Menon told reporters.
“We expect food and oil prices to remain elevated over the near term and filter through into domestic prices.”
Singaporeans and residents have become creative in adjusting to higher living costs, adopting such measures at taking fewer taxi rides to eating out less and shortening shower time to save on water bills.
Local charities said rising food prices are also driving more Singaporeans, especially poor senior citizens, to join queues for free meals.
The trade ministry said inflation should remain around the current levels for the next two months and ease in the second half of the year.
Analysts said the central bank could further strengthen the Singapore dollar in a bid to tame inflation.
Tiny Singapore, Southeast Asia’s most advanced economy, imports most of its needs because it lacks the natural resources and agricultural base of its much bigger neighbours.
MAS, Singapore’s central bank, deals with inflation by weighing the Singapore dollar against a basket of currencies.
It tightened its foreign exchange policy at its last meeting in April and policy makers said they have no plans to review the policy until the next meeting in October.
“Looking at the mix of risks to both inflation and growth, our assessment is that it remains appropriate given the mix of uncertainties and the forecasts that we are projecting,” said MAS deputy managing director Ong Chong Tee.
“There are no plans now to adjust the policy stance. Obviously we will be looking closely at the numbers over the course of the next months, and review this again in October,” he said.
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