Property News!

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March 19, 2009
Credit squeeze as banks tighten home loan criteria
By Joyce Teo
GETTING a mortgage has become a far trickier proposition these days with banks tightening up loan criteria, with some owners being asked to stump up more cash when values fall.
Loans of 80 or even 90 per cent of a property's value are still possible, especially if the buyer intends to live in the home, but investors on their second or third property are finding it tougher.

The banks' moves come amid a real estate market hit hard by the economic crisis. Prices have fallen and are continuing to fall, forcing lenders to aggressively re-assess their loan criteria.

Once common, loans of 80 per cent are less so these days. Maybank, for instance, is granting loans of up to 70 per cent of valuation prices for its latest home loan fixed rate package.

Ms Ally Yang, a chief mortgage consultant at www.homeloan.com.sg, told The Straits Times: 'It is very difficult to get 90 per cent financing nowadays. The banks need to see all the savings the customers have, to see if they are sufficient for the 10 per cent down payment and 24 months of instalment payments.'

Unlike Singaporean owner-occupiers, most investors as well as non-taxpayers will be able to get only up to 70 per cent financing, compared with 80 per cent last year, said Ms Yang.

Banks are becoming more careful on the eligibility condition and are doing more checks even as they compete for the good customers, she said.

It is even harder for investors, who have to pay a higher interest rate on loans than an owner-occupier - perhaps an extra loading of 0.25 per cent on the standard package, she added.

The squeeze is also forcing some buyers of new properties to think hard about their purchases, with experts warning them against holding off too long on taking loans in case prices fall.

Some owners are already having to shell out cash to make up the shortfall between their purchase prices and the valuation now. Take a home that you agreed to buy for $1 million, with a 20 per cent deposit and the assumption of obtaining a loan for $800,000.

If the valuation falls to $900,000, the 80 per cent portion is now $720,000. So you need to chip in $80,000, in addition to your $200,000 deposit, to make up the $1 million purchase price.

It is standard practice for banks to engage independent valuers to determine the market value of properties.

However, most new launches do not have this problem. Frasers Centrepoint's Caspian in Jurong, for instance, sold 517 units out of 600 launched units last month - quite a feat these days.

'In today's market, developers will not want to launch at a price that cannot be matched by the banks,' said PropNex chief executive Mohamed Ismail.

Most developers will check with valuers to see if their prices can be supported before they launch their projects, said DTZ executive director Ong Choon Fah.

'For most new launches, particularly projects aimed at upgraders, banks would be able to match their selling prices,' agreed Knight Frank's executive director of residential, Mr Peter Ow.

More developers are linking with banks to offer the interest absorption scheme. This lets buyers defer the bulk of the price until completion, provided he takes a loan at the point of sale. First-time buyer Brandon Goh took it up and got 80 per cent financing for his $693,000 unit at Caspian last month.

Mr Ow, who is marketing Double Bay Residences in Simei, said buyers in the project can even get up to 90 per cent financing from DBS.

HSBC clients can get loans of up to 90 per cent valuation if 'their financial profile...meets the bank's criteria', said its head of personal financial services, Mr Sebastian Arcuri.

Given that the market may soften further, experts say buyers of newly launched properties should commit to a home loan now, rather than later.

Said Mr Ismail: 'It is in the interest of the buyer to lock in the value of their property as soon as possible. Generally, the value at new launches will be matched by the banks, but not necessarily down the road.'

 

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This S'pore house - Sold for $75,000

This was how much one double-storey inter-terrace house was sold for last October, according to data from the Urban Redevelopment Authority's (URA) website.

Sun, Mar 22, 2009
The New Paper

WHAT can you buy with $75,000?

A new 1.6-litre Honda Civic perhaps.

Or a classy Patek Philippe watch.

How about a terrace house a 10-minute drive away from town?

This was how much one double-storey inter-terrace house was sold for last October, according to data from the Urban Redevelopment Authority's (URA) website.

It has a land area of 725 sq ft with a built-up area of about 1,300 sq ft - slightly bigger than a five-room HDB flat.

It's small for a terrace house but its $75,000 price tag takes some beating.

There's a catch - the house has a remaining lease of only 11 years.

Buyers will also have to pay the full amount upfront as they can't use their CPF savings and are unlikely to secure a bank loan.

The New Paper was unable to contact the buyer but neighbours said that the unit has since been rented out.

There are about 300 such terrace houses with similar short leases at Upper Boon Keng Road near Kallang Bahru, making the area arguably Singapore's cheapest private housing estate.

Land area ranges from 725 sq ft to 853 sq ft, and transacted prices ranged from $75,000 to $166,000. With such prices, the houses are far cheaper than most resale HDB flats in the market. Even the smallest one-room flats in Bukit Merah are going for about $150,000.

It took this reporter three trips to the area before he found this little residential enclave hidden among flatted factories in Kallang.

The registered addresses of the houses are Lorong 3, Geylang, but they are at least a 10-minute walkaway from that lane.

Some residents said they feel like they are living on borrowed time because once the lease runs out, they do not know if it will be renewed and if so, at what price.

The houses are on State land which is zoned as residential under the Master Plan 2008.

Miss Koh Peck Choon, 65, said she will live there till the lease runs out. Her parents bought a unit for about $4,000 when she was in her late teens.

The retired seamstress said: 'I like the estate a lot. I have a garden outside my house, and there are many coffee shops and markets in the area.

'I've received offers from agents to market my place but I don't want to sell. I don't like living in HDB flats because I've a fear of heights.'

The estate is a 10-minute walk away from Kallang MRT station and there are wet markets, coffee shops and provision shops nearby.

Safe & friendly

Mr Eric Lim, 39, said his family has been living there since their house was built in 1961.

His parents were given an option to buy a house there after their attap house nearby was destroyed in a fire that year.

They bought two units side by side for about $4,000 each for their family of 10.

Mr Lim, who's unemployed, has seven brothers and one sister.

He said in Mandarin: 'Our family was spread over two houses. The estate was predominantly Chinese and many of our kampung neighbours moved here after the fire.'

His mother, Madam Heng Say Moi, 75, remembered that their terrace housewas situated by the sea.

She said in Hokkien: 'It was a bustling neighbourhood and we all knew one another. It was so safe we kept our gates unlocked and opened.

'We would also gather to watch Chinese opera during religious festivals.'

Each terrace house has a small garden, a living room, a kitchen and two toilets on the ground floor. There are two bedrooms on the second floor.

The Lim family sold one of their units for $130,000 two years ago as most of the children have moved away to HDB estates.

That unit has since been rented out to foreign workers.

Madam Heng said she's thinking of selling their house to rent a two-room flat instead. But she has to overcome her fear of heights first, she said.

'I stayed temporarily with my daughter who lives on the sixth floor of an HDB flat in Yishun. But I couldn't get used to it and felt dizzy. I moved back home after one night,' she said.

Today, the estate is a far cry from the busy neighbourhood it once was, she said.

Many of the houses have been sold and converted to temples.

Madam Heng estimated that out of more than 300 houses in the estate, about 40 per cent are now temples, and another 40 per cent are rented out to foreign workers.

Only about 20 per cent are occupied by owners.

There's also a church in the estate.

There was a 'For Sale' sign outside one of the houses. The seller, who declined to be named, said he was looking at about $160,000 for his place.

HSR Property Group executive director Eric Cheng said the estate is likely one of the cheapest in Singapore.

He said: 'There are some houses in Geylang with about 11 or 12 years left on the lease. But they're scattered around the lanes. They're not in a self-contained estate like here.'

 

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March 26, 2009
Housing agents: Need for a strong regulator
IN YESTERDAY'S report, 'Regulation of property agents under review', Senior Minister of State for Finance and Transport Lim Hwee Hua told Parliament the Government is reviewing ways to strengthen the regulatory framework for housing agents. This was in response to complaints about malpractices by housing agents.
The measures being considered refer to raising the professional standard of agents, quality and training requirements, the dispute resolution framework, as well as the framework for enforcement.

The approach is similar to the regulatory framework used for the sale of life insurance and investment products. It has failed to deal with the problem of mis-selling credit-linked notes and other financial products that are bad for consumers.*

This approach relies on the principle of the free market, which is to provide information for consumers to make their decision. The crux of the problem is that the information is provided by the seller, who makes a bigger profit or commission by mis-informing the consumer. There is a serious conflict of interest.

If this approach is adopted, the regulator must look after the interest of consumers, and take appropriate action against cheating, which is a crime that includes profiting unfairly by misleading the other party.*

A better alternative is to have a strong regulator to set the rules for the market. An example is regulation on the sale of medicine and food products. These products are tested to be safe and suitable for consumption. The regulator can carry out the test or engage independent experts to do the work. But the regulator takes responsibility to put the stamp on the product.

A better system is one in which the regulator licenses agents and sets professional standards of ethics and conduct. If agents fail to meet the standard, they should be removed, which is the case in the licensing of doctors, lawyers and other professionals.

The regulator has the option to outsource the actual assessment to a professional or self-regulatory body, but this body should have 'teeth' and the backing of the regulator. Stronger regulation actually benefits the majority of ethical agents and creates a better market for all parties.

I hope the Government will consider these suggestions.

Tan Kin Lian


March 25, 2009
Regulation of property agents under review
The aim is to strengthen enforcement framework and raise overall professional standards
By Jessica Cheam
FRESH details emerged in Parliament yesterday of a review that is now under way, which is aimed at regulating Singapore's housing agents more effectively.
The review follows a high-profile court case which highlighted the problem of unscrupulous agents.

Senior Minister of State for Finance Lim Hwee Hua told Parliament the review will cover areas such as agent qualifications and training standards.

The review will also look at putting in place a dispute resolution mechanism and an enforcement framework against agencies with errant agents, she said.

News of the review was first disclosed by National Development Minister Mah Bow Tan last week during an interview.

Mrs Lim was responding to a question from Mr Lim Biow Chuan (Marine Parade GRC), who asked if there were plans to license individual agents.

Currently, any housing agent can switch from one agency to another, even if he is sacked, Mr Lim noted.

'How does the ministry intend to deal with such rogue agents who behave in an unethical manner ... Wouldn't it be better to issue licences to individual agents instead of regulating them through agencies?' he asked.

Mrs Lim said that these were issues that 'the review will have to take into account - such as the ethical and performance standards, as well as the mode of licensing'.

The government review follows a high-profile case last month where a couple took estate agency ERA Realty Network to court after they sold their downtown apartment for $688,000 in 2007.

They eventually discovered their home was bought and resold by the wife of their agent's boss for $945,000. The couple won the case and have received the difference of $257,000 back from ERA.

Mrs Lim, who did not make any reference to the case in her reply, said yesterday that the Government agreed that the 'current state of the industry is not satisfactory'.

There have been frequent complaints against unscrupulous housing agents.

Government agencies including the National Development Ministry, the Housing Board (HDB), Ministry of Finance and the Inland Revenue Authority of Singapore (Iras) are 'reviewing possible ways of strengthening the regulatory framework and raising overall professional standards', she said.

'Among other things, there is a need for greater control by the housing agencies over the conduct of their agents,' she added.

Agency bosses that The Straits Times spoke to said they welcomed the move, and felt that licensing individual agents would be the way forward, with a central agency involving the Government playing a regulatory role.

The Government said previously that it preferred to let the industry regulate itself.

The industry currently lacks a high level of accountability, transparency and professionalism, and making agents responsible for their own actions will help in these areas, said PropNex's chief executive Mohamed Ismail.

HSR Property Group executive director Eric Cheng felt that steps have to be taken to consider agents in the older age group, who might not meet new qualification standards - and not to set obstacles for entry into the industry.

ERA Asia-Pacific's associate director Eugene Lim said he was open to a new regulatory framework for the industry, but hoped the Government would consult the industry before anything was decided.

Mrs Lim said the outcome of the review will be announced when it is completed, although no date was mentioned.

jcheam@sph.com.sg

 

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March 25, 2009
Property investment sales plummet 98%
Buyers and sellers are far apart in price expectations, says CBRE
By Joyce Teo

PROPERTY investment sales in Singapore have fallen off the cliff since the start of the year and could slip to levels not seen since the Asian financial crisis.
According to the latest figures from ** Richard Ellis (CBRE), sales so far this year total $184.6 million, down 98 per cent on the same period a year ago and 56.4 per cent lower than the last quarter of 2008.

For the full year, total investment sales could plummet to levels not seen for over 10 years, with buyers and sellers locked in a stalemate and far apart in terms of price expectations, the consultancy warned yesterday.

The only quarters that saw lower investment sales were the first quarter of 1998 - when they were just $49.28 million - and the third quarter of that same year - when they hit $110.62 million. So far this year, the market has witnessed isolated individual deals but there have been no public sales or collective sales.

Residential sector sales accounted for 51.5 per cent of total sales during the period in question.

Apart from $18.2 million worth of deals for three good-class bungalows, Fragrance Properties bought a freehold Pasir Panjang site for $25 million, with plans to develop it into a residential apartment building. CBRE forecasts that such development site sales will be rare this year because most developers are concentrating on their existing projects and are not looking for new sites.

There have been no minimum bid applications from developers for any of the Government land sale sites, it added.

In the commercial market, sales total $77.3 million so far this quarter, with the only major sale being the $35.8 million, or about $900 psf, deal for Le Mercier House in Mohamed Sultan Road.

There was only one transaction in the industrial sector - a Loyang Crescent site that sold for $6.2 million, or $74 psf.

The report suggests that total investment sales for this year might revisit 1998 levels when the total annual quantum was $1.35 billion.

'The lack of volume will continue to feature until such time when price expectations between buyers and sellers meet,' CBRE stated.

Real estate investment trusts are unlikely to make many new acquisitions this year as dividend yields have increased significantly and it would be extremely challenging to make purchases that are yield accretive.

 

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March 27, 2009
Home hunters pack showflats in Balestier
By Joyce Teo
SOME home hunters have been packing showflats in the Balestier area and buying units, even as the general property market remains weak.

City Developments (CDL) said yesterday it has sold 'about 60 per cent' of the 100 units at The Arte@Thomson at an average price of $880 per sq ft since a hush-hush preview started last Friday.

The Arte has 336 fairly large units in two 36-storey blocks in Jalan Datoh, off Balestier Road.

The 60 or so units were transacted at $852,800 to $2.46 million, said a CDL spokesman.

Most of those sold were two- and three-bedroom units. The two-bedroom units are 1,055sqft, while nearly half of the project comprises three-bedroom units ranging from 1,399 sq ft to 1,625sqft.

CDL said it had extended the interest absorption scheme (IAS) to buyers during the preview at no extra cost, but could not yet say how many buyers had taken advantage of it.

'Buyers are given some time to decide if they wish to take up the IAS,' said the spokesman.

The scheme allows buyers to defer the bulk of the purchase price until completion on condition that they take up a loan at the point of sale.

The CDL spokesman said the $880 per sq ft price was being offered for a limited number of units only. 'We will be reviewing the price and adjusting it upwards progressively,' he said.

The encouraging sales at The Arte came amid a still-slow market as some other launches see relatively weak interest. Demand for high-end homes, in particular, remains poor.

New home sales in February were lifted to a relatively high level, but that was largely due to the strong sales at three mass to mid-end projects. Many buyers went for small units as their absolute prices were low, and hence affordable.

Just last week, Keppel Land deferred the construction of two yet-to-be-launched projects - Marina Bay Suites in Marina Bay and Madison Residences in Bukit Timah - because of the slumping market.

In the Balestier area, the new showflats benefited from spillover crowds from the various launches, said Savills Residential director Phylicia Ang, who is marketing the 104-unit Domus in the area.

Released for sale two weeks ago, Domus, in Irrawaddy Road, welcomed visitors who had initially attended The Arte preview.

So far, 33 units - out of the 59 launched at Domus - have been sold at an average of $900 per sq ft, or from $480,000 to $1.2 million, said Ms Ang.

The sales included 20 one-bedroom units of 474sqft.

Novelty Group's I-Residences, a 70-unit project in Irrawaddy Road, is about 50 per cent sold since its private preview late last year.

Nearby, on the former Ruby Plaza site, Soilbuild had a preview for The Mezzo, which offers a 6 per cent rental guarantee for two years. It did not comment on sales.

 

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March 27, 2009
NParks offers tenants 15% rental rebate
Operators glad but some would like more relief to help them during slump
By Jessica Lim
ANOTHER government body has stepped up to offer a 15 per cent rental rebate to its tenants.
The National Parks Board (NParks) told The Straits Times the move was a way of helping its tenants cope with the unfavourable economic times.

The rebate, which will apply until the end of the year, will be backdated to January for more than 70 tenants - mostly F&B operators - at 26 parks islandwide.

The move follows announcements in January by four government agencies - the Housing Board, JTC Corporation, the Singapore Land Authority and the National Environment Agency - that they have slashed rents by 15 per cent.

And earlier this month, government-linked Sentosa Development Corporation joined the rest in cutting rents.

These steps come at a time when commercial landlords are facing pressure from tenants seeking bigger rebates than the 4 per cent given since the Government handed out a 40 per cent property tax rebate in January.

So far, one commercial landlord - of the upcoming Ion Orchard shopping mall - has offered the highest rebate: up to 30 per cent off base rentals when the huge centre opens in July.

Among the tenants which will gain from NParks rent cuts is Aramsa Spa at Bishan Park. Its spokesman said she was 'very glad', pointing out that tenants had enquired about it in January.

'It will be used to help offset rising operational costs like utilities, maintenance and labour costs,' she said. 'It will help cushion us in these times when even a little goes a long way.'

Tenants were informed about the rebates last month. The rebates will cost NParks about $2.3 million in lost rental revenue for the year.

All tenants welcomed the move, but some wondered if more could be done.

The owner of Bliss Restaurant in Punggol Park in Hougang, for one, said rental surged almost 400 per cent when she renewed a three-year lease last March. The rental valuation, which decides how much a tenant pays after a renewal, was conducted at the end of 2007, during the property boom. Mrs Christine Low, 35, who did not reveal the exact amount of her rent, said she now forks out a five-digit sum monthly, up from a four-digit sum before the renewal.

'It was a really ridiculous increase, and one that was implemented after we worked our butts off to bring in good business,' said Mrs Low, who has asked NParks for a reprieve. 'The rebate is better than nothing, but when rental is so high, the amount is almost negligible.'

She also wants a free revaluation of rental 'to suit the current situation'.

So far, some tenants The Straits Times approached say they have had their rents adjusted in the past year after appeals.

Addressing the Bliss issue directly, the statutory board's assistant director Tan Lai Kheng said the rental 'was revised from a very low base line and even in current market conditions is still a very fair rental'.

'NParks is continuing to monitor the market situation and will provide assistance where possible,' she added.

 

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March 28, 2009
Mortgagee sales tipped to rise
MORTGAGEE sales - when repossessed homes are put on sale by financial institutions - have been few and far between so far but they are tipped to increase in the coming months.
The auction market remains weak but showed signs of life this month, said Colliers International yesterday.

There were 53 repossessed properties - 41 were residential - put up for sale in the first quarter, up 18 per cent from the fourth quarter last year.

Colliers said the rise may be small but it indicates an impending trend of continued growth, which is in tandem with the deteriorating economy.

Deputy managing director and auctioneer Grace Ng said a more significant number of mortgagee sales is expected later this year or next year.

'This is due to the lag time of approximately six months or more between when a buyer defaults on his loan repayments and when the bank repossesses the property and puts it up for auction sale,' she said.

Together with properties put up for sale by owners, there were 189 auctions in the first quarter but just 6 per cent were sold, up slightly from the low 5 per cent in the fourth quarter of last year.

Still, the value of deals rose and there were more transactions this month. Eight properties were auctioned off this month for a total of $12.955 million.

These transactions bring the total value done in the first quarter to $17.94million, up a striking 234 per cent from the fourth quarter.

JOYCE TEO

 

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March 28, 2009
S-Reits face worst crisis
After astonishing growth, overall value of units plunges 60 per cent
By Jessica Cheam
SINGAPORE real estate investment trusts (Reits) are facing their worst crisis since they entered the market eight years ago and became wildly popular.
Property experts are confident Reits here, known collectively as S-Reits, will survive the global economic turmoil, but they warn some might fail along the way as the industry consolidates.

'S-Reits have been undergoing the most challenging and difficult times since their inception,' said property giant City Developments' group general manager, Mr Chia Ngiang Hong.

Reits are listed on the stock exchange. They own a property portfolio - shopping malls, for instance - and make regular payments to unit-holders.

Investors piled into Reits, attracted by the reliability of payments and the good yields. Reits grew at an astonishing rate - their combined market value hit $33.5billion in June 2007 from just $740million in 2003, Mr Chia noted.

However, the global crisis and tight credit markets have contributed to a market free-fall for Reits.

Overall, the value of Reit units has plunged by about 60per cent, said National University of Singapore (NUS) provost Tan Eng Chye.

Both Mr Chia and Professor Tan were speaking at the NUS Department of Real Estate's public forum on S-Reits yesterday.

Refinancing and recapitalisation risks are the darkest clouds hanging over the industry, said the real estate department's Associate Professor Sing Tien Foo.

An estimated $4.6billion in S-Reit debt is due to be refinanced this year. Another $12billion is due next year, he said.

The weak financial markets and elevated risks among lenders have made it difficult to get financing.

Given their structure, Reits are heavily dependent on capital markets, said Moody's senior analyst Kathleen Lee.

The industry will see a wave of consolidation, and smaller Reits are at greater risk of having refinancing issues.

Some here may even go under, she added, citing a case in Japan where New City Residence Reit sought court protection late last year with US$1.1billion (S$1.6billion) in debt.

Moody's, along with other rating agencies, has in recent months downgraded the credit ratings of many S-Reits.

One scenario that might emerge from this crisis could be firms with the 'smart money' acquiring weaker Reits and taking them private, said Mr Philip Levinson of the Asian Public Real Estate Association.

The association last month asked the Government to help Reits refinance an estimated $12 billion of debt.

It was reported that one request was to lower the minimum investor payout ratio that Reits must meet to qualify for tax transparency treatment - from the current 90per cent to as low as 50per cent.

This has since been rejected by the authorities, on the grounds that the characteristics of Reits as a stable, high-payout, pass-through vehicle are important considerations for investors.

At the panel discussion yesterday, rights issues also came under fire.

CapitaMall Trust had recently issued units at a hefty discount to market price, drawing criticism that this was an expensive source of capital to refinance debts.

Ms Lee said even though this is true, a rights issue is an available option to raise cash and will be the 'only way to go' for some as a matter of survival.

She added that besides refinancing risks, Reits are also rated on their portfolio diversity, quality of assets and track records of its management.

Guest speaker James Shilling, an established real estate academic from DePaul University in the United States, told the 150-strong forum audience that despite the current weak performance of Reits, he believed 'Reits are here to stay' and will experience growth in the long term.

In the meantime, Reits are in for a tough and volatile time ahead.

'When the volatility index comes down, investors will come back and that's when things will start turning a corner,' he said.

Ms Lee added that she believed the recovery will be a 'lazy L-shaped' one, where it will take some time before the market recovers fully.

 

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March 29, 2009
property
Land a house for under $1 million
But be prepared to compromise on location, condition, size and lease tenure

By Joyce Teo
A landed home for less than $1 million? To many, a landed property is both a desirable dream home and the ultimate - yet unaffordable - status symbol.

So they steer clear of looking for one, thinking they would never be able to afford it anyway.

But while the landed market is often less accessible than the condominium market, there are houses out there pegged below $1million.

Potential buyers just have to be prepared to look hard as their choices are limited, property experts say.

Also, these houses may sit on a small piece of land or be in relatively poor condition.

'If your budget is below $1million, expect to compromise on the location, size and condition of the house,' said HSR Property Group executive director Eric Cheng.

'It can be fun for a person who likes DIY, as you can really do up the house. But you have to take into account the renovation costs,' he added.

Where to look

First of all, rule out the central areas of districts 9, 10 and 11. Much of the coveted residential districts of 15 and 16 will also be out of reach, said managing director of RealStar Premier Property Consultant, Mr William Wong.

Buyers should look at areas in the north-east such as Hougang and Serangoon, he said.

There may also be opportunities in Upper Thomson and Sembawang, said Knight Frank auctioneer Mary Sai.

Mr Cheng said there are small single-storey terrace houses in Upper Thomson going for below $1million, though there is no parking space in front of these homes.

Other areas with houses below $1million include Jalan Gembira in MacPherson, Telok Kurau, Loyang Villas in Loyang and Sin Ming Walk, he said.

Aside from leasehold homes, freehold ones below $1million can also be found.

However, it is almost impossible to find a bungalow at those prices. Semi-detached houses and corner terrace units are also unlikely candidates, leaving buyers with just mid-terrace units, said Mr Wong.

Apart from the resale market, the auction market may from time to time offer some affordable landed home buys.

Property consultancy Knight Frank said it will have one freehold terrace house available for auction next month at under $1million.

With an indicative price of about $800,000 to $900,000, it is an old, narrow, two-storey terrace house sitting on 1,300sqft of land at 7 Jalan Mesra in MacPherson.

Some houses in the area were going for $700,000 to $800,000 a few years ago, before a run-up in property prices, with up to around $1million for a nicely-renovated one during the 2007 boom, said Ms Sai.

Recent deals in that area included one for a unit in Jalan Setia, with a land area of 885sqft, which went for $850,000 in November.

Atypical houses

There are also a few areas with unusual landed homes costing way below $1million.

The Housing Board itself has 285 leasehold landed flats in Whampoa and along Stirling Road in Queenstown. These 99-year units were built in the 1970s by the Singapore Improvement Trust, the predecessor of the HDB.

Relatively small houses sitting on varying plots from just under 1,000sqft, can go for around $500,000 to $700,000, said MrCheng.

Such mid-terrace units are rather narrow, considering a typical mid-terrace unit sits on at least 1,600sqft of land, he said.

Then, there are houses with extremely short leases. Banks are not keen to offer loans for such properties, so buyers have to pay cash.

In Lorong3 Geylang, for instance, run-down terrace houses can go for around $150,000. One such unit, with a land area of just 725sqft and a built-up area of about 1,300sqft, sold for half that sum last year. It had just 11 years left on the lease.

During the last boom, the landed homes sector was a laggard compared to non-landed homes. Because landed home prices have not risen as steeply or as fast as condominiums, their fall will not be as hard, experts say.

The most recent official data shows that landed home prices fell by 4.8per cent in the fourth quarter of last year.

Going forward, Realstar's MrWong projects that landed home prices could fall by another 10per cent this year.

While sellers may dither over acting now or sitting tight, this is good news for buyers with a tight budget looking for landed homes.

 

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March 30, 2009
Real estate agencies fully back govt review
I REFER to last Wednesday's report, 'Regulation of property agents under review'.
The Singapore Accredited Estate Agencies (SAEA) is fully supportive of the Government's move towards a more effective way of regulating housing agents.

The housing agent industry is largely fragmented and unregulated. The current basic requirement is to pass the Common Examination for House Agents and apply for a house agent licence from the Inland Revenue Authority of Singapore (Iras). This licence is issued to agencies - that is firms and not individual agents. Once licensed, the proprietor usually recruits many associates (not employees), who work based on an agreed shared commission. So many agencies recruit agents indiscriminately, many without proper qualifications.

Therefore, the industry ends up with more than 30,000 agents and most without sound understanding of real estate practice.

We believe professionalism arises from, first, basic certification of skills and knowledge with continuing professional development training; and, second, a code of practice which agents follow. This can come about only if there is mandatory licensing and accreditation of individual realtors and a body familiar with real estate practice that is sanctioned by the Government to be a watchdog.

We understand the Government has always encouraged the industry to self-regulate. This is feasible if the industry is in the first place regulated. To exercise control on an industry which is unregulated is indeed daunting. Nevertheless, the SAEA scheme was officially launched on Nov 11, 2005 by the then Minister of State for Finance and Transport, Mrs Lim Hwee Hua. When launched, this scheme was supported by the HDB, Iras and Ministry of Finance.

As a result, there are now more than 300 accredited agencies and 6,000 accredited agents and salesmen, sharing the common vision of raising professional standards in the industry by certified competencies and compliance to a professional code. We believe this is a good scheme and leaders of all our accredited agencies, which comprise 23,000 agents in total, will endeavour to work with government bodies to build a better real estate agency force in Singapore.

Peter Koh
Chairman of Executive Committee
Singapore Accredited Estate Agencies

 

[jq75]

April 1, 2009
HDB upgraders on the move
More are buying new private condo units as prices come down

By Joyce Teo
SEVEN in 10 buyers of new private homes in the first three months of the year had Housing Board addresses, making HDB upgraders the hottest group in the property market so far for this year.
This is the second-highest proportion of HDB upgraders since the earliest available data in 1995, according to property consultancy DTZ's preliminary analysis of caveats lodged in the first quarter. The record was 86 per cent, in the second quarter of 2002.

HDB upgraders refer to better-off residents of larger flats looking to move up the property ladder.

They typically buy into 'mass market' private developments - lower-priced condominiums in the suburbs, and preferably in the same town or region where they live.

In normal times, HDB upgraders account for between 20 and 50 per cent of new home buyers, DTZ said.

But experts reckon their numbers are now swelling during a rare 'window period' when the price gap between private homes and HDB resale flats is narrowing.

Supply has also played a key part in the surging interest, with mass market projects forming the bulk of recent launches, said DTZ's senior director for research Chua Chor Hoon.

Property consultancy ** Richard Ellis thinks many HDB upgraders held back from buying during the recent property boom, particularly as prices skyrocketed in 2006 and 2007.

There were few 'mass market' condo launches then, as developers rushed to build high-end homes and investors scooped them up.

But now, private property prices are falling sharply at a time when HDB resale flat prices are still holding steady.

Official data shows that while fourth quarter private home prices fell 6.1 per cent, HDB resale prices actually rose 1.4 per cent.

So HDB upgraders are now keen to sell their flats and upgrade to bigger units at reasonable prices.

For example, a HDB five-room flat in Queenstown can still sell for around $600,000.

At recent property launches, suburban condo units were going for around $600 psf. This means a 1,200 sq ft three-bedroom private condo apartment costs $720,000.

At Mi Casa in Choa Chu Kang, upgraders accounted for 80 per cent of its 97 buyers so far. They also bought many units at The Caspian, beside Lakeside MRT station, Double Bay Residences in Simei and The Quartz in Buangkok.

Corporate communications and marketing manager Adam Tan and his wife Ng Bee Kay are among the HDB upgraders.

'We looked at some properties in October but the prices were still a bit high. Then, my wife got pregnant in late November. So from January onwards, we started to search for a bigger place - with a vengeance,' said Mr Tan, 32.

The family will be moving from their four-room flat in Bedok into a $760,000, 1,195 sq ft unit at Astoria Park, next to Kembangan MRT station.

To attract buyers, developers of some ongoing launches slashed prices in the first quarter. The average price at Waterfront Waves in Bedok was reduced from $800 psf to $600 psf, while at Kovan Residences near Kovan MRT station, prices were cut from $880 psf to $750 psf.

Experts expect the gap between private homes and HDB resale flats to continue narrowing this year, which means this is likely to be a strong year for the HDB upgraders segment.

Unlike the previous downturn in 1996, HDB prices are less likely this time around to fall quickly in tandem with private property prices.

One reason is that the supply of new HDB flats is more limited now.

'Previously, HDB built public flats ahead of demand,' noted DTZ's Ms Chua. But it now builds only when there is demand via its build-to-order system.

With relaxed eligibility rules, there are also more buyers in the HDB resale market, including permanent residents and singles.

If current trends continue, the experts say, HDB resale prices should eventually fall by the end of the year in line with the bigger fall in private home prices.

 

[jq75]

April 2, 2009
Record 13.8 per cent fall in private home prices

By Joyce Teo
PRIVATE home prices fell a record 13.8 per cent in the first quarter of the year, with values of city-centre and city-fringe homes hit the most.
Flash estimates released yesterday by the Urban Redevelopment Authority (URA) reveal that the fall is the largest since the index started in 1975.

And they show that the market has now lost half of the gains it chalked up in the property boom just past.

The almost 14 per cent plunge is more than double the 6.1 per cent decline in the fourth quarter of last year and nearly triple the 4.7 per cent fall for the whole of last year, according to URA data.

Some property experts have described the fall as startling while others, such as Credo Real Estate managing director Karamjit Singh, said it was not unexpected.

He said sales were extremely weak in the fourth quarter following the Lehman Brothers collapse and that this followed into January, adding that 'the index is playing catch-up - it has always lagged the market'.

Contrary to typical expectations that city-centre areas would suffer the largest price drop, yesterday's data showed the biggest first-quarter price fall of 17.2 per cent hit non-landed homes in city-fringe areas.

Non-landed city-centre home prices fell 15.2 per cent while non-landed suburban home prices dipped 7.5 per cent, said the URA, which is set to give more details on the private home market on April 24.

So far, the mass market has been the most resilient of the three areas and will remain so, consultants said.

Many of the new private homes sold this year - some 2,000 units or more are expected to be sold for the first quarter, compared with 4,264 units during the whole of last year - were mass-market units. High-end home deals have been few and far between. If volumes rise due to more distressed sales, the price drop may be more pronounced, experts warned.

Prices also fell in the HDB resale market - for the first time since 2006 - albeit by just 0.6 per cent.

'While the fall in price of private residential properties in the first quarter was acute, the drab economic situation is expected to continue to place downward pressure on home prices in 2009,' said Knight Frank's director of research and consultancy Nicholas Mak.

But the fall may not be so sharp going forward. Developers have already made a 'quantum leap' in reducing prices during the first three months of the year, said Colliers International's director for research and advisory Tay Huey Ying.

'Although further declines in launch prices can be expected, the incremental drop is likely to be marginal and more gradual.'

She expects the rate of decline to taper off to around 8 per cent for the second quarter, and 3 per cent to 5 per cent for the third and fourth quarters. Overall, she expects an average fall of 25 per cent to 30 per cent this year, with a milder drop of 10 per cent to 15 per cent for the mass market.

However, the continued decrease does not signal that the bottom is close at hand.

'If it is going to be a deep and long recession, then the bottom of the market may not come in 2009,' said Chesterton Suntec International's head of research and consultancy Colin Tan.

Currently, all bets are out on whether the fall for this downward cycle will be deeper than expected though, according to Mr Singh, history shows that prices at the bottom of the present trough will be higher than those experienced at the lowest point of the previous downturn.

 

[jq75]

April 2, 2009
HDB resale flat prices start to ease
First-quarter dip is first since 2006 and points to end of record run

By Jessica Cheam
PRICES of HDB resale flats fell in the first quarter of this year - the first decline since 2006 and a sign that the two-year run of record-breaking gains has ended.
Flash estimates yesterday showed that prices dropped by 0.6 per cent for the first three months, compared with the fourth quarter of last year.

Prices in the fourth quarter had increased by 1.4 per cent over the previous period and helped drive resale flat prices up by a hefty 31.2 per cent over the past two years.

The latest numbers caught industry experts by surprise and underline how the worsening recession has hit the Housing Board (HDB) market sooner than expected.

Many analysts had predicted further increases in resale prices with a decline becoming apparent only later in the year.

Agency chiefs from both PropNex and ERA Asia Pacific had recently forecast that HDB resale prices could rise by a further 3 per cent to 5 per cent this year.

But yesterday's numbers have altered expectations overnight, with analysts now predicting a decline of anything from 2 per cent to 10 per cent this year.

Tell-tale signs in the market signalled that prices have started heading southwards, in tandem with private property prices, which plunged 13.8 per cent for the first quarter of this year, said Prop- Nex chief executive Mohamed Ismail.

'The gloomy outlook for the past few months, coupled with more retrenchments, have hit home, and even the HDB market is feeling it,' said Mr Ismail.

PropNex and ERA have reported buyer resistance to flats above $500,000, with five-room and executive flats feeling the brunt of the price slide.

Such flats are now being sold at below valuation, in some cases up to $40,000 under, said ERA associate director Eugene Lim.

However, there is still strong demand for three- and four-room flats as buyers and permanent residents go for the safer option, he said.

ERA transactions showed that four-room units made up 41 per cent of its sales in the first quarter, compared with 38 per cent in the fourth quarter last year.

Despite the slight dip in prices, HDB flats are generally 'still holding' due to relatively strong demand, say experts.

Valuations of bigger flats are also likely to be lower in the face of decreasing transaction prices.

'This will have the multiplier effect of bringing down prices for these flat types,' said Mr Lim.

HDB's latest numbers did not surprise Knight Frank's director of research and consultancy, Mr Nicholas Mak, who had predicted bearish numbers from last year.

'HDB prices cannot go against the broad economic trend, when almost all asset prices are depreciating,' he said.

Chesterton Suntec International's head of research, Mr Colin Tan, said it is logical that HDB resale prices have 'turned a corner', partly because the supply of attractively priced new flats has increased.

As demand for HDB resale flats has relatively eased, so have their prices, and they will fall gradually from here, although not drastically, he added.

ERA and Knight Frank are estimating a decline of 5 per cent to 10 per cent over the year, while PropNex has put it at 2 per cent.

Demand for resale flats will continue to come from permanent residents, people downgrading from private properties to HDB flats and those downgrading from larger to smaller homes, said ERA's Mr Lim.

He expects total resale transactions for this year to be around 30,000 units, compared with last year's 28,419 units, with three- and four-room units making up the bulk of sales.

Demand for smaller flat types looks set to remain high amid the recession.

HDB's quarterly sale of 150 two- and three-room flats spread across Punggol, Queenstown, Sengkang and Yishun attracted 427 applications yesterday by the close of its first day.

 

[jq75]

April 2, 2009
City fringe home values fall the most

THE property downturn has crossed an unexpected frontier, with the index measuring the values of private flats on the city fringe falling below that which tracks those in suburban areas - the first time this has been recorded.
Values for private units closer to the city are typically thought to hold up better than those in the suburbs but their rate of price decline in the first quarter means that this belief may no longer hold true.

Simply put, a dollar invested in a suburban flat is holding its value better than the same ploughed into a city fringe unit, if the investments were made in the last quarter of 1998.

The Urban Redevelopment Authority (URA) uses the fourth quarter of 1998 as a base for compiling its value indexes for three parts of Singapore.

The anomaly arose after flash estimates yesterday showed that prices of city fringe flats fell by 17.2 per cent, the biggest fall of any housing sector. City centre flat prices dipped 15.2 per cent, while suburban ones slipped only 7.5 per cent.

Knight Frank's director of research and consultancy, Mr Nicholas Mak, said the first-quarter moves could be a 'statistical blip'. 'It's likely a one-off thing. If it were to continue in the next two quarters, we could have some sort of a price gap compression,' he said.

If mid-end property prices are diving at such a high speed, they would soon be near mass-market levels, he said.

This will not be sustainable as people who live in the suburbs will then upgrade to homes nearer to the city, said Credo Real Estate's managing director, Mr Karamjit Singh.

The URA began offering property indexes based on three geographical zones in 2007. The price movements in the different segments reflect the market better than just an all-in-one index.

JOYCE TEO

 

[jq75]

April 2, 2009
HORIZON TOWERS COLLECTIVE SALE SAGA
No go for en bloc sale

By Joyce Teo
THE minority owners of Horizon Towers have won the fight to block the $500 million collective sale of their Leonie Hill estate.
Singapore's highest court handed out its judgement on Thursday morning, allowing their appeal.

This puts an end to arguably the most protracted en-bloc sale dispute in years. The saga began in January 2007 when the majority owners accepted a price of just under $850 per sq ft (psf) of gross floor area for the 99-year leasehold estate in Leonie Hill. The 199 apartment owners would each have pocketed about $2.3 million while the 11 penthouse owners would have received at least $4 million each.

The buyers are Hotel Properties (HPL) and its partners, Morgan Stanley Real Estate and Qatar Investment Authority.

 

[jq75]

April 3, 2009
It's final: Horizon Towers sale is off
Surprise ruling vindicates stand of minority owners

By Joyce Teo
THE Court of Appeal halted the contentious Horizon Towers collective sale once and for all yesterday with a hard-hitting ruling that singled out the estate's sales committee for scathing criticism.
The dramatic judgment caught many by surprise and vindicated the four sets of minority owners who opposed the sale from day one - about 3-1/2 years ago, when the idea was first mooted - and spent nearly $1.5 million in legal costs.

One of those owners, Mr Hendra Gunawan, told The Straits Times yesterday: 'I am very happy that at last we can protect our homes.'

'We can't do anything about it if 80 per cent agree to sell but they have to do it properly so that everyone's home will be sold at a proper price.'

Industry experts are also hailing the decision as a landmark judgment that will set clear parameters for en bloc deals.

Yesterday's ruling was clear in its condemnation of the way the en bloc process was conducted and was particularly critical of the estate's sales committee.

Among a litany of criticism, it pointed to the committee's failure to follow up on a higher offer for the estate, its undue haste in agreeing to a sale price in a rising market and its sloppy procedures in appointing a marketing agent and keeping owners up to speed on the transaction.

But perhaps the most serious censure was directed at its failure to take heed of a possible conflict of interest that arose when two owners bought additional units in the estate just before they were appointed to the sales committee.

'The sale committee's duty is to achieve the best price under the circumstances, and not just a fair price,' said Mr Karamjit Singh, managing director of Credo Real Estate, which has handled many collective sales but not that of Horizon Towers.

The Strata Titles Board, which backed the sale, was also criticised for the way it took too much at face value - whether opinions on price or legal points - when it should have been more questioning. It was also rapped for not being more vigilant on the possible conflict of interest issue regarding sales committee members.

One immediate effect of the ruling is that one of Singapore's most drawn-out en bloc deals is finally over.

The sale of the Leonie Hill estate was first mooted in October 2005. The owners agreed to a reserve price of $500 million the following year, just before the dramatic run-up in the property market.

A deal was signed in January 2007 when the majority owners accepted a price of just below $850 per sq ft of gross floor area from Hotel Properties and its two partners.

The 199 owners of the 99-year leasehold estate would each have pocketed about $2.3 million while the 11 penthouse owners would each have received around $4 million to more than $6 million.

A series of court challenges followed. Even some majority owners turned against the deal when they saw how the soaring market had made their sale price look like a giveaway.

The property market has since slumped and the en bloc market has dried up.

'On paper today, the owners would have lost out, but probably by just 10 per cent,' said a property expert who declined to be named.

Only a handful of the minority owners who objected to the sale fought on until the end, spending millions along the way.

Mr Ng Eng Ghee, Mr Gunawan and his wife Sulistiowati Kusumo and Madam Ong Sioe Hong were represented by Harry Elias while Mr Rudy Darmawan represented himself, his wife and aunt at the hearing.

Madam Ong said her group incurred expenses of more than $1.5 million. Another group of objectors - who fought against the sale earlier - has spent around $1 million. Property industry experts said yesterday's landmark ruling has struck a decisive blow for transparency.

'This is the first time the court of appeal has held in favour of the minority owners,' said Mr Phillip Fong, a partner of Harry Elias Partnership, which represented four minority owners.

'There's now substantial clarity on the extent of the duties of the sale committee.'

Credo's Mr Singh said: 'The judgment is undoubtedly significant. It clarifies what constitutes, for example, good faith and conflicts of interest.'



THE OBJECTORS
FOUR sets of minority owners lasted the full distance to see yesterday's final victory in overturning the Horizon Towers sale.
Those left standing after the marathon battle were Madam Ong Sioe Hong, Mr Hendra Gunawan and his wife, Mr Ng Eng Ghee, and Mr Rudy Darmawan, his wife and aunt.

Mr Darmawan, an Indonesian living here, represented himself, his wife and his aunt at the Court of Appeal. He is believed to be an executive at a multinational corporation.

Mr Gunawan, another Indonesian living here, runs his family's manufacturing business in Indonesia. The 53-year-old and his wife Sulistiowati Kusumo, and two sons have lived in Horizon Towers for eight years.

Madam Ong is the managing director of the department store operator Metro and the sister of Mr Jopie Ong, boss of Metro Holdings. Their father is Metro founder Ong Tjoe Kim.

Madam Ong, her husband and their two sons have lived in Horizon Towers for more than 20 years.

Retiree Mr Ng, was a property developer and is listed as the director of companies such as Hi-Rise Builders and Bideford Realty.

The long-running and costly legal battle saw many minority owners fall by the wayside.

Two out of nine sets of minority owners - a couple representing themselves and a foreign firm - had dropped out of the fight by the time the case went to the High Court in March last year.

By the time the case got to the Court of Appeal stage, more owners had dropped out.



VERY HAPPY
'We are very, very, very happy that we get to keep our home. All the minority homeowners are very passionate in working together towards keeping our home. We are also fortunate to have very professional and passionate legal counsels.'

Madam Ong Sioe Hong, one of the four appellants to the Court of Appeal

VINDICATED

'I had to pinch myself a few times. These three years have been quite an emotional rollercoaster. The minority owners are happy that we have been vindicated in the fight for our homes. For us, the price was never an issue.'

Ms J. Tan, a homeowner who objected to the sale

OVER AT LAST

'As consenting parties, obviously we wanted the sale. What is disappointing is that it took that long (to reach a conclusion). So much time and money has been spent on this. At least the last two months' anxiety is over. Whichever way it goes you have to accept it and move on.'

Mr Bharat Mandloi, 49, a commodities business director, homeowner and resident

PEACEFUL PLACE

'Together in Horizon Towers we always had a peaceful environment (throughout the proceedings), and it's still a wonderful place to live. I feel that justice has been done to what the minority objectors raised.'

Ms Mamata, 40, a real estate agent and Horizon Towers homeowner

FINE WITH VERDICT

'I am fine with the verdict. I have a great apartment and I will continue to live in it.'

Mr Anil Ahuja, 46, who lives in a penthouse

ADDITIONAL REPORTING BY JOANNA SEOW AND LINETTE LAI

 

[jq75]

April 2, 2009
HORIZON TOWERS COLLECTIVE SALE SAGA
No go for en bloc sale

By Joyce Teo
THE minority owners of Horizon Towers have won the fight to block the $500 million collective sale of their Leonie Hill estate.
Singapore's highest court handed out its judgement on Thursday morning, allowing their appeal.

This puts an end to arguably the most protracted en-bloc sale dispute in years. The saga began in January 2007 when the majority owners accepted a price of just under $850 per sq ft (psf) of gross floor area for the 99-year leasehold estate in Leonie Hill. The 199 apartment owners would each have pocketed about $2.3 million while the 11 penthouse owners would have received at least $4 million each.

The buyers are Hotel Properties (HPL) and its partners, Morgan Stanley Real Estate and Qatar Investment Authority.

April 3, 2009
It's final: Horizon Towers sale is off
Surprise ruling vindicates stand of minority owners

By Joyce Teo
THE Court of Appeal halted the contentious Horizon Towers collective sale once and for all yesterday with a hard-hitting ruling that singled out the estate's sales committee for scathing criticism.
The dramatic judgment caught many by surprise and vindicated the four sets of minority owners who opposed the sale from day one - about 3-1/2 years ago, when the idea was first mooted - and spent nearly $1.5 million in legal costs.

One of those owners, Mr Hendra Gunawan, told The Straits Times yesterday: 'I am very happy that at last we can protect our homes.'

'We can't do anything about it if 80 per cent agree to sell but they have to do it properly so that everyone's home will be sold at a proper price.'

Industry experts are also hailing the decision as a landmark judgment that will set clear parameters for en bloc deals.

Yesterday's ruling was clear in its condemnation of the way the en bloc process was conducted and was particularly critical of the estate's sales committee.

Among a litany of criticism, it pointed to the committee's failure to follow up on a higher offer for the estate, its undue haste in agreeing to a sale price in a rising market and its sloppy procedures in appointing a marketing agent and keeping owners up to speed on the transaction.

But perhaps the most serious censure was directed at its failure to take heed of a possible conflict of interest that arose when two owners bought additional units in the estate just before they were appointed to the sales committee.

'The sale committee's duty is to achieve the best price under the circumstances, and not just a fair price,' said Mr Karamjit Singh, managing director of Credo Real Estate, which has handled many collective sales but not that of Horizon Towers.

The Strata Titles Board, which backed the sale, was also criticised for the way it took too much at face value - whether opinions on price or legal points - when it should have been more questioning. It was also rapped for not being more vigilant on the possible conflict of interest issue regarding sales committee members.

One immediate effect of the ruling is that one of Singapore's most drawn-out en bloc deals is finally over.

The sale of the Leonie Hill estate was first mooted in October 2005. The owners agreed to a reserve price of $500 million the following year, just before the dramatic run-up in the property market.

A deal was signed in January 2007 when the majority owners accepted a price of just below $850 per sq ft of gross floor area from Hotel Properties and its two partners.

The 199 owners of the 99-year leasehold estate would each have pocketed about $2.3 million while the 11 penthouse owners would each have received around $4 million to more than $6 million.

A series of court challenges followed. Even some majority owners turned against the deal when they saw how the soaring market had made their sale price look like a giveaway.

The property market has since slumped and the en bloc market has dried up.

'On paper today, the owners would have lost out, but probably by just 10 per cent,' said a property expert who declined to be named.

Only a handful of the minority owners who objected to the sale fought on until the end, spending millions along the way.

Mr Ng Eng Ghee, Mr Gunawan and his wife Sulistiowati Kusumo and Madam Ong Sioe Hong were represented by Harry Elias while Mr Rudy Darmawan represented himself, his wife and aunt at the hearing.

Madam Ong said her group incurred expenses of more than $1.5 million. Another group of objectors - who fought against the sale earlier - has spent around $1 million. Property industry experts said yesterday's landmark ruling has struck a decisive blow for transparency.

'This is the first time the court of appeal has held in favour of the minority owners,' said Mr Phillip Fong, a partner of Harry Elias Partnership, which represented four minority owners.

'There's now substantial clarity on the extent of the duties of the sale committee.'

Credo's Mr Singh said: 'The judgment is undoubtedly significant. It clarifies what constitutes, for example, good faith and conflicts of interest.'



THE OBJECTORS
FOUR sets of minority owners lasted the full distance to see yesterday's final victory in overturning the Horizon Towers sale.
Those left standing after the marathon battle were Madam Ong Sioe Hong, Mr Hendra Gunawan and his wife, Mr Ng Eng Ghee, and Mr Rudy Darmawan, his wife and aunt.

Mr Darmawan, an Indonesian living here, represented himself, his wife and his aunt at the Court of Appeal. He is believed to be an executive at a multinational corporation.

Mr Gunawan, another Indonesian living here, runs his family's manufacturing business in Indonesia. The 53-year-old and his wife Sulistiowati Kusumo, and two sons have lived in Horizon Towers for eight years.

Madam Ong is the managing director of the department store operator Metro and the sister of Mr Jopie Ong, boss of Metro Holdings. Their father is Metro founder Ong Tjoe Kim.

Madam Ong, her husband and their two sons have lived in Horizon Towers for more than 20 years.

Retiree Mr Ng, was a property developer and is listed as the director of companies such as Hi-Rise Builders and Bideford Realty.

The long-running and costly legal battle saw many minority owners fall by the wayside.

Two out of nine sets of minority owners - a couple representing themselves and a foreign firm - had dropped out of the fight by the time the case went to the High Court in March last year.

By the time the case got to the Court of Appeal stage, more owners had dropped out.



VERY HAPPY
'We are very, very, very happy that we get to keep our home. All the minority homeowners are very passionate in working together towards keeping our home. We are also fortunate to have very professional and passionate legal counsels.'

Madam Ong Sioe Hong, one of the four appellants to the Court of Appeal

VINDICATED

'I had to pinch myself a few times. These three years have been quite an emotional rollercoaster. The minority owners are happy that we have been vindicated in the fight for our homes. For us, the price was never an issue.'

Ms J. Tan, a homeowner who objected to the sale

OVER AT LAST

'As consenting parties, obviously we wanted the sale. What is disappointing is that it took that long (to reach a conclusion). So much time and money has been spent on this. At least the last two months' anxiety is over. Whichever way it goes you have to accept it and move on.'

Mr Bharat Mandloi, 49, a commodities business director, homeowner and resident

PEACEFUL PLACE

'Together in Horizon Towers we always had a peaceful environment (throughout the proceedings), and it's still a wonderful place to live. I feel that justice has been done to what the minority objectors raised.'

Ms Mamata, 40, a real estate agent and Horizon Towers homeowner

FINE WITH VERDICT

'I am fine with the verdict. I have a great apartment and I will continue to live in it.'

Mr Anil Ahuja, 46, who lives in a penthouse

ADDITIONAL REPORTING BY JOANNA SEOW AND LINETTE LAI

 

[jq75]

April 3, 2009
The Appeal Court judgment

The Court of Appeal yesterday reversed the sale of Horizon Towers, ending a 2 1/2-year battle over the estate's collective sale. Chief Justice Chan Sek Keong and Judges of Appeal Andrew Phang and V. K. Rajah found that the condo's sales committee had breached its duties to unit owners and that the Strata Titles Board (STB) and High Court judge Choo Han Teck had erred in allowing the sale. The original sales committee comprised chairman Arjun Samtani, secretary Wee Hian Siew, and members Tan Kah Gee, Henry Lim, Bharat Mandloi, Claude Reghenzani, Dr Chan Siew Chee, Shahrukh Marfatia and George Eapen. These are the main points of the judgment.
WHERE THE SALES COMMITTEE ERRED

By not acting with due diligence and transparency in appointing the marketing agent, First Tree Properties, which has two shareholders, neither of whom is a licensed valuer. The appointment was done in haste and 'reflected a lack of conscientiousness';
By failing to follow up on a higher offer for Horizon Towers made by Vineyard Holdings, a Hong Kong company;
By not using the Vineyard offer as leverage in negotiations with Hotel Properties Ltd (HPL), the eventual buyer of the estate;
By not getting advice from an independent property expert prior to the sale;
By proceeding with the sale to HPL in 'undue haste' in a soaring property market;
By ignoring conflicts of interest. Two of the sales committee members - Mr Samtani and Mr Tan - had bought additional units in Horizon Towers with the help of 'substantial' bank loans right before they were appointed to the committee. They did not disclose these purchases. First Tree was also eager to seal a deal before its mandate as marketing agent expired;
By not consulting, or even updating, the majority owners on the sale, despite knowing that the property boom had pushed up the market value of the individual units and significantly eroded their estimated premiums from the collective sale.
WHERE THE STB ERRED

By refusing to subpoena Mr Arjun Samtani to testify;
By allowing the sales committee to assert 'legal privilege', that is, to not divulge the advice it had received from its lawyers;
By not considering whether there was a possible conflict of interest in the sales committee members' purchase of additional units;
By not asking whether the price was the best one 'reasonably obtainable';
By concluding that the original sales committee had 'acted in good faith' in selling the property to HPL just because the committee had received and relied on legal advice.
WHERE JUSTICE CHOO HAN TECK OF THE HIGH COURT ERRED

By taking a 'restricted view' of the duties of a Strata Titles Board in approving a collective sale;
By deciding that the only issue to rule on was that of price, and that the STB had determined the price was fair.

 

[satayxp]

April 7, 2009
Resistance level' for DBSS flats, Not more than $500k
Few takers likely above this price due to weak market and restrictions


THE tightening property market and demand for smaller homes have created a dilemma for the HDB's design, build and sell scheme (DBSS) - price flats over $500,000 and buyers could stay away.

That price point has been cited as the 'resistance level' for home seekers with less cash to spend but a wealth of options in a buyer's market.

Experts said DBSS homes - public flats designed, built and sold by private developers - are sandwiched in a fast- narrowing price gap between private condominiums and HDB flats.

To move units, these condo-style homes will have to be priced at about $500,000 or less - under an equivalent- sized flat in a private condo - but that may erode any profits for the developers.

'These are the same people who will buy your resale HDB flat,' said Knight Frank director Nicholas Mak.

PropNex chief executive Mohamed Ismail agreed: 'The resistance level of HDB buyers is around the $500,000 level. If they are going to be priced above $450 per sq ft (psf), they may face resistance.

'Buyers may head for the private market where they can get better value for $500 psf to just below $600 psf.'

Mass-market condos that offer full facilities, such as Rosewood Suites in Woodlands and Caspian in Jurong, have units in that price range. Developers have lowered their prices of some mass-market projects by 20 to 25 per cent while HDB resale prices are also falling, though at a slower pace.

Two DBSS projects are expected to be released for sale this month. The first is a 1,203-unit project in Toa Payoh with three-, four- and five-room flats.

And Parc Lumiere in Simei will have 360 units - 120 four-room and 240 five- room flats. A Hoi Hup-led consortium won the tender for the Toa Payoh site at about $160 psf per plot ratio last August, while Sim Lian won the Simei site at $137 psf last June.

 

[jq75]

April 4, 2009
HORIZON TOWERS VERDICT
Relook en bloc rules
I AM sure that I am not alone in being mightily heartened by the ruling of the Court of Appeal in the Horizon Towers case. However, the case happened because of the infancy of en bloc sale laws. Something is amiss if you have to go all the way to the Court of Appeal to get fair play.
Not only should such sales have tighter rules to regulate all aspects of the transactions, but the laws should also be reviewed. It is also time to take stock of the role of the Strata Titles Board. Is its very composition detrimental to any real kind of proper hearing on the issues?

In the past, many multimillion-dollar en bloc transactions have fallen far short of rigorous scrutiny. Self-interested sales committees have been allowed to practise partisan conduct to promote a sale at any cost. Dissenters of a sale have been prohibited from attending closed-door meetings concerning the sale of their own homes.

It is the silence of the law on many such practices which has resulted in passionate dissent on the en bloc landscape. The bravery of the Horizon Towers dissenters is to be lauded. However, seeking redress to ensure fair play in collective sales means digging deep into one's pockets to get any kind of hearing. Surely, something is amiss.

Susan Prior (Ms)