by Jessica Cheam
ONLY a year ago, old estates sitting on sizeable plots of land were hot property, sought by the property big boys as prime sites for redevelopment.
Today, the en bloc market has cooled such that only one major deal - Katong Mall - has been done this year - and developers seem to be taking the chance whenever they can to make a legal exit from the purchases they made last year.
The Tampines Court collective sale is one prime example. It sits on a plum 702,162 sq ft site with 560 units - and looked like a lucrative development for property giants Far East Organization and Frasers Centrepoint when they inked the deal for $405 million last year. The developers could have transformed it into a new condominium with around 1,580 units averaging 1,300 sq ft. At that price, they were paying around $430 psf - a bargain, considering new condos in Tampines had hit $700 psf in the vicinity.
But how the winds of change have turned on the property market only a year after. On the back of esclating construction costs, the drop in demand for new flats, and the flattening of private home prices, Far East and Frasers are no longer keen on Tampines Court - unsurprising, say property anaylsts, as the developers’ land banks are relatively full and they have plenty of new projects to be launched on hold.
The developers told The Straits Times they were “ready to complete the deal” but that “the onus was on the sales committee” to get the necessary approval. The fact they used “was” - past tense - in their response was telling of how they are already treating the deal as history.
Their refusal to extend the deadline of the agreement has indirectly put the pressure on the Strata Titles Board to now make a decision on the sale.
The agreement expires this Friday (July 25) and following a mad scramble by the sales committee to get STB to make a decision by the deadline, it now looks like a conclusion is imminent.
One way or the other, STB’s anticipated decision is believed to be the speediest the board has made in the histoy of en blocs. After hearing all evidence by sale objectors, lawyers usually take a week or two to make closing submissions, thereafter the board will deliberate on the merits of the sale, before deciding. This deliberation usually takes up to three months, but in the case of Tampines Court, it looks like it will take only one day.
Granted, the circumstances are unique and the stakes are pretty high. A no-go by the board would mean that years of effort and the money (probably in hundreds of thousands) spent on legal tussles by the residents will have been naught - but some will argue that this is not a bad thing, if it was proved that the sale was done in bad faith, and owners are emerging less well-off than before the sale.
If STB gives the green light, then the sales committee - which looked to have shot itself in the foot when it delayed getting the STB approval initally - will breathe a sigh of relief and the developers will have no choice but to proceed with the redevelopment of the former HUDC estate.
The more important question is, who will emerge winners and losers in these scenarios?
Is it better to put off a sale that even the developers are no longer keen on, and let residents keep their flat or sell it on the open market?
Or is it “for the greater good” that urban renewal gets its way?
Residents of Tampines Court will tell you that either way, the en bloc sale has damaged relationships in the estate beyond repair. As I stood outside the room where the weekly Meet-The-People’s sessions were conducted last Monday, one resident remarked to me (we were waiting for the owners to finish their meeting with National Development Minister Mah Bow Tan) that she, a majority owner, wasn’t even sure if she should be happy or sad about the sale anymore.
On one hand, she has already committed to another home elsewhere so she is keen to let go of her Tampines Court home. On the other hand, her kids grew up in Tampines Court where it holds invaluable memories, and life there is so convenient as they live near to work, schools, amenities etc. To uproot her entire family and move somewhere else isn’t as glamourous as it is made out to be, she said wistfully.
“The sad thing is,” she added, “from beginning till the end, the entire en bloc process has been fraught with unhappiness.”
To which I immediately responded, “which en bloc has ever been a happy one?”
Tampines Court’s story - although laden with its unique twists and turns - is no different from the en blocs before them - Horizon Towers, Waterfront View, Gillman Heights, just to name a few recent ones.
On the whole, it might benefit more owners who had bought their units at low prices and have got a windfall from their homes. But there are also many who bought their units at the last property peak (1995/6) and face having their homes expropriated, leaving them with zero cash in their pocket.
This is partly due to the recent change of rule in 2002, that banks now get first charge from the sale proceeds, and the CPF account, the second. In a landmark ruling concerning a resident in Waterfront View, the STB had ruled that the shortfall in an owner’s CPF will not be considered as financial loss. (This shortfall occurs if the sale proceeds are not enough for both the bank charge and CPF principal plus interest monies) This amount gets wavied, and the owner does not have to pay back this money into the CPF. However, this also means his CPF is left with a gaping hole that he would not have had to realize if he was not forced to sell his home.
Some might argue that that is the money he had to pay for living in his home for the last x number of years that he has had it. After all, we can’t expect to live somewhere for free, right? But is it right for an individual’s neighbours to decide for him that it is time to leave your home, realize the loss in your CPF account, and look for a different place to live?
Singapore is a young country, and our en bloc laws are even younger. It is not yet perfect, and what is becoming more apparent in our unique strata-titled property landscape is that these laws have to be tweaked to make the process more transparent and equitable.
This will likely take a long time, and claim many en bloc “victims” along the way. But as long as we do not stop improving our en bloc laws, perhaps someday, we can finally achieve this myth that’s called the “happy en bloc” and urban rejuvenation can happen without the expense of an inidividual’s basic human right to keep his home.
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