En bloc sales are back, but past beneficiaries of such sales say the monetary windfall is a mixed blessing
IT’S baaack: Singapore’s favourite bloc-buster: ‘Who wants to be a collective sale millionaire?’
Yup, en bloc fever is running high again, in the wake of the record-busting sale of Eng Lok Mansion in Napier Road earlier this month.
The 64 owners of apartments there will each receive a cool $2.16 million, about twice the market value.
In the process, they are making history as the happy recipients of the most expensive collective sale ever: the freehold property sold for $138 million.
They join the much-talked-about ranks of 5,000 homeowners who have scored an instant en bloc fortune since Singapore’s first collective sale in 1994.
The sums involved are staggering: In the years since then, an estimated 260 developments have been sold at an aggregate value of $12.8 billion, according to estimates from property consultancy Credo Real Estate.
Property developers like to buy up an estate in one go to take advantage of changing plot ratios enabling more bang for their buck on the land.
The result is that owners stand to get between 30 and 50 per cent more than what their properties would fetch if they sell them off individually.
‘It’s an amazing phenomenon that’s very unique to Singapore,’ notes Credo Real Estate’s executive director Karamjit Singh.
LifeStyle decided to track down some of these fortunate 5,000, to see how they have fared since striking the property equivalent of Toto.
But most turned down LifeStyle’s requests for interviews, citing fears of drawing attention to themselves and being seen as flaunting their wealth.
In 1999, after the collective sale of her property was sealed and she was sure she would pocket $1.1 million, Esther (not her real name) quit her bank executive job the very next day.
She had bought the walk-up apartment in the Moulmein area for a mere $220,000 in 1989.
‘The sale gave me the financial muscle to resign and pursue other things in life,’ she says.
Esther took a one-year break before returning to work in a few banks on and off over the past few years.
She invested about $900,000 of her windfall on a new private apartment, and parked the remainder in bonds, unit trusts as well as in the bank.
There was no shopping spree or buying binge. In fact, the 45-year-old single woman still lives simply - without a car or a maid.
Amazingly, she still worries about money. ‘My main concern is how to manage my funds so I can retire early and comfortably,’ she says.
Indeed, you might not want to get out the hankies for them, but life can be tough when you hit the en bloc jackpot.
Freelance IT specialist Alice (not her real name), 45, recalls how she noticed a distancing between her and the people around her after news got around that she had pocketed $1.6 million from the en bloc sale of her apartment in 1999.
‘People must have talked about me behind my back, although I’ve never heard anything malicious said to my face,’ she says.
For some, the successful closure of an en bloc sale is more of a ‘huge relief’ than a cause for celebration.
After three rounds of en bloc exercises, teacher Sally (not her real name), 56, finally sold her apartment near Newton Circus in 2004, making a profit of about $600,000.
‘For eight years, I was stuck in this crumbling house. I couldn’t sell, move or renovate,’ she says.
Then there are the ’serial en blockers’, a small but growing group of people who invest in one or more properties which have en bloc potential - usually older developments on large plots of land.
Knight Frank’s executive director Foo Suan Peng says: ‘Money is not an issue for these people. After we close a deal, they’ll immediately ask ‘So where’s the next en bloc sale?’ ‘
One en blocker who came out of the process relatively unscathed is property agent K.Y. Wong.
He made a profit of more than $500,000 when he sold his Calrose Gardens maisonette at Yio Chu Kang in 2004. He was content to downgrade, moving into a smaller unit at Lakeview Condominium at Upper Thomson Road.
‘I’m a simple man. I don’t feel rich. I don’t indulge in luxurious things,’ he says, in words that may be of some comfort to envious non-en blockers.
Jervois jackpot
WHO: Mr Lee Peng Shu, a 56- year-old businessman
WINDFALL: $975,000
LESSONS LEARNT: ‘You must forget and forgive - forget the difficulties you encountered in the en bloc process and forgive the unpleasant things which people might say to you in the heat of the moment.’
BUSINESSMAN Lee Peng Shu and his family hit the jackpot when both Jervois Court off River Valley Road and neighbouring Goldhill Mansion were sold en bloc in one fell swoop three years ago.
The lucky Lees, that is, Mr Lee, his four siblings and their late father, owned three units at Jervois Court and four units at Goldhill Mansion, including two shophouses, which cost them from as little as $70,000 - with the first purchase, back in 1971 - up to $770,000.
So the family was all smiles when the properties fetched $8 million in the en bloc sale, or a net profit of $5 million.
But en bloc sales are notoriously difficult to pull off - some stubborn property owners may refuse to sell, or want more than the others - and this was no exception.
One owner held out and at the eleventh hour, the sales committee - of which Mr Lee was chairman - agreed to give him a $50,000 ’subsidy’ to reach the 80 per cent majority required by law.
According to Mr Lee, this payment was supposed to be split among the seven committee members, but he paid the lot.
The sale came after two earlier attempts failed.
The first was in 1996. Amazingly, 100 per cent of owners were in favour, but alas, there were no buyers.
Then, in 1999, not enough sellers came forward to reach the 80 per cent mark required of estates more than 10 years old.
When Mr Lee is asked if he had doors slammed in his face during the drawn-out sales process, he says coyly: ‘I forget about these things.’
But asked when he received the cheque of near-on $1 million for his share of the proceeds after Centrepoint Properties’ $105 million purchase, the father of three pauses and says: ‘Of course I remember the date - Sept 14, 2004.’
Despite receiving the huge sum, he claims he had ‘no feelings at all’, as about $600,000 went straight away to paying off a loan on his new condominium apartment in the Bukit Timah area.
The rest was put in the bank.
He insists the sale had little impact on his life.
Indeed, he is already quite well-off - the family-owned company he runs is the sole distributor of Darlie toothpaste in Singapore.
Recalling the en bloc experience, he says: ‘After waiting so many years and attending more than 200 meetings, I was just so glad it was all over.’
Residents from Goldhill Mansion held a farewell party at a hotel and he was the last person to vacate the estate last March.
Apparently, there was also supposed to be a ‘celebration for my kampung’ at Jervois Court, but it never happened.
With a sad smile, he says: ‘After they got the money, they just forgot about it. That’s human nature for you.’
Despite that, he attributes the eventual en bloc sale to ‘kampung spirit’.
‘Everybody knew one another and we tried to achieve something together,’ he says.
While he has had one windfall, he is open to others: He would not hesitate to bite if a shophouse he owns in Genting Road is put up for collective sale one day.
‘En bloc sales are by chance, rather than effort. If I have another chance, I’ll just grab it.’
Mak Mun San
Sitting on a goldmineWHO: ‘Mrs Lim’, in her 50s, who runs her family’s furniture business. She did not want to reveal her real name
WINDFALL: $2.16 million
LESSONS LEARNT: ‘Tolerance and patience. You have to take the idiosyncrasies of different characters. Humans are greedy. Some people think we’re sitting on a goldmine. Everyone wants more and more. In hindsight, it’s true that we are sitting on a goldmine. But I never thought so until now.’
Mrs Lim remembers the night she found out she was going to be $2 million richer. She had returned home from work and had just settled on the couch to watch American Idol, one of her favourite programmes.
The phone rang. It was her older sister, who had just emerged from a meeting at property consultancy CB Richard Ellis’ office in Raffles Place bearing good news for Mrs Lim and the other 63 families in Eng Lok Mansion (left) in centrally located Napier Road.
Mrs Lim’s sister, who did not wish to be named, co-owns the apartment and is on the sales committee of the property, which was built more than 30 years ago. The committee had just made history by clinching the highest collective sale price ever - $138 million.
Yet, instead of jumping for joy, Mrs Lim said her first thought was a sobering one: ‘I’m leaving this apartment. We’ll be moving.’
After all, for 27 years, she and her husband had enjoyed the best of both worlds: a green sanctuary - the Botanic Gardens - to her right, a shopping haven - Orchard Road - to her left. Should anyone in the family need emergency medical attention, one of Singapore’s top hospitals, Gleneagles, was, literally, just next door.
She adds that even her 28-year-old bank officer son ‘wasn’t that exuberant. His friends phoned and congratulated him after reading about it in the news later and he said: ‘What’s so great about it? I’ll be out of Orchard Road’.
Eng Lok’s sale finally went through after four attempts in 10 years. The others failed because not enough owners wanted to sell.
Indeed, she says that ‘there are still people who don’t want to move out. A few of them are really old and they don’t want to uproot’.
‘We understand that. But the place is really quite old. If we do nothing now, eventually we will have to have a major overhaul, and you’ll never get the consensus.’
Mrs Lim and her sister have not discussed how to split the money. ‘Everyone will be househunting this weekend. But I won’t want to spend the total amount on one property. I’m not getting any younger. My priority is to save some for old age,’ says Mrs Lim.
She has two criteria for her new home: it must be a condo because she doesn’t like landed homes - ‘too much hassle’ - and be near her family members. Her mother, younger brother and older sister all live in the vicinity of her Napier Road home.
And how about a little celebration? She says there will be an extraordinary general meeting soon and ‘we told everyone, it should be a champagne party’.
Tan Dawn Wei
Don’t feed the frenzy
WHO: ‘Michael’, a 65-year-old former civil servant who declined to give his real name
WINDFALL: $1.8 million
LESSONS LEARNT: ‘Make your money grow by buying Singapore proxy stocks. Don’t get caught up in the global economic mania. A lot of purported investment experts will want you to part with your money. Don’t feed the frenzy.’
The saying ‘you win some, you lose some’ certainly applies to Michael.
In the mid-1990s, his two-bedroom maisonette was sold in an en bloc sale for $1.8 million. He had paid just $690,000 for it the year before.
Michael, who is single, had never slept one night in his maisonette. Not only that, but the newly retired civil servant had just poured $140,000 into extensive renovations on the 10-year-old unit.
Before the new paint on the wall had even dried, the en bloc word was going around the neighbourhood.
‘I was really frustrated. I was keen on living there because I wanted the privacy of a second floor.’ He was living in a condominium unit then.
Still, he went along with the wishes of his new neighbours and also became the chairman of the sales committee because ‘I decided I wasn’t going to let some cretin manage the sale’.
A hundred per cent of homeowners in the estate said ‘yes’ to the sale, which was mandatory according to regulations of that time. Of his $1.8 million cheque, $800,000 was left after paying taxes, and discounting what he paid for the apartment.
So far, so good. Then, disaster: He put the money in a bank as an investment, and ended up kissing most of it goodbye.
‘You suddenly find yourself holding a large amount of cash. You have to deposit it somewhere. The moment you find a bank, you’re in its sights already because you’re a high net worth individual.’
Most of that money went into mutual funds, on the advice of the bank’s relationship managers.
When the dot.com bubble burst in 2000, so did $750,000 of his money, which was parked there for four years. ‘I felt violated. I began to realise that I was just being made use of.’
Still, he has no regrets about the en bloc sale. ‘No one will say he regrets winning the Singapore Sweep. You regret how you mismanaged the money.’
He has since put what’s left, about $500,000 - he made some money from foreign currency deposits - into stocks. ‘If I had invested the money sensibly, I would probably have been travelling first class all over.’
Not that he would necessarily do so. ‘I don’t care for stylish cars and I see no reason to pay $1,200 when I can sit for $400 in the same plane and still get to the same destination.’ He still drives a basic Japanese sedan.
Despite the ups and downs, he says the sale gave him ‘options’ in life. ‘I still have the resources to go through the rest of my life comfortably. I can go into a retirement home if I choose to,’ says Michael, who now lives in a condominium apartment.
No splurges, just leeches
WHO: ‘Alice’, a 45-year-old freelance IT specialist who declined to be named
WINDFALL: $1.6 million
LESSONS LEARNT: ‘I’ve learnt how to say ‘no’ to people who want ‘loans’ from me. I’ve also realised that I’m not as materialistic as I thought I was. I’m not spending the way people would expect someone in my situation to spend.’
ALICE is a naturally friendly person. But once the conversation veers towards personal details such as how much she earns or where she lives, she clams up.
And it is with good reason: fear that yet more ‘leech’ friends and relatives will hit her for a loan.
‘Oh yes,’ the singleton says resignedly, ‘it has happened many times. In some cases, I didn’t lend them the money - I gave it away.’
However, she has since learnt to say ‘no’ after she realised ‘people were just taking advantage of me’.
Alice became an overnight millionaire in 1999 when the apartment in town which she had bought for about $400,000 in the early 1990s sold en bloc for $1.6 million.
She spent a large chunk of it on a new property. But not for Alice a mega-splurge down Orchard Road with the rest. Instead, she used the money to make more money, placing it in unit trusts and stocks under the advice of a personal financial planner. And now, she has an income stream off that.
She also took care to give to charity as well, she says.
But despite having riches that most people can only dream of, she insists that money has not changed her or her life in any major way.
The millionairess drives a modest 1,300cc Japanese car and goes on short trips around the region instead of taking the extravagant holidays in Europe that she could easily afford.
The restraint continues with retail therapy, or lack thereof. She says she shops less these days, although she does admit buying more expensive clothes.
Sounding almost nonchalant about her wealth, she says: ‘Before the en bloc sale, I was already investing. So the money I received only meant that there was more capital for me to invest.’
And she even kept on working for six months after her windfall, finally quitting because the hours clashed with her postgraduate course.
Nowadays, she still does work on a freelance basis, but picks only the jobs that are ’satisfying to me’.
‘I certainly do consider myself lucky. Blessed. I don’t have to work for a living. Not many people have the freedom to do that,’ she says.
The downside is, she has less hunger and drive now. Just last week, she turned down a freelance assignment because ‘I wasn’t comfortable with the people I would have to work with’.
‘It has always been part of my plan to live like this. It’s just that it happened faster than expected,’ she says.
Her advice for would-be en bloc gainers? ‘Don’t be greedy. The current offer may not come off, and then you would be left with nothing.’
Mak Mun San
Serial en blocker cleans up
WHO: ‘Jenny’, a 50-year-old marketing consultant who declined to give her real name
WINDFALL: $1.05 million
LESSONS LEARNT: ‘Do your homework and make sure you have the holding power. If you go in wanting to make a quick buck without the ability to invest long-term, then you can get burnt very easily.’
WITH one collective sale sealed and delivered last November, another cheque expected in September, and two other deals in the works, Jenny is what some might call a ’serial en blocker’.
But this is no property owner who has simply struck it lucky. The remarkable success of the 50-year-old mother of two has been due to research and calculated risk-taking.
‘I’m a serious investor. I don’t hit and run,’ she says.
The savvy buyer has studied the en bloc market since the early 1990s, looking and waiting for the right moment to invest.
It came in 2003, when she felt that the property market had hit rock bottom.
Jenny and her four siblings pooled about $860,000 to buy an old apartment in an area she did not want to disclose ‘for fear of being identified’.
Just two months later, they hit the jackpot. The estate was sold en bloc, and they bagged $1.05 million, making a tidy profit of about $200,000.
Each took only $10,000. The rest was ploughed back into an investment company owned by the family.
Jenny says: ‘I was very pleased with myself. I did my homework and knew which properties had already gone through two en bloc exercises. Those are the ones which its owners are keen to let go.’
Her nose for an en bloc bargain proved astute again when a property she and her siblings bought last July for $980,000 was sold collectively three months later. They will pocket $1.43 million from this sale.
Two other properties that she and her siblings have snapped up over the past year are currently going through the en bloc process.
The former civil servant, who now works part-time as a marketing consultant, admits it is easy money.
‘We didn’t expect it to go this well. I’d told my siblings to be prepared to wait up two to five years,’ she says.
When asked if she gets anxious and stressed out playing the waiting game, her instant reply is ‘no’.
‘We buy with the view of investment. We make sure we have the holding power and we’re prepared to be in this for the long haul,’ she says, adding that the rent they earn in the meantime is more than enough to cover the interest on the mortgage.
Some friends who went against her advice and bought properties which, in her words, ‘did not really have en bloc potential’, have ended up bankrupt, she says.
In any case, she says she and her siblings are going to slow down from now on.
‘One shouldn’t follow the herd. If everyone jumps in, then it’s time to get out. The trick is to catch the early wave.’
Source : Sunday Times - 12 Mar 2006
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