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NEIGHBOURHOOD shops are getting another makeover to help them compete better against suburban malls.

Minister of State for National Development Grace Fu yesterday announced the Revitalisation of Shops Scheme (ROS).

It will offer small retailers a variety of assistance measures, as long as they are prepared to organise themselves to drive their own projects.

The ROS includes:

Subsidised upgrading of common areas. For rental shops, the Housing Board and town councils will pay for all upgrading costs, capped at $20,000 a shop. It will also pay up to 50 per cent, or $10,000, for the upgrading of sold shops.

Co-payment of promotional activities organised by local merchants. HDB will pay 50 per cent of the cost of such activities, that is, up to $1,000 a year for rental shops and up to $500 a year for sold shops.

A rent-free period of up to one month for HDB retailers to renovate their shops as part of the overall promotional activities.

Retailers can apply for all or a combination of measures. To qualify, they must be represented by a merchants association. This is to ensure that there is collective effort and a common vision for their area.

Besides ROS, the Standards, Productivity and Innovation Board (Spring Singapore) and the Workforce Development Agency (WDA) also have schemes to help neighbourhood shops.

Spring offers the Heartland Retail Programme, which, among other measures, helps retailers to engage marketing consultants. The WDA provides training to improve retailers’ service standards.

Ms Fu was responding to queries from Senior Parliamentary Secretary (Education) Masagos Zulkifli and Ms Lee Bee Wah (Ang Mo Kio GRC). They called for HDB to help neighbourhood shops adapt to changing lifestyles and deal with competition from malls.

HDB and Spring will brief all local merchant associations about the ROS and Heartland Retail Programme over the next few weeks. They will have up to Sept 30 to apply for the schemes.

Mr Chua Ser Keng, president of the Federation of Merchants’ Associations, welcomed the new scheme.

‘This scheme will help to update our shops. We might then attract new customers, while still catering to the traditional clientele - the aunties and uncles who prefer the neighbourhood set-up to big shopping malls,’ he said.

Yesterday, Ms Fu also said the Ministry of National Development would review an existing scheme - the Restructuring Programme for Shops (RPS) - which pays retailers to give up their shops where there is an over-supply of shops or where business is poor.

Since the RPS was introduced in 2005, the HDB has offered it to 455 shops in 44 blocks. Of these, 48 per cent - that is, 20 blocks comprising 219 shops - will be cleared.

Previously, only blocks in which more than half of tenants wished to quit were eligible for the scheme. But from now on, blocks where only 30 per cent of tenants opt to quit may be considered for RPS, Ms Fu said.

As before, tenants who opt to quit will receive $60,000, while those who choose to regroup elsewhere will get a $10,000 removal allowance.

‘With this revision, we believe we should have reached an optimal level of shops, considering the needs of both tenants and residents,’ she said.

Source : Sunday Times - 4 Mar 2007

Govt will take action to ensure that projects are not disrupted

INDONESIA has informed Singapore that there is no export ban on granite, National Development Minister Mah Bow Tan disclosed yesterday.

However, the Government is watching the situation closely and will take all necessary measures to ensure there is no disruption to construction activities here, he assured Parliament.

Both Foreign Minister George Yeo and Trade and Industry Minister Lim Hng Kiang contacted their Indonesian counterparts to ask why barges transporting granite materials have been detained on their way here.

Mr Mah revealed that Indonesian Foreign Minister Hassan Wirajuda and Trade Minister Mari Pangestu had the same response: There is no ban on granite shipments. Both will also check on the reasons for the detention of the barges, which has caused a disruption in supply here.

In the past week, the Indonesian authorities have stepped up checks on barges carrying granite, reportedly detaining 13 for allegedly trying to smuggle sand into Singapore.

Granite dust and aggregates - or stones - are used by the construction industry here to produce concrete.

Indonesia announced the ban on the export of land sand in January.

Mr Mah said yesterday there has been no land sand from Indonesia in Singapore since the ban. Importers said the detained barges contained granite material and not sand.

‘They say they have the necessary certificates to prove this. Yet their barges have been detained,’ he said.

‘On our end, we can verify that there has been no land sand from Indonesia since the ban took effect in early February. All the supply we are getting is from other sources.

‘We are quite puzzled and we do not know how long these actions will continue.’

The price of granite aggregate has risen from $25 per tonne to $70 per tonne. Concrete prices also shot up from $70 per cu m to about $200 per cu m.

To ensure there is no disruption to work on projects, Mr Mah said the Government is releasing granite aggregates from its stockpile and buying from other sources. It is encouraging the private sector to do the same.

However, he said that if the situation persists, the price of granite will go up because the ‘alternative sources’ are farther away compared to Indonesia.

Responding to Dr Lily Neo (Jalan Besar GRC), who asked about the impact on contractors, he said the increase in construction costs should be between 1 and 3 per cent, which he believed was ‘quite manageable’.

The Government will also have a cost-sharing arrangement with contractors and suppliers of public-sector projects - the same way it did for sand.

Mr Mah hoped that private developers would do likewise with their contractors.

More importantly, he urged contractors to rely less on concrete - and thus the need for granite and sand - and adopt more sustainable methods.

Minister of State (National Development) Grace Fu told MPs the sand and granite problems were ‘timely reminders’ of the importance of diversifying construction materials. She called for the greater use of glass and steel.

Contractor Seow Seng Wei was glad to know that Indonesia is not banning granite export and noted: ‘The prices of granite have been volatile, so it is definitely an assurance to hear this.’

Source : Sunday Times - 4 Mar 2007

Ordinary ‘uncle’ cons tenants by playing SHADOW BOSS

- Collects rent from sub-tenants but does not pay primary landlord
- Involved in at least four such scams
- Owes authorities years of rental arrears
 
He’s a ‘land baron’ of the worst kind, leasing out properties that he has no right to - and then vanishing with the money.

His tenants are then left to face the music. In most cases, they are evicted and end up losing a bundle.

If there’s a high-profile rental scam, chances are Robert Ho (not his real name) is somehow involved.

And it appears that he keeps doing it.

In July last year, a High Court judgement ordered Huku Corp to pay the Singapore Land Authority (SLA) $2.5 million in rental arrears, contract breach penalties and interests for 2 Outram Park, which Ho had sublet from 2002 to 2005.

Yet, recently he was back in the news with 38 Commonwealth Avenue, a converted hawker centre. His tenants there found out he had been renting the place illegally to them.

And when The New Paper team posed as businessmen interested in renting space at the centre yesterday, Ho himself showed us around.

Apart from the $2.5 million suit, there have been at least four rental scams where he owed SLA months, sometimes years, of rental arrears, The New Paper has learnt.

How much does this man owe SLA in all?

And how much has SLA recovered from him?

SLA, which puts buildings up for lease, would not say.

In its statement to The New Paper, it would only say: ‘As for the other past cases… the properties have been repossessed by the State, and SLA is in the process of recovering the outstanding arrears.

‘As custodian of State properties, SLA does not let up in its efforts and measures to recover rental and State assets.’

A Biznet check showed Ho was made a bankrupt in 1988 by a former primary schoolmate over an unpaid friendly loan.

When contacted, the former schoolmate said Ho was discharged from bankruptcy when he eventually paid up - nearly 20 years after the loan was given.

POLICE REPORTS

Ho has had many police reports made against him, by both his former partners and tenants.

So why has he not been blacklisted?

A former employee said: ‘No one can do anything to him. He knows what loopholes in the system to exploit.

‘You may not find his name linked to the companies that rent from the authorities, but he’ll pop up to sublet the buildings later.’

Ho’s name appears in the business profiles of two of the four companies that leased buildings from SLA.

And he’s always the one collecting rent.

He’s there working out deals for the directors of the companies which leased buildings from SLA.

When The New Paper posed as businessmen interested in renting shop space at 38 Commonwealth Avenue, it was Ho who showed us around.

Yet he is not one of the directors in the company which leased the building from SLA. (See other report.)

The New Paper first exposed Ho in 2005.

But little has changed.

SIMPLE SCHEME

Each time, Ho uses a simple scheme.

First, rent an entire building from its primary landlord under Company A.

Then, sublet the building - either all of it or divided into smaller units - to sub-tenants under Company B.

It seems perfectly above board.

Except for a few important details.

Like how neither Company A nor Company B has permission from the primary landlord to sublet the building.

And how Company A does not pay rental despite Company B collecting rent from the subtenants.

Eventually, the primary landlord gets a court warrant to repossess the building.

Over the years, hundreds of subtenants have lost months of paid-up rent when they are suddenly confronted with eviction.

By the time the rental scam comes to light, angry tenants realise - too late - that Ho has disappeared.

He and his business associates then continue bidding successfully for the buildings put up for tender by SLA.

HIS RENTAL SCAMS:

1998 to 2000: Abex Centre, a company in which Ho was and is a shareholder, owed the Land Office (now SLA) more than $600,000 in rental arrears for 2 Adis Road.

2002 to 2005: Huku Corp rented 2 Outram Road from SLA. The building was sublet by Systemveyor Engineering, a company in which Ho was a director, as well as Huku Corp. In July last year, Huku Corp was ordered by the High Court to pay SLA about $2.5 million.

2005 to 2006: A company in which Ho was a director rented 320 Havelock Road from SLA and marketed it under a different name. It is not known how much rental arrears were owed to SLA.

2006 to 2007: Pagar Park rented 38 Commonwealth Ave from SLA. Ho sublets the building under the company Systemveyor Engineering.

Evasive when questioned

To rent an office space at 38 Commonwealth Avenue, no deposit is needed.

‘You can pay one, two or three months rental first until you are sure you like the place,’ Ho said with a smile.

He was showing this reporter and a photographer around the second floor of the converted hawker centre.

‘Or just pay two weeks rent to try it out,’ he added persuasively.

Dressed casually, the small-sized man rattled off various rental prices for different units: $400 for 100 sq ft; $650, $800 and $850 for 200 sq ft depending on their locations.

And he was never short of explanations for the rundown appearance of the building.

Crude concrete blocks lined up along one balcony? They stop the rain from flowing in as the makeshift awning cannot be more than 1m due to conservation rules.

But he became more evasive when we started asking about the landlord of the building.

He said he was just the ‘marketing person’, and that he did not know the name of the company running the place.

But tenants had earlier named Pagar Park and Systemveyor Engineering as the two companies they had dealt with.

We continued: ‘Surely, we need to know who we are signing a contract with?’

‘Oh, there’s no contract to sign,’ he replied, ’so there’s no problem leaving any time.’

And that was how things were in 2005 at 2 Outram Road when tenants rented without contracts from the same man. Except it was he and his staff who disappeared when SLA issued a warrant to repossess the building then.

Now, history is repeating itself.

An SLA spokesman said it has started legal proceedings against Pagar Park to get a Warrant to Dispossess Unlawful Occupant and the matter is now before the courts.

And ‘immediate action to recover the property’ will be taken once the warrant is issued.

SLA said it had informed tenants at 38 Commonwealth Avenue that Pagar Park had not sought approval for subletting the place and its tenancy had been terminated due to rental arrears.

Tenants who have claims against Pagar Park should seek ‘independent legal advice’.

The SLA spokesman said Ho was never a named director nor shareholder of Pagar Park.

And Ho, his associates and Pagar Park’s directors, have been ‘blacklisted and are debarred from participation in any public sector projects, including taking up State properties’.

SLA advises the public that before entering any sub-tenancy agreements, they should first make enquiries that the ultimate landlord’s permission to sublet had been sought and obtained.

Source : The New Paper - 4 Mar 2007

Power to award higher payout to valid dissenters, stricter rule on sale committees among other suggestions

The government is proposing an additional requirement on the definition of majority consent for en bloc property sales.

Such sales must be agreed to by those who own at least 80 or 90 per cent of units in a development, on top of the current requirement of consent from owners controlling a minimum 80 or 90 per cent of share values, depending on the age of the development.

The proposed change - revealed by Deputy Prime Minister and Law Minister S Jayakumar in Parliament yesterday - is in response to feedback, and is aimed at addressing unhappiness among residential unit owners in mixed developments.

These owners, despite owning a substantial floor area and number of units, have significantly less share value and little in the way of voting rights on en bloc sales.

Mixed developments are unique in the way share values are allocated. For the same floor area, the share values of residential, office and retail units in a development are generally allocated in the ratios of 1:4:5. So a shop unit will have five times the share value of a residential unit with the same floor area.

Residential units may make up 30 or 40 per cent of the number of units or total floor area in a mixed development, but their share value can be as low as 10 to 15 per cent. As a result, when it comes to deciding on an en bloc sale, voting rights tend to be skewed in favour of the owners of shop and office units.

The additional requirement that consent for an en bloc sale be obtained from owners with 80 or 90 per cent of units - depending on whether a development is more or less than 10 years old - will also apply to pure residential developments. But this is not expected to be an issue for them because share values in pure residential developments are more closely tied to the number of units.

Mixed development en bloc sales so far include Kim Tian Plaza, Eng Cheong Tower and Kim Seng Plaza. But more are expected.

‘I don’t see much impact on collective sales from the proposed change, which is fairer to those deemed to be unreasonably denied rights in voting on en bloc sales,’ said Knight Frank managing director Tan Tiong Cheng.

The Ministry of Law also proposes to empower the Strata Titles Board (STB) to issue guidelines on allowable expenditure when evaluating claims of financial loss. Market watchers welcome this, saying it will provide greater clarity.

The Land Titles (Strata) Act says an owner is deemed to have incurred a financial loss from an en bloc sale if his sale proceeds, after deductions allowed by STB, are less than the price he paid for his property. But the Act does not specify what deductions are allowed.

So far, based on precedents set by STB decisions, stamp duty and legal fees are allowed as deductions but interest and renovation costs are not.

This is an important issue because financial loss provides grounds for STB to throw out an en bloc sale. STB hears all collective sale cases in which unanimous consent from owners has not been obtained.

Another proposed change, aimed at boosting transparency in the en bloc sale process, is that an en bloc sale committee can be formed only at an extraordinary general meeting convened by a management corporation.

At present, if a few owners are interested in selling a development, they can band together to form a pro tem en bloc sale committee. The change is aimed at achieving accountability to all owners - not just those who are keen on an en bloc sale.

The ministry also proposes that STB be given the power to increase sale proceeds to dissenting owners who have filed valid objections and who may not have been treated fairly or equitably in the distribution of sale proceeds, even if there is no bad faith on the part of the majority owners.

However, this will only be in exceptional cases. Prof Jayakumar gave an example. ‘Say, a minority owner does $200,000 worth of renovation when there was no en bloc proposal in the air. Then six months later, there’s an en bloc proposal which becomes successful. In fact, it means that he has ‘enjoyed’ his renovated unit for only about two years before having to move out. So really, he does not suffer a financial loss in the terms of the Act. But the Strata Titles Board may, if they have this discretion, increase his sale proceeds by an amount which it considers fair, if they consider it fair and equitable to do so in the circumstances.’

The additional award that STB can make will be capped at 0.25 per cent of the sale proceeds, to be deducted from every unit and subject to a minimum of $2,000 per unit.

Hence, if every owner in a 100-unit development is to receive $1 million, amounting to $100 million in total, STB can make additional awards totalling up to $250,000, which works out to $2,500 per owner in such a case.

However, the majority owners will continue to decide on the method of distribution of sale proceeds most suitable for their development.

The public will be consulted on the proposed changes, and feedback will be taken into account in finalising the proposed amendments to the en bloc legislation. The changes are expected to take effect by year-end.

The proposed changes

Majority consent to be defined based on ownership of units, in addition to share values.

Strata Titles Board to be given power to increase sale proceeds for minority owners with valid objections in exceptional cases, subject to a cap of 0.25% of sale proceeds to be deducted from every unit, or $2,000 per unit, whichever is higher.

STB will issue guidelines on the allowable expenditures to be taken into account in evaluating claims of financial loss.

En bloc sale committees to be formed only at extraordinary general meetings convened by management corporations.

Source : Business Times - 3 Mar 2007

Market watchers yesterday gave mixed views on how much the proposed changes to the rules for en bloc sales are likely to affect collective sales.

Some, like CB Richard Ellis executive director Jeremy Lake, reckon that by having two criteria for defining the 80 per cent majority consent required from owners - based on number of units, as well as share value - it may make the process of en bloc sales more difficult.

Agreeing, SK Phang of Phang & Co said: ‘Imposing an additional threshold will make the requirement for en bloc sales more stringent and difficult to achieve. There may be fewer en bloc sales.’

However, Knight Frank managing director Tan Tiong Cheng and Credo Real Estate managing director Karamjit Singh do not see much impact on en bloc sales as a result of having the additional definition. ‘It’s one more additional step to be adhered to, but will not have any significant impact on the overall rate of collective sales,’ Mr Singh suggests. ‘The change seems to be targeted at mixed development en bloc sales, which are already more difficult to do because of the issue of apportionment of sale proceeds among different classes of owners - apartments and commercial units.’

But the property sector generally welcomed the thrust of the change in defining majority consent. As Dr Phang puts it: ‘It reduces the inequality, the imbalance in voting power, in the case of a pure residential development, between the owners of large apartments with higher share value and of smaller apartments with lower share value, and in the case of mixed developments, between apartment owners who have lower share values, and commercial owners who have more more share values.’

Another change welcomed by industry players is that the Strata Titles Board (STB) will issue guidelines on allowable expenditure to be taken into account in evaluating claims for financial loss. ‘That’s what the industry has wanted all along. The clarity will reduce unnecessary aggravation,’ said Mr Tan of Knight Frank.

He welcomed the move to require any en bloc sales committee to be formed only at an extraordinary general meeting convened by the management corporation as this procedure ‘engages all owners in the whole en bloc process from day one’.

‘In the rush to get en bloc sales out in the past, some owners and agents may have organised themselves in a way that may not be acceptable to some parties. This will be a refinement of the rules,’ he added.

One area of concern among some en bloc players is the proposal to give the STB power to increase sale proceeds for minority owners with valid objections, as this might bring unforeseen results. ‘It will have the effect of increasing the number of people who object, hoping to get their hands on the 0.25 per cent of sale proceeds MinLaw is proposing to set aside for this purpose,’ Dr Phang predicts.

Agreeing, Mr Singh says: ‘I hope MinLaw will detail what they consider to be valid objections, to minimise frivolous attempts by some minority owners who try their luck getting their hands on the extra money arising from the proposed change, and delaying the process for no good reason.’

Source : Business Times - 3 Mar 2007