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Improving economy and rules to persuade buyers to be prudent among key reasons

The number of repossessed flats put up for sale by banks is dropping as the economy improves.

Another reason: the crackdown on inflating the purchase price of flats to get bigger loans has put a stop to the illegal practice.

The Housing Board told The Straits Times that recently there have been about 60 mortgagee sales of flats every month, but ‘the number is on the decline in tandem with the improving economic condition and employment situation’.

HDB, however, did not reveal the previous rate of mortgagee sales, only saying that banks carried out 895 mortgagee sales of HDB flats between March this year and January 2003, when banks were first allowed to provide loans to HDB flat buyers. The bulk of these mortgagee sales took place in 2005 and last year.

Property firms hired by banks to sell repossessed HDB flats painted a similar picture.

PropNex, for example, was assigned by its partner banks to sell just 12 flats in March, compared with about 20 to 25 a month from October to December last year. ERA Singapore is now being assigned 20 to 30 flats a month this year, down from 40 to 50 last year.

Banks approached by The Straits Times would not reveal their foreclosure rate. A spokesman for UOB, however, said the number of HDB flats repossessed is very small compared with the number of housing loans it offers. OCBC Bank’s head of consumer secured lending, Mr Gregory Chan, said loans are foreclosed only after all reasonable options are exhausted.

Property firms said a key reason for the drop in repossessions was that existing flats purchased through illegal cashback schemes have been mostly repossessed and sold.

ERA’s assistant vice-president Eugene Lim said: ‘(The repossessions) mostly resulted from all these shady cases. There should be no more of them in the market now.’

Under a cashback arrangement, the flat buyer and seller collude with a valuer to over-declare the price of the flat, so that the buyer can get a bigger bank loan than is allowed. Before the Government clamped down on such deals in April 2005, many people bought flats under cashback deals solely for the extra cash that they stood to gain.

But they were then saddled with much bigger loan repayments than they could afford and many eventually had to give up their flats.

Recent regulations to encourage homebuyers to be prudent about their finances have also slowed the repossession rate. In January, for example, the HDB required buyers who needed loans to get a letter from a bank or the HDB stating the maximum amount they could borrow before they committed to a flat.

The HDB stopped giving out market rate home loans in 2003, choosing to focus solely on subsidised loans for eligible Singapore households. Between 2003 and March last year, 70,000 flat buyers had taken bank loans.

The HDB said that 360 households taking the board’s loans returned the flats to the board from 2002 to last year after defaulting on their mortgage loan payments. None of these flats was forcibly repossessed.

Now, with the economy improving, the number of repossessed flats is likely to shrink further.

PropNex chief executive Mohamed Ismail said: ‘If the economy gets better and people can find a job, the bank has no reason to repossess the flats.’

Source : Straits Times - 2 May 2007

It is said to have received an offer for $1,800 to $1,850 psf ppr

A New benchmark for residential land in Singapore could be set, if an offer received for the collective sale of Char Yong Gardens materialises into a deal, industry sources say.

The freehold property, at the corner of Cairnhill and Hullet roads, is said to have received an offer for $1,800 to $1,850 per square foot of potential gross floor area recently from a joint venture (JV) that involves a fund, developer and other entities. The JV includes China and Singapore parties among others, BT understands.

However, the terms of the offer have yet to be ironed out, with some sources suggesting they may be difficult for the owners to accept. ‘There’s no guarantee of a deal, but if one does materialise at the price range being talked about, it will be a new benchmark,’ said a market watcher.

The $1,800-1,850 psf per plot ratio (psf ppr) that the JV is said to have offered for Char Yong Gardens would topple the current record of $1,735 psf ppr set by The Parisian at Angullia Park in December last year.

The $1,800-1,850 psf ppr price includes an estimated $48 million development charge.

Based on this price range, the absolute price payable to Char Yong Gardens’ owners would work out to $422 million to $435 million.

Char Yong Gardens has a freehold land area of about 93,300 sq ft and is zoned for residential use with a 2.8 plot ratio (the ratio of maximum potential gross floor area to land area) and a 20 storey maximum height. Jones Lang LaSalle is marketing the property.

Some market watchers note that $1,800 to $1,850 psf ppr is 17 to 20 per cent higher than $1,542 psf ppr that Sing Holdings paid in March for the nearby Hillcourt Apartments.

Other key collective sale sites transacted in the location over the past year or so includes Silver Tower (next to Char Yong Gardens) which was sold in September last year for $1,107 psf ppr to CapitaLand.

And there is the $880 psf ppr price that SC Global paid in the first half of last year for Hilltops Apartments at Cairnhill Circle and 16 adjoining terrace houses.

In fact, SC Global and CapitaLand are said to have indicated interest in Char Yong Gardens when its tender closed a few weeks ago. But their offers were probably below the reserve price set by owners, reckoned market watchers.

Source : Business Times - 1 May 2007

Q1 gross allocation of ready-built facilities falls 30%

Net allocation of prepared industrial land (PIL) by JTC Corporation increased 90 per cent to 95.7 ha in the first quarter of 2007.

In its Q1 facilities report released yesterday, JTC Corp said the increase was due to net allocation at specialised parks, with gross allocations achieved by Jurong Island (64.3 ha) and wafer fab specialised parks (7.1 ha).

Year on year, however, net allocation of PIL was down 24 per cent.

Gross allocation of PIL for the quarter was led by the chemical sector (55 per cent), followed by services (17 per cent) and logistics (12 per cent).

Precision engineering accounted for the bulk of termination of leases of PIL at 53 per cent or 4.7 ha.

Generic land accounted for 26 per cent of overall gross allocation of PIL and 19 per cent of overall net allocation.

Local establishments’ share of generic land grew 12 per cent, while foreign firms accounted for 63 per cent of total terminations.

Gross allocation of ready-built facilities fell 30 per cent to 52,000 square metres, from 67,300 sq m in Q4 2006.

In this segment, take up of flatted factory space was mainly by the services cluster (15,500 sq m), general manufacturing (5,500 sq m) and precision engineering (5,100 sq m).

Services also continued to account for the bulk of terminated flatted factory space (42 per cent) followed by electronics (18 per cent) and general manufacturing (17 per cent).

Business park and technopreneur space were the two ready-built segments that grew in Q1.

Net allocation of technopreneur space was 1,200 sq m, up from 300 sq m in the previous quarter, while terminations of 300 sq m were the lowest since Q3 2004.

Net allocation of business park space was 4,600 sq m, up from 2,400 sq m in the previous quarter but down from 8,500 sq m in Q1 2006.

Occupancy for business park space was 93 per cent, while occupancy for technopreneur space was 74 per cent.

Overall occupancy of ready-built facilities was 88.1 per cent for the quarter, up from 88 per cent in Q4 2006 and 84.4 per cent from Q1 2006.

Source : Business Times - 1 May 2007

A Group of unhappy home owners is trying to stop the collective sale of their condominium on Leonie Hill going through - three months after a developer agreed to buy it for $500 million.

Their gripe: the condominium next door is getting a lot more, thanks to fast-rising prices in the area.

Property prices have soared so much - especially in the Orchard Road area - that these owners of Horizon Towers feel shortchanged by their sale in January.

They have banded together to send a letter to fellow residents, urging those who have signed the collective sale agreement to back out of it.

But lawyers warn that ringleaders of any push to back out face being sued for inducing breach of contract.

Almost 84 per cent of owners had earlier signed the agreement to sell Horizon Towers to Hotel Properties and two foreign funds in January for $500 million.

That meets the legal requirement of more than 80 per cent of owners for properties more than 10 years old. It means each owner of the condo’s 199 units will get about $2.3 million, with the 11 penthouse dwellers reaping up to $6.28 million.

But this is not enough for some owners, who sent out a letter dated April 25 saying the ‘en bloc price no longer reflects the true value of Horizon Towers’.

The Straits Times obtained a copy of the letter, which added: ‘If enough like-minded owners decide to rescind the (agreement) and the majority falls below 80 per cent, the application to STB (Strata Titles Board) can be repealed.’

The letter was not signed. Four apartment numbers were cited, but The Straits Times was unable to contact their owners to confirm if they had written the letter. It is also not clear if the letter writers themselves had signed the sale agreement.

The letter highlighted the fact that neighbouring Grangeford Apartments - a property five years older - is now going en bloc for much more than Horizon Towers achieved.

Grangeford owners are asking $660 million, or $2,016 per sq ft (psf) of total floor area - more than double the $850 psf of total floor area achieved by Horizon Towers.

Home prices in the Orchard Road area have risen 10 per cent since January, but asking prices for collective sales have soared to new heights as both sellers and developers bet on property prices rising further.

In the letter, the unhappy owners also said they are prepared to hire a lawyer to fight their case.

But law firm Drew &; Napier, which is handling the collective sale of Horizon Towers, said these owners have no legal grounds to back out of the sale. On Friday, the firm issued its own letter to residents in response, saying the collective sale agreement is legally binding and that rescinding it would constitute a breach of contract.

Mr Jimmy Yim, senior counsel at Drew &; Napier, warned of ‘very serious consequences’ for owners backing out of their agreement.

‘In my view, they are treading on very dangerous ground,’ he said. ‘Whether an individual or a collective sale agreement, once it is signed, it has binding legal obligations.’

Mr Yim added that encouraging others to rescind the agreement would be ‘inducing breach of contract’.

This could lead to the ‘instigators’ being sued for damages equal to the developer’s and other home owners’ lost profits, he said.

Source : Straits Times - 1 May 2007

All co-owners, save one ‘lone ranger’, have no ambitions to revive it

After being gridlocked for more than a decade by squabbling relatives, the Mitre Hotel site off Orchard Road, estimated to be worth around $100 million, will finally go under the hammer.

Justice Judith Prakash gave the go-ahead for the site to be sold by public tender, after summoning the feuding parties to the High Court yesterday afternoon.

The family tussle began in 1996 when Mr Chiam Heng

Hsien, 61, fought off a move by his cousin Chiam Heng

Luan, 93, and the latter’s daughter Chiam Ai Thong to obtain a court order to sell the site.

The High Court had then allowed the sale, but refused to decree that it could be sold as a vacant site.

The dissenting Mr Chiam remained in the hotel until early last year, when five parties led by Mr Chiam Heng Luan, who together own 45 per cent of the property, filed another suit against eight other parties, led by Mr Chiam Heng Hsien.

The younger Chiam, who is represented by lawyers Andre Maniam and Koh Swee Yen, is managing partner of the hotel and still runs the premises as an improvised boarding house.

But by the time the court case began at the beginning of last week, he was the only one holding out against all the others.

The rest were in agreement with the elder Chiam, who was represented by Senior Counsel Hapreet Singh Nehal.

They wanted Mr Chiam Heng Hsien to vacate the land so they could sell it as a ‘vacant possession’. But Mr Chiam, who owns 10 per cent of the property, resisted, arguing that a 1948 agreement allowed the hotel operators to squat on the land indefinitely until a fair compensation is paid.

Justice Prakash observed last Thursday that all the co-owners, except Mr Chiam Heng Hsien, had given up their lease on the building, leaving him as the sole tenant.

Describing him as a ‘lone ranger’, she noted none of the property’s co-owners shared his ambition to revive Mitre Hotel.

Yesterday, Justice Prakash not only ordered Mr Chiam Heng Hsien to clear out, but also laid down the rules for the sale.

She ruled that a valuation should be done on the 40,000 sq ft site - about half the size of a football field - to be arranged by law firm Drew &; Napier. The valuation, she said, must be kept confidential.

If the tender price exceeds the valuation, the owners will have the option to accept the bid. But if the offers do not meet the valuation price, there should be no sale.

She also ordered that Mr Chiam Heng Hsien vacate the site no later than four weeks before completion of the sale.

It is understood the sale could be conducted within three months, if there is no appeal against the judgment.

The prime land, located in Killiney Road, is expected to draw keen interest. Around 1997, there was an offer to buy the site for more than $72 million.

That offer could not go through, according to court records.

Justice Prakash also ordered the net proceeds of the sale to be kept in a stakeholders’ account until she decides if the partnership that owns the hotel should be paid compensation.

It is understood the hotel’s partners have spent more than $300,000 since the early 1970s renovating and maintaining the building before its days as a hotel ended in 2004.

Source : Straits Times - 1 May 2007