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The government is raising property development charges with effect from Saturday.

This follows the regular six-monthly review on development charge rates.

For non-landed residential use, the charge was raised by an average of 58 percent with prime areas like Cantonment Road seeing the biggest jump of 112 percent.

For commercial use, the hike is an average of 42 percent.

Market watchers say an increase was expected, but the steep hike is likely to slow down collective sales.

Margate Mansion off Meyer Road in District 15 was sold en bloc on Thursday to Soilbuild Group for S$58 million.

The developer had projected a 20 percent increase in development charge.

But based on the announced rates, the jump is estimated to be about 55 percent - or an additional $2 million.

That means about S$10 million instead of the projected S$7.8 million.

This will work out to about 2 percent of the total development cost which property consultants say is still acceptable.

Nicholas Mak, Consultancy and Research Director, Knight Frank, says: “I think the industry as a whole is expecting an increase in the DC rate but the steep increase that we just saw this evening is probably higher than what most people would have expected. In July, the government adjusted the computation rate and DC rate increased by about 40 per cent across the board.”

The average increase for non-landed residential use this time round is 58 percent.

Cantonment Road will see the sharpest hike at 112 percent followed by the Newton and River Valley at 108 percent and Anson Road at 104 percent.

Analysts attribute the jump to recent en bloc prices of properties like Oakswood Heights at Cantonment and Lincoln Lodge at Newton.

While market watchers expect the new rates to slow en bloc sales, they also note that developers might start looking at non-prime areas.

Mr Mak says: “I think that developers and sellers will have to go back and redo their sums, they’d have to factor in this new reality. Some developers may consider that some of the asking prices coupled with this increase in DC rate may make land prices a bit too expensive. Owners may have to adjust their asking price to see whether it still makes sense for them to proceed with the en bloc sales.”

Meanwhile, commercial DC rates have gone up by an average of 42 percent.

And market-watchers say this could affect plans to redevelop certain commercial buildings.

Areas seeing the highest increase (of over 100 percent) include Telok Ayer, Maxwell, Shenton, Anson and South Bridge Road. - CNA/ch

Source : Channel NewsAsia - 31 Aug 2007

More details on the first HDB estates to be rejuvenated across Singapore have been released.

The three chosen ones are Punggol, because it is new; Yishun, because it is middle-aged; and Dawson estate in Queenstown, because it is old.

Punggol has already been picked for transformation, under the Punggol 21 plan.

But the renewal effort is being stepped up.

Among the facilities planned are a seafront promenade which stretches around the town, reservoirs for water activities, a waterway through the town centre, and proposals for a town plaza and sports complex.

HDB officials cannot say when construction will start on the individual projects.

Instead they say they are focusing on gathering feedback first.

But the plan is to put at least one piece of land in Punggol on the market for construction over the next couple of years, and possibly more in other areas.

As for Yishun, proposals include a new polytechnic or university and a shopping complex that is integrated with housing and a bus exchange.

These are on top of the facilities already under construction, such as the Khoo Teck Puat Hospital and the extended Northpoint shopping mall that will feature a new Community Library.

Because Yishun is considered a middle-aged town, it qualifies for two new upgrading programmes - the Home Improvement Programme (HIP) and the Neighbourhood Renewal programme (NRP).

The HIP is for improvements inside the home while the NRP is for works done on the blocks and around the neighbourhood.

Flats will be eligible for the NRP if they were built in 1989 or before, and have not undergone the Main Upgrading Programme (MUP), Interim Upgrading Programme (IUP) or the IUP Plus.

Dawson Estate in Queenstown is an old estate.

So the idea is to provide new public housing and integrate facilities into a seamless community.

But the estate’s memories will be retained.

Some of the new ideas for Dawson include housing-in-the-park and multi-generation living.

Three local architect companies have drawn up concepts for three parcels of land in the estate.

The HDB estimates about 3,500 flats can be built on the land.

National Development Minister Mah Bow Tan said: “This (rejuvenation of HDB heartlands) will happen in the next few years. At first, we will start slowly because we need to gain experience in the new type of housing; our architects, our engineers, even the contractors and developers and builders will also have to gather new experience. But as we become more experienced, this will gather pace. So, what we have done is we have drawn up plans for Punggol and Dawson estate in Queenstown, for a start. We are going to replicate this in other parts of Singapore. Of course, it is going to take us time - 20 to 30 years.”

To get an idea of just how different the new generation of public housing will be, you can catch an exhibition at the HDB Hub.

It is on till 8 September before it makes its way to the heartlands where it will be on until early October.

Visitors to the exhibition can give their feedback on the proposed plans for the new generation of public housing via the telephone, Internet and HDB service counters. - CNA/ir

Source : Channel NewsAsia - 31 Aug 2007

Trade and Industry Minister Lim Hng Kiang has urged developers and contractors not to price in expectations of increases in costs into their tenders for projects.

Speaking to reporters on the sideline of a groundbreaking ceremony on Friday, he said that the government would continue to manage the increase in cost of steel and other materials and try to mitigate the impact of higher costs.

He said: “The construction industry contributes about 4 percent of our GDP, and the construction cost itself is a very small part of the GDP, so the impact would not be that significant. But nevertheless, we don’t want to have a situation of it being built into expectations and contractors padding their tenders with very high expectations of continued cost escalation.

“This is something that we want to avoid, so Ministry of National Development is in constant dialogue with the Singapore Contractors Association to explain to them the situation, to make sure there isn’t this situation, that they don’t create a self-fulfilling prophecy. And they don’t have expectations built into their tender process. We must have a realistic view of the situation and know the measures that the different parties are taking to mitigate it.”

Mr Lim also touched on the need to make investing in hotel developments attractive.

He cited the increase in hotel rates, adding that these will continue to go up at a measured pace, and developers can factor this into their calculations.

Mr Lim said: “They can calculate the returns. We hope they will tender sensibly for the land price and then be in a position to build the supply that we need. If you look at the basic numbers, if we are practically doubling the number of tourist arrivals, simple common sense would say that you also practically double the number of rooms.” - CNA/ch

Source : Channel NewsAsia - 31 Aug 2007

HDB heartlands are set for a major facelift over the next few years.

In fact, National Development Minister Mah Bow Tan has described it as a “quantum leap in public housing in Singapore”.

Mr Mah was speaking at the opening of the HDB’s “Remaking Our Heartland” exhibition on Friday evening.

He also unveiled more details on the new generation of public housing and plans to help the elderly unlock the value of their flats.

“We will provide a variety of housing choices, landscaped community spaces, bring more greenery to residents’ doorstep and make better use of water bodies to soften the impact of high-rise, high-density living. Some of these features are new; others are not so new. We will bring these various elements together to transform HDB living into ‘Housing in a Park’,” said Mr Mah.

On display at the week-long exhibition at the HDB Hub are plans in store to rejuvenate the HDB estates - starting with Punggol for the new towns, Yishun for the middle-age towns and Dawson for the old estates.

“It (HDB living) also helps our citizens to share the country’s progress through the upgrading programmes. And now it’s also going to help to supplement our retirement income when we grow old,” said Mr Mah.

And this can be done through a new lease buyback scheme which was announced by Prime Minister Lee Hsien Loong during the National Day Rally.

Under this scheme, HDB will buy back the tail end of the flat lease from elderly owners and leave them with a shorter lease of 30 years on the same flat.

The value unlocked from the lease buyback scheme will be based on market rate.

Mr Mah said that owners will receive a lump sum payment when they sign up for it. That will be the first part of the payout.

They will also be able to continue living in the flat while drawing a monthly payout for a fixed number of years.

Mr Mah said: “But should they live beyond the payout period, we want to make sure that they continue to have some money to meet their living expenses. Therefore the third part (of the payout) will go towards a longevity insurance that will continue to pay the owners a monthly allowance for as long as they live. It is likely that we will ride on the CPF scheme when it is ready.”

HDB projects that some 25,000 households will qualify for the lease buyback scheme.

It is targeted at owners aged 62 and above, particularly those living in a 2- or 3-room flat who have only had one bite of the housing cherry.

Mr Mah added that the government will provide a subsidy to encourage eligible residents to join the scheme.

All residents are encouraged to be more involved in the shaping of their neighbourhood.

Mr Mah said there will be more formalised consultation channels like mini Town Hall gatherings, where residents can discuss the facilities they wish to be built in the estate. - CNA/ir

Source : Channel NewsAsia - 31 Aug 2007

The long-running saga that has gripped the Singapore property market has reached a turning point; the majority sellers in the Horizon Towers debacle now have just over a week to respond to lawsuits filed against them.

Sued for allegedly messing up the en bloc sale of the development, the majority sellers need to decide if they should contest the action or give in to the demands.

BT spoke to several lawyers to determine the implications of each decision.

Background

The tale began in February when 84 per cent of Horizon Towers owners - the majority sellers - agreed to sell the Leonie Hill development en bloc to Hotel Property Ltd (HPL), Morgan Stanley Real Estate-managed funds and Qatar Investment Authority for $500 million.

The sale fell through when the Strata Titles Board (STB) in early August refused to grant an order for the collective sale. The board said the sale application was defective because certain documents were missing.

STB’s rejection came just days before the Aug 11 deadline for the completion of the collective sale. To salvage the deal, HPL and its partners asked the majority sellers to extend the deadline and either to appeal against the STB’s decision or file a fresh application.

When the majority sellers did not respond, HPL and its partners decided to make good on their threat to sue.

The lawsuit

Through their lawyers, Allen & Gledhill, HPL and its partners filed an originating summons in the High Court last week - naming all 255 owners and the sales committee members who signed off on the collective sale as defendants.

It is believed that HPL feels the majority sellers may not have kept faith with them - especially when some sellers were not keen on having the en bloc sale succeed, when subsequent collective sales of neighbouring developments fetched much higher prices.

HPL and its partners are now demanding that the majority sellers ‘do everything necessary’ to obtain the collective sales order - including extending the sale completion deadline by four months to Dec 11, appealing against STB’s decision and/or filing a fresh application for a new sales order, if needed.

Should the sellers fail to take one of these actions, HPL and its partners will sue for damages of between $800 million and $1 billion. This means each of the majority sellers could be liable for about $4 million.

The majority sellers have until Sept 11 to decide on what to do.

The minority owners are not being sued because they were not part of the collective agreement to sell Horizon Towers, but the majority’s decision would impact whether they would have to move out of their homes.

What should Horizon owners do?

The sales committee of Horizon Towers told BT they have asked the High Court to appeal against STB’s decision, but have not yet decided if they should give in to the other demands.

Some sellers have indicated their intention to contest the lawsuit, with one apartment owner saying the sellers intend to raise up to $5 million to engage lawyers to prepare their defence.

The majority is now collectively represented by Tan Rajah & Cheah, but individuals have begun seeking their own legal advice.

BT spoke to lawyers not involved in the Horizon Towers saga. While refraining from making a direct judgment on the case, the lawyers acknowledged that the majority sellers are obliged to ‘do everything in their power’ to file a proper sale application to the STB, given that they agreed to do so in the sale-and-purchase agreement.

Patrick Ee, director of law firm Legal21 LLC, told BT: ‘It’s an accepted position in law that parties to an agreement have to use their best endeavours to achieve the condition precedent in that agreement. In a previous en bloc deal I was involved in, we advised the sales committee to extend the sale completion deadline because that was what was needed to ensure that the sellers were ‘doing everything in their power’ to make a proper collective sale application to the STB.’

Mr Ee also pointed out that in the case of Horizon Towers, the STB had rejected the collective sale order application because of improper documentation. ‘Speaking generally, technicalities which can be rectified should be dealt with,’ he said.

Some majority sellers have also indicated their intention to name the lawyers and sales agents who advised them on the collective sale application as third parties to the claims made by HPL and its partners.

A corporate lawyer, who asked to remain unnamed, commented on such a course of action: ‘Naming their advisers as third parties doesn’t absolve the sellers of their contractual obligations to the buyers; it merely serves to indemnify them against some of the damages which HPL is looking to claim against them.’

Alvin Chang of M&A Law Corporation explains the position further: ‘Bringing in the advisers as third parties doesn’t mean the sellers can shift the blame completely on the advisers. It just means that, should HPL prove its case against the sellers and succeed in their claim for damages, the sellers can try to get their advisers to indemnify them for those damages caused as a result of the advisers’ negligence or inadequate advice.

‘But whether the sellers have a case would depend a lot on the scope of work their advisers were supposed to provide during the en bloc sale application.’

Nicholas Narayanan of law firm Nicholas & Co believes the focus should be on resolving the issue, rather than assigning blame. ‘I feel it’s premature at this juncture to point fingers at various parties as to who’s to blame for the STB’s decision, when a resolution for the whole matter is clearly in sight. The majority sellers can easily rectify the situation: they can extend the deadline and refile an application to save the sale,’ Mr Narayanan said.  

Source : Business Times - 31 Aug 2007