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New rules will address minority concerns over sale price, transparency

The property fever that has gripped Singapore for the past year will likely cool in the wake of proposed changes to rules on collective sales.

Farrer Court

The new rules - likely to apply in early October - will make collective sales a lengthier, more complex procedure, say industry experts.

‘The market will eventually adapt, but the process will definitely be more long-winded and cumbersome, which should diminish the number of projects which come to market successfully,’ said Mr Jeremy Lake of consultancy CB Richard Ellis.

Lawyer S.K. Phang said Singapore’s rules on collective sales are already one of the most comprehensive in the world, but ‘the latest amendments - so far the most far-reaching in their effects - tighten them further’.

Sales have already been tapering off.

Other pressures have come from a recent hike in development charges that developers pay and a jittery stock market that has unnerved investors.

The new rules come amid seemingly growing resentment among minority owners - those who did not vote for a sale - with the sale process.

Many of their issues, apart from the sale price, concern transparency, with some owners complaining that they are being kept in the dark.

The changes, including a five-day cooling-off period, will help address these concerns, but the changes are still pro-sale, said a lawyer.

Some industry players are not happy with the short transition period for the proposed changes.

Once the amended Land Titles (Strata) Act takes effect, it will apply to all projects except those where the 80 per cent or 90 per cent required majority consent has already been obtained.

Owners are seen rushing to get the 80 per cent approval before the new rules come into effect or risk having to restart the whole sale process under the new law.

The last few signatures, however, are often the hardest to nail, observers say, so those who have not yet signed have even more reasons to resist.

‘The short transitional period may undo some ongoing collective sales, which are in the process of obtaining the required percentages of consensus,’ said Dr Phang.

Estates that have just formed sales committees or started collecting signatures will have to start again at a higher cost. A benefit is that the owners of these estates will be able to monitor the sale process better.

‘The new rules will give owners a chance to be involved,’ said a collective sale seller. ‘If not, the sales committees kind of run the show on their own.’

Mr Nicholas Mak of consultancy Knight Frank said: ‘The requirement to have a vote to set up a sales committee means very committed people are required to sit on the committee, as they will face greater responsibility and accountability.’

Some speculators looking to set up a sales committee or just buying into older properties hoping for a quick gain through the collective sale process could be deterred.

There will be a higher risk that the sale will not succeed and, even if it does, the specuators’ cash will be tied to the property for a longer period.

The proposals could also deter those who are not serious about a collective sale but are just testing the market to see their property’s worth.

‘If the new regulations can weed out such people, that would be a positive effect,’ said Mr Mak.

If fewer estates come to the market, their success rate could rise, said a consultant.

Source : Straits Times - 29 Aug 2007

The Housing and Development Board (HDB) has put up a commercial site along Lorong 6 Toa Payoh for sale by tender.

The 1,400 square metre site is being offered for sale under the Confirmed List of the Government Land Sales Programme.

It has a maximum gross floor area of about 4,200 square metres.

The 99-year leasehold site is located near the HDB Hub.

Property consultant CB Richard Ellis expects the successful bidder to devote 100 percent of the maximum gross floor area for retail use.

It expects to see bids of between S$600 and S$700 per square foot per plot ratio. - CNA/ch

Source : Channel NewAsia - 29 Aug 2007

PAY a hundred per cent more rent or move out.

That was a reality check for an expatriate, who wanted to be known as Mr Tony, in the soaring property market.

He decided to take up the ‘halfway house’ option and move in temporarily with a friend.

But he had to contend with all his belongings and furniture from his packed two-bedroom apartment.

To solve the problem, the Head of Strategic Partner Development at a global telecommunications firm decided to rent self-storage space for $600 a month.

Other than some clothing and a few personal items, everything that Mr Tony, 44, owns is now stored away.

He is not alone.

Companies which provide self-storage facilities are reporting a rise in rentals by foreigners as rising rental prices force more of them to downsize.

One of the companies, Lock+Store, has double the number of expatriate clients compared to nine months ago.

About 10 to 20 per cent of its 1,200 units at Tanjong Pagar Distripark are now rented by expatriates, said its general manager, Mr Lee Seng Chee.

Overall, business has grown at least 60 per cent in the last year, said Mr Lee.

He added: ‘A large part of the surge is due to the number of expatriates who are downsizing due to the booming rental market, and companies not increasing housing allowances by as much.’

But the rise is also due to the number of expatriates relocating temporarily due to work, he added, as well as the increasing popularity of self-storage facilities.

Market leader Storhub has seen the jump in expatriate numbers mainly at its Changi outlet. From having eight foreigners from March to May, it registered 15 from June to August.

Its vice-president for marketing, Mr Anthony Chua, attributed it to the increasing popularity of homes in the East with expatriates.

Mr Chua added: ‘They normally furnish their homes very well, so when they move to smaller places, they have no choice but to find somewhere to store their bulkier furniture.’

Another major player, Store-It!, has seen its foreign clientele rise from 10 to 15 per cent in the past year.

In Mr Tony’s case, he had signed a two-year lease and paid $2,100 a month for his apartment at Valley Park condominium at River Valley Road.

When the contract came up for renewal earlier this year, the landlord raised it to $4,000 a month and offered only a year-long lease.

Mr Tony said: ‘The rent situation has gone through the roof. From what I’ve seen, rents have effectively doubled. I know of friends who either bite the bullet and pay more or they move out of town.’

Mr Tony, who hails from the UK and has worked in Singapore for 21/2 years, said he no longer finds it worth renting and has decided to buy a place.

Homemaker Kylie Jones, 34, has not had to downgrade. Yet she rents a 14 sq m unit at Lock+Store as her five-bedroom semi-detached house is not large enough to keep all her family’s belongings.

She counts herself lucky to have signed a three-year lease in January 2006 because in the past year, she has seen rental prices in her Bukit Timah area skyrocket.

While Mrs Jones is paying $6,300 a month, a neighbour who moved in three months ago, is paying twice the amount.

Mrs Jones said: ‘It is ludicrous. Many expatriates come on a package and their companies are not increasing their salary to meet the increase in rent.

‘People I know are finding that they have to move into smaller places as rents are eating into their savings. Quite a few are looking to move to the East Coast area.’

She added that a few of her expat friends, who foresee that they will have to downgrade, have asked her about her experience of using the storage facility.

Lock+Store’s Mr Lee said self-storage has not only become a necessity for some expatriates but is also part of their lifestyle.

Mr Lee added: ‘Expatriates are more used to renting self-storage facilities, and as word spreads, more in the expat community are using it. They use it as an extension of their home.’

Most of its clients are from the US, Australia, Germany, UK and France. It is adding another 580 units soon, and has plans to build a new facility in the east to cope with rising demand.

Source : New Paper - 29 Aug 2007

Singapore property stocks fell yesterday, hurt by the Government’s proposed changes to laws on collective property sales.

The Singapore Property Equities Index fell 1.13 per cent to 1445.27. CapitaLand fell 0.7 per cent to S$7.40, while luxury developer Wheelock Properties slid 3.8 per cent to $2.56.

Analysts attributed the falls to proposals aimed at making the en bloc sales process clearer and fairer. By October, such sales may require a public tender and a five-day “cooling-off” period, during which owners can withdraw from their sale agreements.

“It would take longer to do en bloc transactions (with the amendments),” said DBS Vickers property analyst Wallace Chu.

UOB Kay-Hian said the additional safeguards would make en bloc processes “more difficult in general”, and with fewer en bloc sales, property price increases could slow.

CIMB-GK property analyst Donald Chua said the moves come on top of earlier government measures such as higher land development charges, which were “perceived to be cooling the (property) market”. Concerns about the sub-prime mortgage meltdown in the global credit markets, while not directly related to property stocks, also drove down investor sentiments, he said.

“The physical property market was already expected to cool down, and investors are now just taking a step back to reassess what are the stocks that still have value,” he said.

He does not expect property stock prices to recover to previous highs until sentiment recovers, and provided that more clarity on the sub-prime impact emerges and there are no draconian measures from the Government. “But office property will still be going strong, as they rely on fundamentals, while the residential-sector is more sentiment-driven,” he said.

Source : Today - 29 Aug 2007

Or will rule changes draw out time to close a deal, ask analysts

AS PROPERTY stocks fell yesterday in reaction to the proposed new rules on collective sales, less certain is what kind of impact the changes will have on the dampened en bloc fervour.

With Singaporeans spooked by the United States’ sub-prime woes, only one en bloc sale has been lodged so far this month, according to data from Savills Singapore — a far cry from April’s high of 20 and last month’s six. In all, 62 deals worth a total of $10.9 billion have been announced this year.

Now, enter the proposed new legislation unveiled on Monday, which could take effect in October.

Some industry players are apprehensive that the extra requirements, such as requiring lawyers to witness the signing of Collective Sale Agreements (CSAs), could draw out the time taken to launch a site for sale.

But others believe the new rules could re-ignite the frenzy that had just calmed.

Chesterton International’s research director Colin Tan felt the changes could reduce the “controversies” in an en bloc deal and actually speed up the process.

“There’s more transparency and fewer grouses and, ultimately, fewer grounds of appeal. Once concluded, the sale completion, including the hearing of appeals, would be much faster,” said Mr Tan.

But Dennis Wee Realty’s head of investment, Mr Daniel Ong, argued that some “illogical” changes would cause deals to bust their deadlines.

A CSA lapses if a sale committee cannot garner majority consent within a year.

Said Mr Ong: “Many owners call the sale committee members out of the blue and say, ‘You want to take my signature? Come to my house now, or I’ll be away for the next three months.’ How are you going to get the lawyer to be around?”

And by giving owners a five-day “cooling off” period during which they can change their minds, owners would “ding-dong”, Mr Ong added.

“They should require the sale committee to set a date when it’s compulsory for all residents to gather and listen to the lawyer explain the CSA,” he said. This way, those absent “cannot turn around and say they are unaware of the terms and conditions”.

Nevertheless, some residents in the midst of en bloc transactions welcomed the changes.

Mr Harry Chia told Today the sale committee for his Bukit Timah apartment complex had “pre-empted, in a way” the new legislation — the committee, marketing agent and lawyer were appointed at a general meeting. As a result, the en bloc process begun last month has been “very smooth”, he said.

Meanwhile, some owners at Neptune Court objecting to an en bloc bid, launched in May, are planning to hold out until the new laws kick in. Today understands the sale committee is halfway towards achieving the required 80-per-cent majority consent.

Said unit owner Philip Williams: “I think residents would be happier following the new guidelines set out by the Government.”

Another resident added: “Currently, the regulations surrounding the sale committee are nebulous or, in fact, non-existent.”

Source : Today - 29 Aug 2007