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You read property mogul Kwek Leng Beng’s gung-ho outlook on property prices in yesterday’s The Business Times and your eyes glaze with dollar signs.

The property bull may keep charging on till 2012 or beyond! says the Hong Leong Group executive chairman, whose astute eye on property prices is almost always spot on. In the first quarter, it has risen by 4.8per cent.

You whip out your calculator. You dream of selling your family home. You salivate over a windfall…

And greed takes over.

Then your eyes fall on your stubborn or potentially sneaky father or mother, son or daughter, brother or sister.

They’ll never agree, you think. Will they stand in my way?

And what if they take a big chunk of the money and run off?

CAN I TRUST THEM?

And suddenly, you start looking at them in a different, dark light.

Money as the root of all evil? That’s a no-brainer. Another no-brainer: That Singapore families bank most of their hopes on the value of their property, that the bulk of our savings is tied up in property.

Property, dear boy, you can’t go wrong with property in Singapore. And so mums and dads buy, and then will their property to their children.

And so, when the time comes to cash in, family values, even filial piety, is threatened.

A quick reading of the property disputes in the past 12 months suggest this is becoming, increasingly, Singapore’s unique version of the property bubble.

Wills, deeds, many minds and one big, big decision can mean squabbles for some families, and full-blown wars for others.

As if in tandem with rising property prices, there seems to be an increase in the number of families torn apart by court disputes over property gains.

There is the Tan family, whose squabble has become very ugly and very public (and some say, very petty), on pages 2 and 3.

There was the ugly $100-million fight among relatives over the decrepit Mitre Hotel, which ended less than two weeks ago.

There was Madam Hwang Chow, 80, whose story was reported in this newspaper in February. She sued her elder daughter and son-in-law for more than $520,000, which she claimed was her share of the profits after the sale of a house.

The case was settled, with Madam Hwang getting an undisclosed amount.

Happy ending? No. She now regrets that she will never be able to reconcile with her daughter, who died of hypertension three days after court papers were served on her.

At the time her case was reported, Madam Hwang and her granddaughter were no longer on talking terms.

Then there was the Chew family’s court battle, which saw an elderly couple take their eldest son to court for over $1 million.

The bulk of the money was from the $890,000 sale of a shophouse on Cactus Road.

After the parents won in August last year, the father, Mr Chew Tong Seng, 72, told this newspaper: ‘We’ll pretend that we never had such a son. We slogged to raise our children yet this is how he repays us.’

Justice Tan Lee Meng called it a ’sad’ and ‘bitter’ affair.

There have been at least seven cases of families embroiled in legal battles over property in the past year alone. And these were only the ones that were reported.

Families that could and should have been celebrating their windfalls were instead torn apart, bitter, as the judge said, and sad.

And, perhaps, wondering privately how it had come to this.

So as the property bull continues its run and more Singapore families consider cashing in, it may be worthwhile to look at the lessons from such cases and consider issues beyond dollars and cents.

At the micro level: Could this happen to my family? Could greed possibly divide us too?

At the macro level, a pertinent question: In a supposedly Confucianist society, with a premium placed on family values and filial piety, is the basic building block of society in danger of being demolished by greed’s wrecking ball?

Source : The New Paper - 10 May 2007

CityDev chairman plans to keep some units in new residential projects

KWEK Leng Beng is so confident about the ongoing property bull market that he’s considering retaining a portion in some new residential developments for rental income and capital appreciation.

‘We’ll do this selectively and it will help us even out earnings fluctuations from our core property development/trading business,’ says Mr Kwek, who is executive chairman of Hong Leong Group and its listed property unit City Developments.

This new business model is no different from keeping office buildings for rental income, he explains in a recent interview with BT.

‘Residential also has a lot of potential. Let’s say, I had two towers in a residential project. I could sell one, and keep the other - and maybe sell later when prices are higher, keep for rental income, or even go for an en bloc sale one day, when I will be entitled to a windfall,’ he said.

The issue in today’s hot property market is that ‘the selling price of your current project becomes the break-even cost for your next project’ because of the ever-increasing cost of buying replacement land. ‘You might as well not sell your residential development,’ Mr Kwek argues.

He says that retaining a portion of units in residential developments makes sense also because residential rentals are set to appreciate further on the back of leasing demand created by the influx of foreign talent into Singapore.

He also points out that the number of new homes built on sites sold through collective sales may be smaller than the existing stock that is being pulled down because of the trend of building bigger homes.

Mr Kwek also says that with the Singapore real estate sector booming, he would rather use his resources in a place where he has the best local knowledge and experience.

‘I’ve always believed our strength is here. We are the proxy to the Singapore real estate sector. Why should we go overseas when we can make a lot more money here?’

‘Also, for our group’s property activities, we want to be a pure real estate company. We don’t want to be a half-breed - half real estate, half financial. But things may change one day. Many institutional investors love the model of a financial, real estate company. But I tell investors: if they’re looking for yield, they can buy into a Reit. There are people who like my model and are today enjoying a lot of capital gains.’

Mr Kwek also addressed recent concerns about the risks posed to banks that lend to developers which sell homes on deferred payment schemes. As most banks lend developers only up to 70 per cent of land and construction costs for residential projects, developers have to put in at least 30 per cent equity. And assuming they collect around 20 per cent payment from home buyers under the deferred payment scheme, these developers will have a cushion of about 50 per cent that will serve as a buffer to banks’ exposure to them in the event of a housing price slide.

Mr Kwek also says that based on his model, if a developer sells half its high-end residential project and assuming that of the units sold, half are sold with normal progress payments and the rest on deferred payment, the sales proceeds collected by the developer should be able to pay for construction and related costs, depending on profit margins.

He also doles out advice for individual property investors, saying those who have sold their homes through en bloc sales should quickly re-invest their windfall in another property, to continue riding on the current buoyant property market.

On the common complaint among owners that sales proceeds from en bloc sales are insufficient to buy a replacement property, he suggests: ‘Why don’t you use the sales proceeds to fund half of your purchase and borrow the other half? This makes sense because the purchasing power of money becomes smaller over time.’

Another common complaint: ‘If I sell, I can only afford a replacement property in an inferior location.’

Mr Kwek’s answer: ‘This is faulty thinking, because you are exchanging an old property of, say, 20 or 30 years, for a new one. If you want to be in the same location, you have to pay the new price. But do you need the larger older unit or a similarly large new unit where the cost is much higher? A new and smaller unit could be the answer.’

En bloc sellers should make the most of their windfall to re-invest for another windfall that will come about in the years to come, he says.

Another compelling reason to include real estate as part of one’s investment portfolio: ‘If you look at Forbes’ list of the world’s richest persons, many of them have their wealth backed by real estate.’

Source : Business Times - 10 May 2007

Companies turning to business parks as CBD office space supply tightens

PROPERTY group Soilbuild said yesterday its eight-storey Eightrium @ Changi Business Park is ready for occupation, having been granted a temporary occupation permit (TOP) three months ahead of schedule.

BT understands that some space has already been leased, after marketing began as early as March. Soilbuild said in its statement that the high-tech building, which has a net lettable area of 178,000 sq ft, has attracted strong interest from MNCs in the high-tech, research and development and knowledge-intensive sectors.

Property firms CB Richard Ellis (CBRE) and Jones Lang LaSalle (JLL) have been appointed joint leasing agents.

‘We have received many enquiries about the development, with several parties in various stages of negotiations,’ said CBRE, which started marketing the property in March. Eightrium is achieving an average rental rate of $3-$3.50 per sq ft (psf), it said.

Island-wide, median rents for business park space ranged from $2.79 to $3.70 psf in the first quarter of 2007, CBRE said.

‘Vacancy levels in the office sector have fallen dramatically and occupiers are searching for quality space to accommodate business growth,’ said CBRE’s executive director for office services Moray Armstrong.

‘It is apparent that fast-escalating rents in the tight office sector are encouraging occupiers to find solutions to help contain costs. This has certainly contributed to the surge of leasing activity at Eightrium,’ Mr Armstrong said.

Low Soon Sim, executive director of Soilbuild, said completion of Eightrium is a milestone for the group and a big boost to its business space portfolio. ‘In addition, the shorter cycle for the development of our business space projects complements our core residential property business which has a longer development cycle,’ he said.

The 7,957 sq m site for Eightrium was awarded to Soilbuild by JTC Corporation after a competitive request-for-proposal exercise in November 2005. The site has a 30-year lease, which started in February 2006, with an option to renew for a further 30 years.

Source : Business Times - 10 May 2007

Access difficulties earlier slowed down works to stabilise slope: BCA

BUSINESSMAN V. Seek and his wife have not been able to return to their Hillview estate home for the past four months.

Their kitchen is buried in mud, the dining room walls are cracked and the roof has been breached by a fallen tree - no thanks to a landslide on Jan 12.

And Mr Seek, now living in a rented three-room HDB flat in Ang Mo Kio, has no idea when he can move back.

The problem: Work on his house cannot begin until the top of the slope, under which it sits, is stabilised.

The landslide caused soil to slip along a 50m stretch behind Chu Yen Street and next to Chu Lin Road, affecting eight houses - five of which have since been declared safe.

But the National Parks Board (NParks), which owns the area on top of the slope, has not finished stabilisation work.

Said Mr Seek: ‘Our society is so efficient, so why does this take so long?’

Mr Seek’s home, owned by his sister, is one of three houses - units 56, 58 and 60 - in Hillview estate still deemed unsafe.

The damage ranges from slight cracks in the backyard retaining walls to soil inside the homes to buried kitchens and collapsed walls.

Responding to queries over the delay in slope repairs, the Building and Construction Authority (BCA) said the Chu Yen Street landslide covers a very large area.

The slope is narrow, restricting access for NParks excavators and the machinery needed to cut and remove trees, excavate the soil and trim the gradient to make it gentler.

The BCA said work on the slope would be finished ’soon’ but did not give a date.

An engineer retained by the affected home owners told The Straits Times that a temporary path to allow excavators and machinery to access the slope was completed in early March.

Mr Kelvin Lim said that NParks had to earlier clear the trees manually, using trolleys, as heavy machinery could not be used then on the unstable soil.

Since then, some earth has been removed to make the slope gentler.

Terraces are now being completed, and they will form a stable platform for the home owners to construct permanent protective structures.

Some of the homes - such as units 58 and 60 - have debris piled 1 1/2 storeys high and large cracks in their structure.

Part of the houses will have to be demolished and reconstructed, said Mr Lim.

The landslides occurred after heavy rain in December and January, which led also to flooding in several areas.

The BCA had then asked eight families to stay away from their homes which were deemed unsafe.

But a week after the landslides, a few households were allowed back in.

They had either put in temporary structures such as wall supports, or cleared up the debris.

One of Mr Seek’s neighbours, who moved back in about a week ago, is still worried about more landslides.

The woman, who wanted to be known only as Mrs Lee, said her backyard has been cleared of debris, but a permanent retaining wall has yet to be constructed.

She and her seven family members had been staying in a flat temporarily for the past four months.

While Mrs Lee is thankful for the work done by the BCA and NParks, she is ’still very anxious every time it rains’.

She gets Mr Lim, the engineer, to come by every week to check that her home is safe.

At another landslide which also occurred on Jan 12, three houses along a slope near the Jalan Dermawan playground were affected.

None of the families has been able to return as yet.

The BCA says that work to make the slope gentler is almost complete and residents will be able to move back in soon.

Source : Straits Times  - 10 May 2007

Rift in sale committee, legal threats bog down proposed Neptune Court en bloc sale

In stark contrast to the serenity of the nearby East Coast Park, a stormy en bloc tussle is brewing at the 752-unit Neptune Court estate — complete with threats of a police report and potential lawsuits.

Some 100 owners who do not want to move have roped in lawyer Edmond Pereira to prevent their interests “from being circumvented”.

Meanwhile, eight members of the original committee — nominated by residents to consider the en bloc sale — have broken away and formed their own pro tem sale committee, in hopes of hastening the process.

A showdown is slated for Sunday, when the breakaway group, which has appointed its own lawyer and property consultant, starts garnering signatures for its Collective Sale Agreement.

Out to stop them are what’s left of the original committee who — having roped in more members, and with the backing of the Neptune Court Owners’ Association — have urged residents not to sign.

At least 600 owners, or 80 per cent of the estate, must agree to sell the 32-year-old development, for the bid to go through.

Representing the “stayers”, resident Philip Williams is also one of the two remaining members of the original committee, which he maintains is the bona fide one.

Prior to the rift, he alleged, proceedings were not transparent. Mr Williams claimed he was “excluded from the meetings”. His attempt to get the committee disbanded failed.

The managing director, who has lived at Neptune Court for 15 years, told Today: “What we want now is to work with the owners’ association and follow the due process in accordance with the resolution, where strict conditions were laid down for residents to vote on the selection of lawyers and property agents.”

The en bloc bid was initiated last year on a cordial note, when residents elected a 10-men committee to study the possibility.

But after an acrimonious year’s impasse, things came to a head last Saturday, when eight committee members quit to form a pro-tem sale committee. The reason: They disagreed with the owners association’s decision to call for another round of proposals from real estate agencies.

The breakaway group explained, in a letter to residents, that they had invited proposals from 12 real estate agencies before deciding on one by law firm Phang & Co and property consultants Chesterton, which they felt was the “most likely” to meet owners’ needs.

The group said: “Timing is important, if not crucial, for this collective sale exercise. Some of us feel the re-invitation is not necessary, given the work that has gone into the due process and diligence by the committee.”

But on Tuesday, the owners’ association shot back with a circular describing the actions of the breakaway group as “most regrettable”.

The association, which is seeking legal advice, said it wants the “assurance that owners have been given a chance to listen to more presentations” before making “a truly informed choice”. It would not accept responsibility the actions of the “self-appointed” committee.

On his part, Mr Williams wants the breakaway group to hand over documents pertaining to the sale — failing which, he said, he would make a police report.

But the group’s lawyer S K Phang, who runs Phang & Co, said they have refused as they “do not know in which capacity” Mr Williams had made the request.

Dr Phang is also seeking legal advice over a flyer distributed by Mr Williams, in which he had purportedly made disparaging remarks. Said the lawyer: “I need to protect my professional reputation and that of my law firm… subject to the advice, I will have to ask the person or persons responsible for the malicious libel to withdraw the same and for an apology.”

He noted that Mr Williams’ earlier failure to dissolve the original sale committee was a sign it had residents’ “strong support”. According to Dr Phang, the breakaway group has conducted three dialogue sessions attended by some 600 residents.

Source : Today - 10 May 2007