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TERENCE WONG and ALVIN YONG look at where investors can get the best returns

IT has been quite a year for the Singapore property market, emerging from the gloom and heading into uncharted territory. The spark that started the uptrend can be traced back to late 2004 when foreigners, flush with liquidity, began showing interest in Singapore’s high-end property.

This was boosted by the country’s plans for the Sentosa and Marina Bay integrated resorts as well as government efforts to make property more appealing by easing the approval process for foreigners to own land (in the case of Sentosa). Moreover, Singapore’s property market had been lagging behind Asian cities like Shanghai, Hong Kong and Mumbai.

Capitalising on the government’s effort to revitalise the property market, developers started acquiring prime land in the core central region (downtown core, Sentosa and districts 9, 10 and 11) in anticipation of rising property prices. It led to a series of en bloc deals in 2005 and 2006 as developers outbid each other to secure prime land.

This in turn prompted the government to hike the development charge (DC), with the rates for commercial use and office space rising by an average 12 per cent, landed residential use by 6 per cent and non-landed residential use by 14 per cent.

Reaping rewards

Savvy investors who saw the glimmer of light in late 2005 as a buy signal are reaping the rewards of their investments. In 2006, the Singapore property equities index rose 67 per cent while the URA property price index for residential and commercial property increased by 10.2 per cent and 17 per cent respectively. Singapore Reits (S-Reits) have also done well, appreciating by more than 40 per cent on average in 2006.

Given the buoyant outlook, where should investors look for the best returns in 2007?

Home prices increased by 10 per cent in 2006, with the bulk of the price increase concentrated in the core central region. Prices are expected to rise by a further 12 per cent this year. Residential rents have also risen 14 per cent in 2006.

While the focus has been on the central region, the mass market could see the filter-down effects this year, for several reasons. First, the strong economy has led to greater job security and rising wages. Coupled with a partial restoration of CPF, demand for mass market projects is expected to rise as middle-income earners, who were most affected by structural changes, will have greater confidence to upgrade their properties.

Second, following the wave of en bloc deals, people who have sold their homes to developers would be shopping for replacement units. As some of them may be priced out of units in the original area, they would look for homes in outlying areas.

Third, the government’s strategy of attracting foreign professionals into the country is paying dividends. Anecdotal evidence suggests many have decided to call Singapore home, driving up demand for private property. Many Singaporeans are also snapping up projects close to where the foreigners are working, in hopes of fetching rich rentals. This can be seen in the recent launch of One North Residences at One North Research Hub in Buona Vista, which sold close to 80 per cent of the units in three days.

On the commercial side, the sharp 30 per cent spike in office rentals in 2006 was attributed to the shortage of prime office space. Although the government has released the Business and Financial Centre for development, no new office supply is expected to hit the market till late 2009. This has caused office rentals in the CBD to surge past $10 per sq ft with occupancy hitting 98.4 per cent for Grade A properties.

With more multinationals from the finance, IT and marine industries relocating to Singapore, demand has risen considerably, while downtown supply has dipped as old commercial buildings are being redeveloped into apartments. As such, the commercial sector will continue to do well for the next couple of years, and new records are expected to be set for Grade A properties. Sub-prime areas will also benefit from spillover demand.

Pockets of opportunities

As property recovers, property stocks have seen one of the best runs in recorded history, far outpacing the rise in real estate. While fundamentals are strong and profits should be very healthy, much of the prospects of property developers may already be in the stock price. However, there are pockets of opportunities, particularly in stocks exposed to the commercial sector as well as Reits.

With the crunch in office supply, commercial real estate landlords will see another stellar year. Given the discrepancy between rental yields of commercial property and the required returns of commercial Reits, value can be unlocked by landlords by selling these properties to existing players or floating a Reit themselves.

S-Reits outperformed their global peers in 2006 and are likely to see slower growth ahead. Given that it is increasingly difficult for Reit managers to make yield accretive acquisitions, it is likely that there will be some merger and acquisition (M&A) activity among listed players. Smaller Reits like Cambridge Industrial Trust, which typically have more attractive valuations and higher yields, are likely targets for takeover.

Property is riding high and will continue to see strong interest in 2007. For investors, this should be a good time to invest in well-located mass market projects, particularly those close to the city or MRT stations. Commercial landlords are also expected to enjoy a good run for at least the next two years. Grade A office buildings have already seen record rentals, and this is expected to spill over to the lower tiers. While prospects for property remain bright, property counters may have already priced in much of the good news. As such, investors should not expect the same gains as before and be more selective.

Terence Wong is chief executive officer, and Alvin Yong, research associate, at SIAS Research Pte Ltd

Source : Business Times - 22 Mar 2007

CHRIS ARCHIBOLD looks at the likelihood that MNCs may find S’pore less attractive as office rents continue to surge

Tight Market Office Property Clock

THE office market in Singapore has changed dramatically in the past two to three years. In mid-2004, Singapore office rents were in a trough caused by the Sars outbreak; less than three years later business sentiment is strong in Singapore and across Asia. This has driven demand for office space.

The market bottomed out in mid-2004 and saw strong rental growth in 2005 and record growth in 2006. In 2005, Grade A Raffles Place rents rose 23 per cent and last year the market saw a dramatic rental spike of 63 per cent.

Most major Grade A buildings currently have occupancy rates of over 95 per cent. This scarcity of space, coupled with high demand and a lack of future supply (supply projections are well below market norms), will cause a serious space crunch over the next few years. This is likely to continue to drive rents northwards.

This phenomenon has been brought about by three key factors - the lack of new office supply coming to the market, the rapid expansion of the financial sector and the recovery of the regional and domestic economies.

The lack of supply is a result of the conservative sentiment among developers in Singapore around the Sars period which has meant that the amount of space currently being developed speculatively is well below the average annual supply rates.

Singapore has traditionally seen a five- to six-year property market cycle (three years up and three down) but due to the lack of supply and high demand, this cycle is likely to see an abnormally extended rental growth period. Given the traditional six-year cycle, and the fact that the market bottomed out in mid-2004, the peak should be around mid-2007. However, under current circumstances, rents are projected to continue to grow for the next two to three years. Our property clock shows that the Singapore market has just completed the fastest rent rise phase of the cycle but still has a number of years of growth.

The two impending integrated resort developments are also likely to have a positive impact on Singapore real estate. Developments of this scale will increase employment opportunities both in terms of the development process and the jobs created within the resorts.

These developments are aimed at drawing both tourists viewing the various attractions and business people using the convention facilities, and will raise Singapore’s exposure to the international community. The impact is likely to be increased business activity, boosting Singapore’s attractiveness for foreign investors.

Given the impending supply crunch and rising rents over the next few years the question on everyone’s lips is: ‘At what point does Singapore become unattractive to further foreign investment and the job opportunities associated with it?’

To answer this we need to review two fundamental issues - price and supply.

Taking price first, average Grade A rents in Q4 ‘06 were around $9.60 per sq ft per month (see chart). This is still below the market peaks of $11.15 in 1990 and $10.40 in 1996.

Given that a number of the prime Grade A Raffles Place buildings transacted deals at around $12.50 psf per month in the first two months of 2007, this points to the previous benchmarks being breached this year. Our research shows further rental increases in 2008 and 2009 with more record rentals likely to be set.

If this proves to be the case, will it deter investment in Singapore by the major MNCs? To answer this you need to look at where the expansion is coming from and the motivation behind it. A good barometer is the take-up of space in the latest core CBD developments. The majority of space in the latest developments has been filled by the expanding banking and finance community. Much of this expansion is coming from the US and Europe so it could be argued that Singapore’s competitiveness is judged against occupancy cost in those cities.

If you look at pure rental costs in London and New York against their counterparts in Asia, Singapore still compares favourably, and it is cheaper than its major Asian financial centre competitors, ie, Hong Kong and Tokyo. Thus, inward investment is likely to eye Singapore as a favourable location at the present time. This is on top of the other locational factors, such as living environment, business transparency, communications and tax structure, in which Singapore also fares well.

That said, Singapore’s rental competitiveness may well change over the next couple of years as the market is likely to continue to see increases whereas some of Singapore’s regional competitors such as Hong Kong and Shanghai are likely to see downward pressure on rents due to upcoming supply.

The higher rentals are causing many occupiers - both SMEs and MNCs - to relocate from the CBD to more cost-effective premises. But as the growth is caused by positive business sentiment the higher costs are unlikely to stop tenants from expanding. Rather, they may review their occupancy standards and workplace strategies.

Future supply is a cause of real concern as there is little coming to the market over the next few years. If there is physically nowhere to expand, MNCs may be forced to look elsewhere. They are by their very nature able to move business units around the region.

Given the supply crunch and demand boom, the authorities have taken various actions to alleviate the situation and plan for future occupation. These initiatives include the announcement of new regional and sub-regional centres in areas such as Jurong, the release of new land sites and making space available in various government properties.

While these initiatives will prove useful there are issues in terms of their impact. The release of new land sites and the announcement of new regional and sub-regional centres will not provide space for a number of years due to the length of time needed to construct new premises.

Existing space freed up from government properties will provide immediate relief but this is limited in scale. Also, in most cases the space is not suitable for MNCs which are looking for new, regular-shaped efficient office space.

The supply crunch is going to be an issue for the Singapore office market for the next two to three years and this could be exacerbated if projects are delayed due to lack of building materials and competition for labour with so many projects under construction at one time.

With increasing demand and a scramble for space, we are likely to see MNCs continuing to pre-commit to future new developments earlier than has traditionally been the norm, restacking their current premises with higher density work spaces or relocating business units to other countries.

Another way of easing pressure on existing supply may be to loosen regulations on the occupation of high-tech buildings. This would bring more immediate opportunities to conventional office users and may encourage more developers to build new supply.

The speed to market of high-tech supply can be faster than that of pure office space because many of these buildings are built on green field sites in business parks (such as Changi Business Park) where there is easy site access (unlike the constrained sites in the CBD) and no demolition or site clearance is necessary. The buildings are also lower and therefore faster to build.

The writer is regional director, head of markets, at Jones Lang LaSalle

Source : Business Times - 22 Mar 2007

While last year’s fall in total HDB resale volume was largely expected, there is some room for optimism in the near future and beyond. EUGENE LIM explains why

Quietly Moving Up

COMPARED with the headline-grabbing private residential property market, the HDB resale market seems to have lost its shine. For the first time in a decade, the number of HDB resale flats transacted in 2006 fell below 30,000 units.

According to data from the Housing and Development Board, 2006’s total of 29,723 units could well be the resale market’s lowest transaction volume to date. Last year’s transactions were 1,333 units or 4.3 per cent less than 2005’s 31,056 units; and some 40 per cent less than the market’s highest volume of 49,618 units in 1998.

A key reason for the drop in volume could be that many of the HDB home owners who had bought their flats during the peak are refusing to part with their assets as they would fetch much less today. Resale prices peaked in the fourth quarter of 1996 at 136.9 on the HDB resale price index. Compared to 4Q 2006’s 103.5, the market is now some 24.4 per cent lower than the peak.

This means some home owners may incur a loss if they sell their flats now. This phenomenon affects home owners of all flat types who had bought their resale flats during the peak year. But it is the owners of larger flats that will feel the biggest pinch should they decide to sell today. For example, an executive flat in Pasir Ris bought for $520,000 in 4Q 1996 can be sold for less than $350,000 today. So, unless there are compelling reasons to dispose of the flat, many of these home owners would rather stay put and wait for better times to return; or look for opportunities for windfall gains from other investments to negate their losses.

Based on records of resale transactions for executive flats during that period, there may be some 6,000 to 8,000 home owners that are suffering a paper loss. Another factor that caused resale volume to fall last year was the keen competition for buyers in that market segment.

First-time buyers can choose new flats from HDB’s on-going Build-To-Order (BTO) programme; or the new Design, Build and Sell Scheme (DBSS) that was successfully launched by private developers last year. In 2006, the HDB marketed some 2,796 units under the BTO scheme while a private developer sold out 616 units under the pilot DBSS at Tampines. More of such launches are expected this year and in the future.

Buyers looking for ready units can opt for HDB’s Walk-In Selection (WIS) programme and, more recently, its new programme to sell unsold ‘new flats’ more than five years old in the resale market. Last year, the HDB launched some 2,771 units via the WIS programme while it has just started selling 250 of the unsold flats in the resale market through appointed agents.

For 2007 and beyond, the HDB is expected to continue with this proactive approach in clearing its completed but unsold stock of flats.

Buyers with a larger budget would be drawn to mass market condominiums as these are typically priced within their budgets. According to numbers from the Urban Redevelopment Authority, there were 2,936 new sale transactions outside the central region in 2006, up from the 2,363 units in 2005 and 2,179 in 2004. With good take-up, developers are expected to launch more of such projects this year.

While last year’s fall in total HDB resale volume was largely expected due to the keen competition for home buyers, there is some room for optimism for the resale market in the near future and beyond.

First, last year’s executive flat resale volume of 2,229 units was higher than 2005’s 2,036 units; 2004’s 1,792 units; and 2003’s 1,793 units. Similarly, last year’s resale volume of 6,421 units for five-room flats was just a shade lower than 2005’s total of 6,434 units but still higher than 2004’s 5,874 units and 2003’s 5,835 units.

In absolute numbers, the market for larger flat types is actually doing better than in previous years, in spite of the on-going competition for buyers. This shows the return of confidence and appetite for larger resale HDB flats. With the current pace of economic growth, we should see more buyers upgrading to these larger flats over time. As the HDB has frozen the building programme for new 5-room and executive flats, buyers will have no choice but the resale market.

Second, although the HDB resale price index may seem to indicate that prices in general have only increased by 1.9 per cent for the whole of last year, the actual transacted prices of resale flats in most mature estates increased more in 2006. (See table)

Mature estates are traditionally popular and demand for flats in these locations is strong relative to available supply. Also, these locations are not affected by over-supply compared with locations where there are still stocks of unsold new flats.

Elsewhere, it is usually the well-renovated flats on high floors, near MRT stations or town centres that can command a premium. Depending on specifics, the premiums for three- and four-room flats are about $5,000 to $10,000 above valuation while the five-room and executive flats may command premiums of $10,000 to $20,000.

For 2007, we are likely to see the HDB resale market return a similar performance as last year. Market conditions are stable now, reflecting actual supply and demand conditions. Total resale volume is expected to be similar to last year’s 30,000 units. However, proportionately more transactions are expected for the larger flat types. Five-room and executive flats currently account for about 22 and 8 per cent of resale transactions respectively. This may increase to 24 and 10 per cent respectively if the current momentum holds.

Resale prices this year are expected to rise by 2 to 4 per cent as a whole; but sellers in mature estates are likely to see more substantial gains than the market average.

In the longer term, as Singapore moves towards a population of 6.5 million people, the total resale volume is expected to increase in line with the projected population increase. All in all, there is quiet optimism as the HDB resale market moves into a mature phase.

The writer is assistant vice-president of ERA Realty Network Pte Ltd

Source : Business Times - 22 Mar 2007

Nicholas Mak and Michelle Tee look at how Singapore’s luxury properties compare with those in other global cities

As Singapore’s high-end homes reach ever higher prices it may be illuminating to see where the city now stands in relation to the major capitals of the world, and what lies in store for these gateway cities in 2007.

One word encapsulates the phenomenon of record-breaking prices for top-end residential property in major cities including Singapore - globalisation. It has transformed some into global cities, where international business and financial institutions, law firms and corporate headquarters cluster, creating a business environment with buzz.

As these global cities continue to nurture a growing pool of wealthy local individuals and a sizeable inflow of high net worth international business people, investment bankers, traders and celebrities, the demand and, in turn, prices of high-end luxury residential developments in these cities would usually be the most expensive in that country or region.

Compared to a year ago, average prices of high-end luxury apartments have seen strong growth of about 10 per cent to 17 per cent in cities like Tokyo, Hong Kong, Beijing and Singapore. The price increase of high-end luxury apartments in London was even more spectacular, surging close to 30 per cent in the past year.

As such, prices of luxury residential properties in selected global cities now range from a relatively affordable S$350 to S$500 per square foot (psf) in Beijing to S$4,000 to S$6,000 psf in London and Hong Kong. Comparatively, prices of Singapore’s luxury properties, which average $2,300 psf, are still some way from the sky-high prices commanded in London and Hong Kong. But they are almost on par with Sydney’s and Tokyo’s.

Exclusivity, lifestyle and convenience are found to be the key features of high-end residential developments in global cities. In particular, tie-ups with branded hotels is a gradually growing trend in the luxury market, especially in cities like Singapore, Tokyo and London. This is to better offer residents an array of personalised hotel services. Examples of such joint propositions include St Regis Residences-St Regis Hotel tie-up in Singapore and One Hyde Park-Mandarin Oriental Hotel tie-up in London.

Notwithstanding this, standard condominium facilities such as swimming pool, landscaped gardens, shared multi-purpose function room, gym, BBQ pit, private carpark spaces and sometimes tennis courts that are commonly provided in Singapore’s luxury residential properties are not always offered to residents in other global cities, even in the high-end market.

London: Priced at a high

Some of the most expensive homes in the world can be found in London. Given a choice, a significant number of people would like to live in central London, but only a few can afford it.

On average, freehold luxury homes in London cost about S$6,000 psf to S$7,500 psf. Demand in London is not limited to people working in the city but also foreign home buyers from Europe, South America, the Middle East and Russia. They are attracted by London’s prime economic status, strong capital markets, lifestyle as well as favourable tax laws as compared to other European countries.

Tokyo: The environmentalist

Reflecting the general eco-friendly culture of the Japanese, developers of residential projects in Tokyo are space conscious even in the high-end segment. Typical units in a luxury development range from 500 sq ft to 1,900 sq ft, with some projects such as Banco Park House and Aksaka Tower Residence offering larger units of up to about 2,800 sq ft. In addition, recreational facilities such as swimming pool, tennis courts, gym and BBQ pits are almost non-existent in Tokyo’s residential developments. But some high-end residential developments such as The Centre Tokyo and Aksaka Tower Residence do provide unique facilities like libraries and guest suites, which are not usually found in other global cities’ luxury residential projects.

Average prices of high-end luxury residential units in Tokyo currently range from S$1,400 psf to S$1,800 psf, with some top-end developments such as Chidorigafuchi priced at about S$2,400 psf. But they are still considered reasonable compared to other global financial centres such as London, Hong Kong and New York.

Hong Kong: Space as status

Hong Kong’s high-end developments are concentrated in areas such as the Peak, Central, Happy Valley and Kowloon Tong. The majority of luxury units such as those found in 8-12 Peak Road and Grosvenor Place are large, at 2,500 sq ft and above.

Given that high-end projects in these areas can range from S$3,000 psf to over S$4,000 psf, potential home buyers need to have assets in excess of S$10 million to be able to purchase a decent luxury unit in Hong Kong. Swimming pool, clubhouse and private car parking spaces can be found in almost all of the high-end residential projects.

Beijing and Shanghai: Self-contained

Given the strong presence of Singapore developers in China’s property market, Beijing and Shanghai’s high-end residential projects have features similar to Singapore’s. One difference is that China’s residential projects tend to be on a larger scale to accommodate a bigger population.

Projects such as Central Park, Park Avenue and Grand Moma Residence in Beijing were constructed in three to four phases with the total number of units in the development ranging from 1,245 to about 1,800. Due to the sheer size of some of these developments, developers have made them self-contained with supermarkets, restaurants, bars and sometimes beauty salons.

The average prices of luxury condominiums in Beijing range from S$340 psf to S$470 psf. Besides standard facilities such as swimming pool, landscaped gardens, private carpark space and gym, larger-scale projects usually have additional recreational facilities. For example, Central Park in Beijing has a squash room and yoga room while Lakeville Regency boasts an indoor golf driving range.

Prices of luxury condominiums in Shanghai are among the highest in China, typically ranging from S$650 psf to S$1,000 psf. Currently, Tomson Yipin, located in the Pudong Lujiazui Riverfront Area in Shanghai, is one of the most expensive high-end residential projects in China. The average asking price is S$2,400 psf but to date only three units have been sold since its launch in 2005.

Sydney: Concierge, concierge, concierge

Similar to Singapore’s Ardmore Park, some luxury developments in Sydney such as Macquarie Apartment and Greenclift also offer homogenous-sized units of three bedrooms or four bedrooms to enhance the exclusivity of their developments.

Average prices of units in such high-end developments range from S$2,000 psf to S$2,900 psf, a level that is close to Singapore’s top-end homes. Landscaped gardens are not usually a feature in luxury developments located in the CBD area but swimming pools, gym, private carpark spaces and concierge services are a must.

What next?

While high-end property markets in most of the global cities have already enjoyed a bull run in 2006, they are not expected to see a correction this year, as global economies stay healthy.

Moreover, with the continual growth in financial services, wealth generation and flow of high net worth individuals across international borders, demand for high-end homes is unlikely to abate in the short term. A more likely scenario is that the rate of price growth will moderate, especially in cities that have already seen record price growth.

On the whole, Singapore and Hong Kong’s high-end residential properties are expected to show the strongest growth in 2007, rising by 15 per cent to 20 per cent while in other cities like Tokyo and London, high-end prices are predicted to grow by a relatively slower 10 per cent to 12 per cent.

In the case of Sydney, the price growth of high-end residential properties in 2007 is expected to be in the moderate range of zero to 5 per cent as the broader market has been depressed over the past two years and the high-end market had only begun to show signs of bottoming out last year.

On the other hand, due to the Chinese government’s effort to cool the property market in China, the growth rate in Beijing’s high-end residential market will slow to under 10 per cent while prices of Shanghai’s high-end apartments will likely record negative growth of 3.5-4 per cent in 2007.

Nicholas Mak is a director and Michelle Tee an analyst at Knight Frank

Source : Business Times - 22 Mar 2007

JEREMY LAKE answers some of the commonly asked questions on the collective sales process

The Singapore residential market is witnessing the third wave of collective sales, with a hive of transactions in 2006 and the highest volumes recorded in the last decade. The two other waves occurred in 1994-1997 and in 1999-2000.

This third wave is significantly different from the previous two waves in two aspects. One is the wider and more diverse pool of players. Back in 1999-2000, the market was dominated by a couple of locally listed companies. Now, this has expanded to include foreign funds, private equity groups and institutional players. Previously, such funds have focused on the retail and office sectors.

The other emerging trend is the faster turnaround from the purchase of sites to the launch of projects. The trend these days is for purchasers to buy, seek the necessary approvals and sell quickly, as opposed to adopting a wait-and-see approach. Many of the collective sale sites purchased in the last two years can be expected to be launched this year.

The key challenge for en bloc sales committees is in getting the 80 per cent consensus. Sales committee members are finding it more difficult to persuade owners to sign on the dotted line, as owners anticipate higher asking prices. (Note: The government will be seeking feedback for proposed changes to the process. Among them is getting consent from owners of at least 80 per cent of units in a development, in addition to the existing requirement of a nod from owners with at least 80 per cent of share values.)

We answer some of the commonly asked questions on the en bloc sales process.

Q: When is an en bloc sale feasible?

A: If the land value of your property is higher than the total value of the individual apartments, offices or houses combined, it means your property has redevelopment potential and you may well profit from a collective sale. These are the most common situations where a collective sale might be possible:
Where the land use has been changed. For example, when use has been changed from landed to high-rise, as a result of re-zoning under the Master Plan. Changes were made to the Master Plan by the Urban Redevelopment Authority in 1993/1994 which sparked a series of collective sales.
Where the Master Plan provides for an increase in plot ratio.
Where the existing development has not fully utilised the allowable plot ratio. This is especially true of older apartment buildings built before 1985.

Q: How does one work out a collective sale agreement?

A: The land price which a purchaser pays is shared among the owners in a pre-determined method. The collective sale premium is the difference between the collective sale price and the most recent transaction of the same unit type in the open market.

Q. What are the methods of apportionment?

A: The Singapore Institute of Surveyors and Valuers (SISV) recommends five methods of apportionment:
Share value
Strata area
Average of share value and strata area
Valuation and share value excess
Any other method

The guidelines provide for any other method - so any combination of the above methods is acceptable, as long as it is fair and equitable. There are no distinct pros and cons of one method over the other. But owners should consider various factors including the individual unit size.

For example, the share value method favours small units while the strata area method favours units with large areas. Share values and strata areas are facts that are available in your title deeds, so any method involving these two values is less contentious. Usually the property consultant will advise the sales committee on an appropriate method depending on each development’s unit composition.

Q. How are owners of mixed developments apportioned their share?

How complicated is determining apportionments for owners of mixed developments over residential developments?

A: The number of collective sales for mixed developments is limited to date. The share of apportionment is a bit more complicated to determine in mixed developments where there are retail and office components. One needs to consider factors such as frontage of units and human traffic.

Q: Under what circumstances may disputes arise?

A: For example, if you have a collective sale of a shopping mall, the ground floor shops command a higher price than other floors, but others on the second floor beside the escalator will demand the same or a higher price than the ground floor back corner unit.

Q: How important are valuations in the settlement of disputes?

A: Valuations are subjective and different people will have different views on it. An owner may have three different valuers which give similar values but an owner may still disagree with it.

Q: Can CPF funds be included as financial loss?

A: Based on the latest Strata Titles Board (STB) judgment for the Waterfront View case, interest on CPF funds cannot be included as financial loss. If the board waives or does not require the owner to top up the account, it is not considered financial loss.

Q: What are the steps involved if you’d like to do an en bloc sale in your estate?

A: A group of interested owners can get together to form the pro-tem sale committee (PTSC). They can contact a property consultant to evaluate the potential. Then, the PTSC can appoint the property consultant and lawyers, who will then advise them on the process forward. (Note: The government is proposing that en bloc sale committees be formed only at extraordinary general meetings convened by management corporations.)

Q: How does one select a good agent?

A: A collective sale is a complex process and there are many pitfalls to be avoided. A good agent should help you to:
Confirm the development potential of your property
Assess accurately the land value and compare it with the value of the individual apartments, houses, shops or offices
Recommend a minimum price
Aggressively market the property in Singapore and internationally, to maximise the sale price
Advise on and coordinate the signing of the collective sale agreement
Help owners find replacement properties
Advise on the legislation and how to apply to the Strata Titles Board for approval of the collective sale.

Q: How long does the entire process take?

A: By legislation, the sale committee has 12 months to obtain the 80 per cent and a further 12 months to make an application to the STB for approval. The STB usually approves the application within four to six months. Thereafter, the owners will receive their payments within three months. They will have another four to six months to vacate the premises.

The writer is executive director, investment properties, at CB Richard Ellis

Source : Business Times - 22 Mar 2007