No go for Horizon Towers en bloc sale

Strata Titles Board rules in favour of minority owners

Move taken because the correct sale procedures were not followed, says STB

By Fiona Chan & K.C. Vijayan

THE Strata Titles Board (STB) axed the contentious collective sale of Horizon Towers yesterday after months of bitter wrangling between neighbours and lawyers. The surprise move - it is the first such decision in seven years - cheered the condominium's unhappy sellers, who have been complaining about a neighbouring estate fetching a higher price due to the property boom. But it was technicalities, not money or the validity of the minority owners' claim, that finally decided the case. The STB told a room packed with residents, lawyers and onlookers that the sale was stopped because correct procedures were not followed. The decision, after a week-long hearing, was the latest step in a battle watched closely by collective sale parties and property owners elsewhere amid the escalating en-bloc frenzy and rising unhappiness among minority owners forced to sell. Horizon Towers was pledged to be sold to developer Hotel Properties (HPL) and a Middle Eastern fund in January for $500 million. At the time, it was the biggest collective sale in dollar terms. But The Grangeford next door went en bloc a few months later at a far higher asking price per square foot (psf). It was eventually sold on Thursday, just two days ago - for double the Horizon Towers' psf price. The Grangeford asking price prompted unhappy Horizon Towers residents to band together to reverse their sale, in the process inspiring a growing group of minority owners in other condos disgruntled with the record wave of collective sales. Even those who signed the original Horizon sales deal ended up backing the minority owners in their bid to unwind the sale. Some residents cheered the decision. One who declined to be named but had signed the sale deal said: 'It's good we've brought things back to square one. This time around, hopefully, we can get a fairer deal relative to what's going on in the market.' But this may not be the end of the road yet. HPL said in a statement yesterday that it is now 'considering the STB's decision and reserves all its rights', including against the sales committee and the owners who signed the sale agreement. Property watchers called the STB's decision 'significant'. 'On the basis of price, I felt the sale would go through,' said Mr Jeremy Lake, executive director of investment properties at CB Richard Ellis. 'Clearly, people will now look carefully at STB's reasons to ensure that other projects don't repeat them.' Horizon Towers is not the first condo to have its collective sale bid turned down. In 2000, Mandalay Court and Grenville Condominium faced similar rejections, also on technicalities. But in both cases, the majority owners ironed out the glitches and succeeded on the second try. But Horizon Towers may not be so lucky. The deadline for owners to obtain the sale order is next Saturday, and without the order or an extension of the deadline, the deal will be off. While the STB said the rejection was based on technicalities, it did not specify which ones. But sources told The Straits Times that cases of irregularities were presented by the objecting lawyers. These included a notice put up on July 11 last year saying that owners with 80.81 per cent of share values in Horizon Towers had signed the sale agreement. A sale needs 80 per cent consensus. But only 79 per cent had agreed to the sale at that time, lawyers said. fiochan@sph.com.sg

Property charge hike not meant to cool collective sale fever: Mah

Minister says overall impact of higher DC is likely to be minimal

By Maria Almenoar

ST PHOTOS: LIM SIN THAI & ALPHONSUS CHERN THE Government's recent move to raise development charges (DC) was not a reaction to the current collective sale fever, the Minister for National Development, Mr Mah Bow Tan, explained yesterday. Rather, the move is because the 'property market is now booming' and it is 'timely to return' to the position before 1985 when the market went down and a recession ensued, said the minister. Though the move could affect some collective sale developments, Mr Mah said the overall impact is likely to be minimal. In a surprise move last Wednesday, the Government raised the tax it levies on property redevelopment - from 50 per cent to 70 per cent of the rise in land value - similar to what it was in 1985. This DC is payable only if the developer is building a bigger project on the land. Some market observers have said the move has abruptly cooled a sizzling market, especially for collective sales, and shifted market sentiment - although the government agency in charge has said that this was not the intention. RELATED LINKS   National Development Minister Mah Bow Tan on... There were also worries - especially among those hoping to sell their properties en bloc - that the DC hike might just be the first of more such cooling measures from the Government. Market watchers spoke of expecting 'a second whammy' on Sept 1 when the Government is expected to announce higher DC rates under its regular six-monthly review of the charges. Analysts said last Wednesday's DC hike had already made some developments more attractive and others less so - depending on how high their DC component was. Most of those affected would be 99-year leasehold properties outside prime areas such as the slew of privatised HUDC estates trying for a collective sale. For these sites, the DC hike could add 6 per cent or more to the land cost, so developers would be inclined to offer less in a collective sale after taking into account the increased expenditure. Mr Mah yesterday described the new DC rates as a 'a sharing of the gains and of the increase in value of the land as a result of the Government's planning approval'. Some of the increase in revenue will be used to provide infrastructure such as roads, rail and power. 'When you increase the plot ratio, when you build more flats, when you build to a higher level, you need to provide the infrastructure,' he said. Mr Mah was speaking to reporters after an event for at-risk youth organised by the north-east mosque cluster in Tampines. He also assured the public that the Government was closely monitoring the property market and the balance between supply and demand. If supply falls short, it will step up its land sales programme. He said: 'My assessment is, over the next two to three years, there will be ample supply coming into the market in various categories...But in the short term, within the one year or so, there may be an imbalance in supply-demand and some pressure on prices.' On rising rental rates, Mr Mah said there had been reports of reasonable prices still being asked in good areas. The high prices, he said, were generally due to people focusing on particular properties. He emphasised there were enough flats available for purchase or rental. Of the roughly 800,000 Housing Board flats, about 600,000 are eligible for rental under HDB rules. Mr Mah said all parties - developers, analysts and the Government alike - need to make information about the market available to the general public. mariaa@sph.com.sg

Horizon Towers minority owners bid to delay hearing fails

In yet another twist to the controversy over the sale of the Horizon Towers condominium, a High Court bid by minority owners for more time to present their case to the Strata Titles Board has failed.

The minority owners, who object to the sale, wanted a judicial review of the Board's decision not to postpone a hearing.

They will now have to present their case next week instead of in September as they wanted.

The $500 million deal for the two blocks at Leonie Hill, which was struck on Feb 12, has to be finalised by Aug 11. If the High Court had ruled in favour of the minority owners, the deal would have been effectively scuttled.

The 99-year leasehold property has been pledged to be sold enbloc to HPL, Morgan Stanley Real Estate and the Qatar Investment Authority, the investment arm of the Gulf Arab state of Qatar.

The deal was backed by 84 per cent of the owners. This is above the 80 per cent requirement, but it still needs the approval of the Strata Titles Board. Previously, the Board set the hearing for September, but later moved it forward.

Through lawyers from Tan Kok Quan Partnership and Harry Elias Partnership, the minority owners argued that they needed more time to prepare their objections to the deal.

They therefore sought leave from the High Court for a judicial review of the Board's decision to bring the hearing forward.

But according to court documents filed by the purchasers, the the deal would have been scuttled if the objectors request had been granted.

The purchasers, who were represented by Senior Counsel K Shanmugam, argued that if this happened,the majority owners who consented to the sale would be unwilling to extend the deadline for the en-bloc deal

Woodsville condo site draws 8 bids; top offer at $50.7m

By Grace Ng

GOOD news for home buyers: More suburban condo units should be coming on stream in Woodsville Close, now that a residential site up for tender there has attracted eight bids. The Urban Redevelopment Authority (URA) yesterday announced that it had closed the public tender for the 3,870.5 sq m site near Potong Pasir MRT station. If sold, Woodsville Close, which has a 99-year lease and a maximum permissible gross floor area of 116,648 sq ft, will be the first suburban residential site sold by the URA this year. The URA launched the tender for Woodsville on June 19, following the Government's move to release more office and residential sites in order to give developers more options and ease a tightening supply situation. The eight bids from developers for the site ranged from $32.6 million to the top offer of $50.68 million submitted by developer Frasers Centrepoint. Frasers' bid, at $434 per sq foot (psf) per plot ratio, is about 69 per cent above the reserve price of $30 million, which works out to $257 psf per plot ratio. 'This price will translate into a break-even price of about $750 psf to $800 psf for the future apartment project to be built on this site,' said Mr Leonard Tay, director of CBRE Research. The second highest bid of $46.8 million was submitted by Eastpoint Development. Other developers that put in bids include EL Development and Meadows Property. Property consultants pointed to the Woodsville site's convenient location near Potong Pasir MRT station, expressways and schools such as St Andrew's Junior College as a draw for developers looking to target the suburban market. Knight Frank director of research Nicholas Mak estimated that about 90 three-bedroom units may be built on the Woodsville site. He expects the units to be 'sought after by HDB upgraders' from areas such as Sengkang, Upper Serangoon, Potong Pasir and Bishan. Mr Tay noted that recent HDB data showing the average cash over-valuation for resale flats in central areas such as Bishan and Toa Payoh range among the highest islandwide, from $13,900 to $33,600 for the various flat types. 'This would provide greater incentive for HDB households in these nearby estates to make the transition to private property,' he said. URA said in a statement that it will announce the award of the tender 'at a later date'.

Latest property data: What does it mean for home buyers?

Big price ranges likely due to exceptional units; median price is the best guide

By Fiona Chan, Property Reporter

ALL THAT GLITTERS...: At The Orchard Residences, the median price is $3,392 psf, a far cry from the top $5,000 psf price. -- PHOTO: ORCHARD RESIDENCES HOME buyers in Singapore have never been so well-informed as they are right now. In response to endless reports about soaring prices, the Government has been steadily releasing new data about the property market to inject some transparency and calm. Its biggest move came on Monday when it unveiled a comprehensive record of brand-new homes sold last month - direct from the mouths of property developers. This details the lowest and median prices in every project, in a bid to counter the potentially distorted picture that may result from developers trumpeting only headline-grabbing prices. But what is a potential buyer to do with this deluge of data? How can he use it to figure out how much to pay? The new data reveals, for the first time, the range of prices and the median price fetched by each of 329 projects for last month. It will be updated monthly. What jumps out at first glance is the very broad range of prices at certain developments, such as The Orchard Residences. Here, the cheapest unit last month went for $2,620 per sq ft (psf) - almost half the level of the priciest one, sold at $5,000 psf. Some cynics put this down to heavily discounted units at the lower end. But property experts, noting that these wide price ranges are only in the highest-end projects, offer another view. For most developments, it is common to pay a higher price psf for a higher floor with a better view. Each successive level commands a premium, such that the top-most units are often the most expensive. At high-end developments, the premiums that buyers are willing to pay for higher floors shoot up, because these are usually the choicest units in the development. In certain luxury projects, the price range is widened even further by one or two outlying, special units that go for top dollar. There, the difference in the highest and lowest prices could translate into the difference between an average-sized unit on the 7th floor that faces a dumpster, and a spacious penthouse on the top floor with 360-degree city views and customised fittings. Indeed, for The Orchard Residences, the unit that fetched $5,000 psf was the penthouse on the 54th floor, said developer CapitaLand. 'At the very high end of the market, the buyers want the best units in the best developments,' said Mr Lui Seng Fatt, regional director and head of investments at Jones Lang LaSalle. 'There are only so many penthouses in prime districts, so the premium they command for their space and their height can be quite significant.' So how can an average buyer tell if a project's price range is being widened by just one or two exceptional sales? This is where the median price comes in. By definition, half the units in a project are sold above this level and the other half below it. For most projects, the median price is almost perfectly in between the lowest and highest sale prices. This implies that prices are quite evenly spread within the project. At Ferraria Park in Changi, for instance, 47 units were sold last month at between $546 and $744 psf. The median price was smack in the middle, $650 psf. But at some luxury projects, the median price is actually much closer to the lower end of the range. In other words, many are far more affordable than their headline prices imply. At The Marq on Paterson Hill, the median price was $4,044 psf - much nearer the $3,604 psf lowest price it fetched than the $5,100 psf on the other end. Similarly, the median price for The Orchard Residences was $3,392 psf, a far cry from the top $5,000 psf price. For most buyers, the median price is by far the best measure of a development's pricing structure. It is, roughly, the cost of a unit that 'is halfway up the block in terms of which storey it's on, has a glimpse of the pool instead of a full pool view, and has a bit of afternoon sun', said Mr Nicholas Mak, director of research and consultancy at Knight Frank. 'If the development comes with a range of units, the median price will probably be for a three-bedroom unit.' So a buyer looking for a unit on a higher floor or with a better view should expect to pay more, Mr Mak added. But buyers should also be aware of the limitations of this new data, especially as the market is moving so fast. 'If the data for June comes out in mid-July, but developers raised prices at the beginning of July, then the data will already be outdated when it comes out,' noted Mr Ku Swee Yong, director of marketing and business development at Savills Singapore.

Watten Estate condo up for collective sale

By Erica Tay

WATTEN Estate Condominium along Shelford Road is up for collective sale by tender with a price tag of $480 million. If this price - it works out to a ratio of $1,550 per sq ft per plot - is achieved, the deal will become the most valuable done in the Watten area. The freehold Bukit Timah estate is a development of 104 units made up of a block of apartments and four blocks of townhouses. Watten Estate sits on a large piece of elevated prime land of more than 20,400 sq m. It is in a quiet enclave off busy Dunearn Road and less than 1 km from a handful of top schools. The estate is also near the upcoming Botanic Gardens MRT Station. 'Assuming a building efficiency of 90 per cent, the site can be redeveloped into a residential development of about 210 units with an average unit size of 1,300 sq ft,' said DTZ Debenham Tie Leung, which is handling the sale. Mr Shaun Poh, DTZ's director of investment advisory services, said: 'Watten Estate is probably the only large and elevated residential site available for sale in the Shelford Road and Watten Road area.' The tender closes on July 31.

Petrol Consumption 11-July-2007