Today – 8th Sep 2009
CapitaLand’s chief executive Liew Mun Leong said yesterday that the reserve price tag of some $1.2 billion for the estate is “too high to yield affordable homes”.
“I’m not very sure that at the end of the day, after paying over $800 per plot ratio, plus construction costs, plus your cost of financing, your break-even cost would be something like $1,500 or $1,600 (per square foot). “Are buyers prepared to pay for it at that location and that price? I am less sanguine than them,” said Mr Liew.
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'Too high to yield affordable homes' ? - more likely 'too high to yield enormous profit for the developer'. They should be willing to lower their profit margin and do their bit for the national agenda of land maximisation - but alas, only private citizens with no political or financial clout are being asked to make that sacrifice.
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I would like to see how they arrived at their 'break even' costing - considering their plot ratio is 2.8. Owners have to buy new units with the sale proceeds and anything less than $800 psf
will not provide them with much choice - and even then the replacement cost is $1,600 psf in the same location! Double the price! When buying property, it is all about 'location, location location'. When selling en bloc it is all about 'replacement, replacement, replacement'. Laguna Pk owners should wait and not undersell their homes or they may become irreplacable. There is no need to rush.
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And if there is no sale - well, they can luxuriate in their spacious homes and let the rat race run elsewhere.
Straits Times – 5th Sep 2009
Laguna Park goes on sale for $1.2b
Consent level reached in Dec, but now’s the right time for tender, it says EAST Coast condominium Laguna Park was put up for collective sale yesterday with a hefty price tag of $1.2billion – potentially the second highest price ever here for such a deal.
The sprawling 30-year-old condominium has been in the headlines over a spate of vandalism attacks on residents who were not keen on the sale.
Despite its troubles, the estate attained the crucial 80per cent consent level from its owners last December.
But the tender exercise was put on hold until now ‘as major developers have only recently returned to the land market with confidence’, said its marketing agent Credo Real Estate.
If it succeeds in finding a buyer, Laguna Park will be the second billion-dollar en bloc deal here, after the 618-unit Farrer Court was sold to a CapitaLand-led consortium for $1.34billion in 2007.
Laguna’s entry on the market marks a milestone in the estate’s troubled path towards a collective sale that was made highly public due to incidents of vandalism which hit the estate last year.
Residents who spoke to The Straits Times yesterday said the estate’s once-peaceful atmosphere has begun to return.
One resident, Mr Robin Sng, who had his car damaged by a corrosive liquid, says he has still not signed up to the deal because he wants to stay on.
Even with the payout, he feels it will be difficult to get a replacement unit with the same attributes in the area.
‘Very few people now talk about the en bloc sale openly, although we know it is going on,’ he said.
Another minority owner, who declined to be named, said he was adopting a wait-and-see approach to the sale, but confirmed that some owners – who themselves were victims of vandalism – had changed their minds and signed up after considering the attractive price tag.
At the current price, most owners will receive $2.1million to $2.3million, while the penthouses will fetch between $3.5million and $4.1million, said Credo.
This price, which works out to about $1,300 to 1,400 psf depending on the unit size, is double the price such units have been fetching in recent months – about $682 psf- even in the bullish market.
Industry analysts are speculating that the overall price tag – at $1.6billion, including an estimated $400 million payable to the Government for development charges and a fresh top-up of the lease – might deter developers.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak notes that the steep sum may lead to interested developers forming joint ventures.
On the timing of the sale, he said this time is ‘as good as any to launch, as developers are triggering government land sales sites and 99-year leasehold condominiums seem to be selling out’.
Like Farrer Court, Laguna Park is a former HUDC estate; it is located in Marine Parade and was privatised in 2007. The condominium has a land area of about 677,493 sq ft and a gross plot ratio of 2.8.
Credo deputy managing director Tan Hong Boon estimates that the buyer could build about 1,500 new apartments with an average size of about 1,200 sq ft.
The land price for the condominium, which has 67 years left on its lease, works out to about $844 per sq ft per plot ratio, including the $400million payable.
At this price, the successful purchaser could break even at about $1,200 to $1,250 psf, with a view of pricing the new units at $1,400 to $1,600 psf, said Mr Tan.
Chesterton Suntec International’s research and consultancy director Colin Tan said the condominium sits on an attractive site that faces the sea, but ‘it remains to be seen if it can achieve that kind of pricing’.
The tender closes on Oct13 at 3pm.
Straits Times – 3 Sep 2009
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It is all about timing, timing, timing.. while ex-gillman residents will face challenges getting replacement, many of those who en-bloc in the last boom have benefited from their sale. Those with inventment units will also benefit. SO it is not always a negative thing... there is alsways 2 sides to a coin.
ReplyDeleteSpeculators and double-unit owners aside, very few ordinary single-home owners in the latter half of the last en bloc wave benefitted from the sale of their units. What appeared initially to be a good price turned out to be half of what was required for a replacement unit (and I don't mean moving to another 26 yr old estate on the throes of another enbloc!).Look at Gillman Heights owners now (and Waterfront View owners and many more similar articles I can reprint from the media..) - faced with lousy units at double the price - which i am sure no ex-HUDC-er can afford.
ReplyDeleteTiming is VITAL - and en bloc CANNOT get the time right because of the huge time lapse between setting the RP - the sale - and the eventual deposit of sale proceeds into owners' bank accounts. No one can forsee the market on that timeline so it is folly to set the RP 2 to 3 years in advance.
Two sides of the coin, you say?
ReplyDeleteSpeculators, flippers, double-unit owners, multiple home owners, develop-buyers are NOT IMPORTANT and no one cares whether they make a profit or not.
It is the SINGLE HOME OWNER whose life savings are enmeshed in the roof over their heads that need protection from all of the above. It is NOT RIGHT that in order for some to make a quick buck, others go down the tube. .
Why should the majority who could benefit from enbloc care about the single home owner who doesn't care? At the point of sale enbloc price will always be higher than what individual unit can fetch. Is it right that those who have to sell are robbed of their opportunity to sell at higher enbloc price because the single home owners only care about their own perceived financial loss cos they bought their untis during the previous peaks?
ReplyDeleteMajority = sale committee
ReplyDeleteThe majority has to care if it wants the STB to approve the sale. The Horizon Tower Appellate Court decision 02 April 2009 set the benchmark on the matter:
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107 As the SC is the agent of the subsidiary proprietors collectively, there is no point at which the SC may act solely in the interests of any group of subsidiary proprietors, whether they are consenting or objecting proprietors
......, once the requisite consent is obtained and the interests of the objecting subsidiary proprietors become distinguishable from those of the consenting subsidiary proprietors, the SC’s role becomes that of an impartial agent acting for both camps. In other words, the SC must hold an even hand between these interests.
108 A fiduciary relationship between an SC and the subsidiary proprietors arises from the underlying agency relationship
154 The duty to obtain the best price arises out of the SC’s duty to act conscientiously as well as to act even-handedly in the collective interest of all the subsidiary proprietors. The duty to obtain the best sale price is particularly crucial for the objecting subsidiary proprietors.
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and
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167 An SC cannot rely on a mechanistic or literal compliance with its statutory and contractual obligations to escape indictment for breach of its obligations as fiduciary of the subsidiary proprietors. The first principle is that an SC has to work for the benefit of all the subsidiary proprietors. This will no doubt involve going beyond just paying lip service to the relevant procedural rules under the LTSA and its mandate under the collective sale agreement. Indeed, in evaluating the conduct of an SC, the contextual conditions in which the power of sale is exercised is everything.
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Majority has to perform due dilligence to ensure that the process is transparent, treatment is fair and best price is obtain at that point in time.
ReplyDeleteWhether the owner is an investor or occupying the unit. They have equal rights. Occupier does not have priority or preferential treatment. Everyone deserves fair treatment.