Gillman Heights were saddled with two problems; a poor sale committee and the National University of Singapore owning a good percentage of the estate. I find it obscene that the Chairman is sitting pretty in a landed estate while many of the owners downgraded - some all the way down to HDB again.
I met the objecting minority at their STB hearings and High Court hearings; they were a fine group of people and were devastated by their loss.
The unlocking potential went 100% to the developer. If they had kept their units - they would probably have an open market value now of $1.5 million or more.
Instead, many owners have lost the equity they had built up over the years, were forced to downgrade into smaller, less valuable homes, probably with a smaller strata area and a reduced share value as estates are more dense nowadays.
This would be particularly damaging to those in the 50-60 yr old age group. Too old to build up a new nest egg, too young to retire. Hanging on to GH would have been a better option for them.
This could have been avoided had there been a 1-for-1 EXCHANGE built into the CSA. Owners would have been protected against a bumbling SC / en bloc raiders/ small-minded people /greedy Developers and other professionals in the field.
A 1-for-1 exchange is an owners safety net should things turn out for the worse.
The unlocking potential went 100% to the developer. If they had kept their units - they would probably have an open market value now of $1.5 million or more.
Instead, many owners have lost the equity they had built up over the years, were forced to downgrade into smaller, less valuable homes, probably with a smaller strata area and a reduced share value as estates are more dense nowadays.
This would be particularly damaging to those in the 50-60 yr old age group. Too old to build up a new nest egg, too young to retire. Hanging on to GH would have been a better option for them.
This could have been avoided had there been a 1-for-1 EXCHANGE built into the CSA. Owners would have been protected against a bumbling SC / en bloc raiders/ small-minded people /greedy Developers and other professionals in the field.
A 1-for-1 exchange is an owners safety net should things turn out for the worse.
Any ex- Gillman owners reading this blog would like to comment on their current status?
,
Feb 10, 2011
WHEN ESTATE UPGRADING IS THWARTED BY...
En bloc roadblocks
IN RECALLING the en bloc saga of Gillman Heights, the chairman of its sales committee stated that the condominium had to be sold en bloc because it was old and falling into disrepair ('No regrets, despite dear memories of Gillman'; Sunday).
This is a view commonly held among pro-en bloc residents, and it should be addressed. If an estate is old, it can be upgraded using the sinking fund, or through a special one-time contribution by residents. Such upgrading is far cheaper than the potential loss for owners from a collective sale.
As many former Gillman Heights residents quoted in the special report ('For better or for worse'; Sunday) ended up paying more for their new homes - some in the hundreds of thousands of dollars - those who live in old estates worth preserving should learn from such experiences.
There are pro-en bloc residents who often obstruct the improvement of an estate because they wish to profit from an en bloc sale. They prefer to see the estate fall into disrepair so they can cite the high costs of replacing old pipes, water tanks, old tiles and lobby areas subsequently. Such en bloc proponents join management councils and oppose attempts to improve the estate.
While many may argue that the decision on such an issue is best left to subsidiary proprietors, the reality is that few are keen on running for office in any estate, and fewer still are willing to argue with loud neighbours who harbour an agenda.
So, this issue must be solved by a built-in safeguard, which should require residents who wish to run for office to declare that there is no conflict of interest. There should be an automatic opt-out clause for those who harbour an interest in organising an en bloc sale.
There must be a law spelling out a conflict of interest to prevent residents who intend to lobby for an en bloc sale from sitting on a management council or any other official body of the estate that may influence the en bloc process.
A management council, by definition, must work towards the good of preserving, repairing and enhancing the estate and if this is so, pro-en bloc residents should be ineligible for office.
Grace Francis (Ms)
Straits Times Forum Page
One issue with the GH enbloc was due to the delay in the sales process after the tender was awarded. The STB process and subsequent high court hearings continued while the property prices sky-rocketed.
ReplyDeleteThis caused the GH owners to be caught in a lurch. Had the sales process gone through over several months, I am sure GH owners would find better replacements.
This is a clear case of minority owners causing more harm than good. Take a look at this compared to the Farrer Court process which was relatively smooth.
The govt was right in shortening the STB process so that such a delay is not repeated.
No worries.
No point blaming the minority here - it was grossly undersold at $363 psf ppr. It should have been at least double that. They were under-compensated no matter when they received their proceeds.
ReplyDeleteThe unlocking potential went 100% to the developer. If they had kept their units - they would probably have an open market value now of $1.5 million or more.
Instead, many owners have lost the equity they had built up over the years, were forced to downgrade into a smaller, less valuable home, probably with a smaller strata area and a reduced share value as estates are more dense nowadays.
This would be particularly damaging to those in the 50-60yr old age group. Too old to build up a new nest egg, too young to retire. Hanging on to GH would have been a better option for them.
This could have been avoided if there had been a 1-for-1 EXCHANGE built into the CSA. Owners would be protected against a bumbling SC and/or en bloc raiders/small-minded people etc.
A 1-for-1 exchange protects the equity in disasterous collective sales.
You did not mention that 50% of GH was owned by one group who decided to sell. Not only the raiders are at fault.
ReplyDeleteThe facts is that the property market moves. The faster the owners get the proceeds, the better.
Had the owners get the proceeds in 2007, they wwill be better off than receiving it in 2009.
Who delayed the process?
GH en-bloc was a mistake.
ReplyDeleteAfter that, new rules added to block the loop holes. Like RP has to be determined by valuation.
If the sale price was higher, it would have been closed earlier without any minorities. Problem was with the SC, they priced it such that there were unhappy residents becoming minorities.
Farrer was en-bloc with done with to 100%, not 81%
Advice to SC, don't target 81%, go for as close to 100% as possible, that means no minorities, greater chance of success.
From the sentiments of the people, if the RF is >$1.7mil, many will NOT object.
But you'll get alot of opposition if below that figure.
After all, if the market comes down, the SC can call for EOGM to review the RP.
NOOOOOOOO!
ReplyDeleteThe RP is NOT, I repeat, NOT determined by a valuation!!!
The LTSA ONLY mandates that a valuation be doe AT THE DATE OF OPENING THE TENDER BOX.... this is way after the majority have signed.
ok... but can we as residents request for the valuation before setting the RP?
ReplyDeleteRemember that it'll cost about $100 each to do the valuation. A small price to pay than being short changed. And we should do this at the next EOGM.
Not 100% of Farrer Courter signed the CSA.
ReplyDeleteJudging from the size of TC, it is impossible to get 100%, whatever the RP. There are many who think they own a gem.
RP cannot be reviewed and adjusted through an EOGM. If adjusted, everyone has to sign the CSA again at the new RP. No guarantee that those who signed previously will sign again.
" There are many who think they own a gem "
ReplyDeleteCan you tell us why TC is not a gem ? Please don't give us the crap that its old, leaking problem, 99 years lease lah, blah, blah, blah. We have heard enough of these negative points in enbloc round 1.
" No guarantee that those who signed previously will sign again "
If you want most of us to sign, give us a fair RP price, $1.7M or more. Don't waste everyone's time by giving anything less.
Building 1-for-1 exchange into the CSA is not practical. Unless someone can tell me how it is done. When are the details finalised? before or after the award of tender? when will owners decide whether they opt for 1-for-1 or cash? must the developer built similar sized replacement? Timeframe? etc.. the regulatory framework does not support 1-for-1 exchange at the moment.
ReplyDeleteIt is not a new idea and has been done in other estates. We can look to them to see how they managed. This is the right thing to do for owners and so the details will have to be worked out accordingly. Being 'difficult' is no reason to brush it aside.
ReplyDeleteAn independent lawyer would need to be engaged to look after the interests of those wishing for a 1-4-1 so they are not shortchanged. The details can be hammered out, presented to the owners for their approval and inserted into the S&P as a condition for any sale.
any idea which successful enbloc had 1-1 exchange as an option?
ReplyDeleteEstates I found in newspaper articles:
ReplyDeletePaterson Lodge
Eng Kong Garden
Char Yong Gardens
Pinetree Condominium.
i think the above need more explanation.
ReplyDeletePaterson lodge and Eng Kong Garden (Green) achieved 100% concent from all 20 and 64 owners and this facilitate the 1-4-1 exchange for ALL owners.
It was NOT an option of cash or 1-4-1 exchange.
The clan owner of the Char Yong Gardens site was sold to the developer for exchange of 36 units of apartments. The developer sold the balance units. This is not the typical 1-4-1 exchange proposed here
Pinetree Condo was not successfully enbloced and should not be considered as a case study.
The bottom like is that there is still no successful case study for the 1-4-1 exchange as an OPTION. TC is just too large for it.
The price was based on cash - and minority owners, if there had been any, would have had to be paid in cash. The reverse should also be possible. A minority owner should be allowed to be paid in an exchange unit.
ReplyDeleteI have only newspaper reports to go on. It is entirely possible - and if it is the will of the owners then the SC has to put in the work.
I would be satisfied if it were restricted to minority owners only - and that would definitley make it an easier sale all round.
if u restrict the exchange to minority onwners, u are limiting their option. not all will minority will agree with u. 1-1 exchange option will increase the risk n option for the developer and thus the potential price the will bid for TC.
ReplyDeleteThat is why no large condo have proposed this option.
No, restrict the CHOICE to minority owners; cash or exchange - since, by signing the CSA the consenting owners agree to the reserve price, and the non-consenting have not.
ReplyDeleteThere is no risk for the developer - say 50 owners opt for the exchange: out of 2 million sqft of strata area - 85,000 sqft will not be missed.
Don't forget, he will buy 1 million sq ft for $X and sell 2 million sqft for $X*2
Even if (and this is purely hypothetical) 560 owners go for the exchange it would mean the developer would not have any huge upfront outlay of cash - and he would STILL have 1 million sqft to build on and sell for double his buy price.
You are wrong. a 1-4-1 exchange in a large estate with a developmental plot ratio of 2.8 is more easily absorbed than in a small development.
A Valuation of the size of TC is NOT $100. This not a single HDB unit($80) or a pte dwelling unit($300).Each valuation will cost $15-20k for TC.
ReplyDeleteLets do our sum for 1-4-1: 560units x 1700 sf =952,000sf replacements to us.
1,960,000 sf- 952000sf = 1,008,000sf for the developer to make his $. assuming he can sell $1000psf, he will get $1.008b.
His construction cost at $250 psf x 1,960,000 sf =$490m
DC and DP cost him abt $220m (Changing in Mar 2011)
His total cost amounts to 220m+490m= $710m
His profit = $1008m -$710m is $298m.
Great, workable!!!!!!
Developers only ever claim to make 10 to 20% profit on a development- and this is the mantra oft repeated even by the Government and reflected in all valuation reports that I have ever seen. Even the Law ministry believes it.
ReplyDeleteTaking your figures - he is making a 30% profit. Though I am sure he can squeeze more out of the million sqft than that.
The reality is of course much different, they are able to price their units at least 100 % above the psf ppr. In en blocked ex-HUDC's it was many multiples above.
With the hypothetical 560 units - many more developers could tender for the land, even relatively small guys - as their costs would only be for building and the various other levies, they would not need to pay for the land.
But I am not advocating a 100% 1-4-1 exchange. I believe a developer can make a special case for say 50 owners who really, really want to stay.
Our MM Lee talked recently about sense of place and belonging. This sense is stronger than the smell of money for some. This en bloc can break the mould and show that a compromise between the money grabbers, the pragmatists and the sentimentalists can be reached. Developer profits can absorb it as their social responsibility.
to: "A Valuation of.."
ReplyDeleteThanks for the clarification for the cost of valuation.
At $20,000 per valuation, each household will need only to pay $35.7 - A VERY SMALL price to pay don't you all agree?
It means that at $100 per household we can do 3 independent valuations (if necessary) and use the best one to determine the RP.
I agree. We should do our own valuation before accepting RP recommended by SC or Marketing Agent. As matter of fact, the agent should pay for it.
ReplyDeleteBe careful who you ask to do the valuation.
ReplyDeleteAs can be seen in en-bloc1. the Pro-enbloc valuation done with negative sentiment and compared with other estates that does not have amenities like we do.
The minorities valuation was done based on the location with all accessibility to amenities, MRT, shopping, Expressways etc. and hence had a much higher valuation.
If MA and SC wants a 'leh-long' the valuation can be skewed to be depressed.