Raintree gardens going Enbloc

ST PUBLISHED AUG 24, 2016

Another privatised former HUDC estate could go on the market soon following the landmark sale of Bishan's Shunfu Ville for $638 million in May.

Sources say owners of the 175-unit Raintree Gardens in Potong Pasir Avenue 1 have got the minimum consent level required for the site to be launched for sale.

The 201,405 sq ft plot, next to Kallang River and near Potong Pasir MRT station, has just over 70 years of lease left. It is zoned for residential use with a 2.8 plot ratio.

Property experts believe the owners could get over $315 million, or about $1.8 million per unit.

Including the sum a developer would pay the Government to build a larger project and top up the lease, the price could be some $430 million, or $760 per sq ft per plot ratio (psf ppr). The collective sale attempt is a first for the estate, which was privatised in July 2014. JLL is marketing the sale.

"While there has been one substantial en bloc sale, Shunfu Ville, one sale doesn't really make a market," said Ms Christina Sim, director of investment sales at Cushman & Wakefield. "That said, there are not many good plots in the market right now, and there is still room for more projects in Potong Pasir. It is an up-and-coming area, and most of the new developments there sell well."

For instance, MCC Land's nearby mixed-use The Poiz Residences has sold 74 per cent of 731 units.

Going by recent bullish bids at Government Land Sales (GLS) tenders such as the Martin Place site, there is certainly demand for plum residential sites, though the price must be right, she added.

As the Raintree Gardens site is within walking distance of the MRT station, it has easy access to the city. Another plus point is the nearby Bidadari estate - set to include a 10ha park with Alkaff Lake.

It is also near St Andrew's Village, which includes primary and secondary schools as well as a junior college on one site.

Recent sale sites in the area include that of The Poiz Residences, which went for about $775 psf ppr in August 2014. A site in Lorong Lew Lian, now The Venue Residences by City Developments, went for about $710 psf ppr last November.

Industry experts get lots of requests to assess potential collective sale sites but it is a tough balance to price sites correctly, said Mr Lee Liat Yeang, a senior partner at Dentons Rodyk & Davidson.

"It will not be easy to sell an en bloc site if it is priced too adventurously for a developer. But if owners don't price more aggressively, they may not be able to get the 80 per cent minimum consent level for the sale."

Developers seeking en bloc sale sites must also factor in the longer pre-construction period, he said. After buying, a developer must apply to the Strata Titles Board, seek guidance from the High Court if needed and allow residents to stay rent-free for six months before it can begin redevelopment.

All these eat into a developer's schedule and must be factored in when he prices the land," Mr Lee said.

Developers buying a GLS site can get a project ready to sell about a year from winning a tender.

A Raintree Gardens resident who gave his name as Kah Hoe, 25, said that while the area was nice and units spacious, the price is good enough for his family to sell.'

ST PUBLISHED 1 SEP 2016

RP versus Replacement Cost

Things to remember:

1. The RLV is a future based calculation - it will take into account the Lease Top Up and all the other costs. No purchaser/developer will buy land without doing a RLV first so it is vital that owners see the SAME figures shown to the purchaser and not some watered-down version with bits left out. 
2. The RLV will condense the figures down to a $ psfppr figure (inclusive of Lease Top Up)
3. The RP should be derived directly from the RLV 
4. Present sale price/TC unit is irrelevant
5. Present sale price /other units around Singapore is also irrelevant.
6. Present New Sale prices of nearby units are based on RLVs done in the past.
7. Present New Sale prices of nearby units are therefore also irrelevant up to a point.
8. Your sales proceeds will not be in your bank accounts until 2019 by which time prices would have moved substantially. The property market never stands still.
9. The average unit size in Tampines Court is a whopping 157 sqm

I will look at the following:

Present New Sale prices of nearby units.

Why new units? Because the RLV figures are extrapolated; our RP is ultimately based on the future $ psfppr and so we should be able to purchase a new unit with the sales proceeds. If not, then the RLV shown to owners has been manipulated to lower the RP. 

When I checked for New Unit Sales in Tampines Jan-Aug 2016, only units in The Santorini showed. so I will work with that.

Background info (tables are my own, figures comes from URA) 

http://www.tampinescourt.net/p/gov-land-sales.html

So, the Santorini was bought through GLS in July 2013. 

The RLV would have been done in 2013. 

Sales started in Apr 2014  (It is still under construction so all sales have been off the plans)

Total No. of units: 597

Launched to date: 597

Sold to date: 221 (ref: Realis)

I have chosen the sales from Jan-Aug 2016 :-

What does this table tell us? It tells us  

1. As a rule of thumb, the developer will sell new units for not less that double the $psfppr  he paid for the land. In this case, MCL Land paid $562 psfppr (see table above) in 2013 and lo and behold,  the new units are all being sold at around $1124 psf (give or take) in 2016.
2. That new units are all basically shoeboxes half to one third the size of Tampines Court; the average size of a unit in Tampines Court being 157 sqm. 
3. The sole unit closest to our size is 149 sqm and it was sold for $1,753,000

Tampines Court is in a far superior location than The Santorini and this should be reflected in a higher $ psfppr. At the present RP, we are effectively being offered $765 psf for our units (incl of common property) when the going replacement cost is $1000-$1200. This is unacceptable.

to be cont.

(E3) RLV TO DETERMINE RP

Subsidiary Proprietors are not allowed to see the marketing agent's RLV up close. We are only allowed to catch a brief glimpse if and when they flash the figures on a bright void deck wall where they are almost certainly invisible to the eye. SPs would also need to have photographic memories to digest the information in that glimpse. For all intent and purposes, the RLV is being kept hidden  away from SP scrutiny. One SC member has scrutinized it and found it wanting. The Vice Chairman of the Sale Committee has raised the red flag on the RP.  Owners should take note of his concerns as he is all that stands between US and a REPEAT of Rd 1. 

After getting a refusal from the MA, I then sent a request for a copy of the RLV to the Sale Committee through their own feedback channel. I assume they have a copy. It was a reasonable request and they should not have turned me down. Their polite answer; a referral back to uncooperative MA, a ritualistic bleating of LTSA requirements and a promised glimpse of the RLV in the offing. 

I respectfully paraphrase what the Court of Appeal (HT) had to say about Sale Committee and their obligations:

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.

It is not too late for the SC to 'work for the benefit of all subsidiary proprietors' but time and patience is running out. They have to show they are on the SP's side and not working in the shadow of a MA who has $7 million+ riding on the sale and 7 million+ reasons to keeps things simple and under wraps. SPs  are just  a nuisance that get in the way of a sale. 
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Anonymous23 August, 2016

Advance notification of RLV calculation is needed to consult and fact check.
An MA confident of his Valuation calculation will welcome this. It presents him with an opportunity to vigorously defend his numbers with conviction and show his full control of the facts and figures.

The Chairman must take full control, lead and not just delegate because he sets the tone and direction. He is ultimately responsible for all decisions, even those he allows others to make on his behalf.

The all impt RP hinges on the RLV. At least 10 days is needed to digest it before meeting the MA so that a meaningful, productive exchange of ideas can take place.

Not releasing the RLV calculations in advance reflects on the character and integrity ( or lack of ) of those in charge.

Take charge, do the right thing, and let us have it now.

UPDATE (from FB)

Looks like a little 'digital ' pressure has had the necessary effect. Let's see how detailed their figures really are - they need to be spreadsheet quality.

BTW, dialogue sessions are the worst kind of interface for SPs. Way too much hassle to hold. Venue and time are not for everyone, only the gung-ho ever attend, and owners rarely have the presence of mind to ask questions on the spur, because information is all one-sided. No, digital allows for deeper reflection and is available to all 24 hrs a day. 

The Shrinking 50% Premium

The marketing tool employed by the MA is the 'Premium over individual sale' method. The 'premium' is an old trick, a fallacious marketing tool used by property agents to entice owners to sign the CSA.  It is never guaranteed, serving only to get people to sign on the dotted line. Once signed (and the 5 day cooling period is over) they are permanently and irrevocably locked in. The premium is not. It quietly erodes over time to disappear altogether. Owners should never lock themselves into a reserve price based on a 'premium' because markets never stand still. Always remember.. we are selling land for redevelopment, not our individual units. The market value of your unit has no bearing whatsoever on the calculations in the RLV from which the RP should be derived. Don't be conned by this trick.

Remember, too, the Day you set the signature to a RP is not anywhere near the day you will receive your proceeds, which could be as far in the distance as 2 to 3 years. Are you really confident that the RP you sign for won't look puny when collection time comes around? Think FUTURE not NOW.

Market very nearly always rise - bar catastrophic events.

A comment below (Lee 18 Aug) must have gone through the STB TapeTranscripts of RD 1 and found the telling moment when the property agent finally flinched and told the truth under cross examination. The brilliant lawyer (now a Senior Counsel) was grilling him on the 66% premium. Thanks Lee.

Below is extracted from Enbloc 1 cross examination of property agent (A) by minority lawyer (Q):

Q. So how does the sale price of an individual unit have an impact or relationship to the sale price of the       entire site en bloc?
A. The impact will show actually that we work out the whole en bloc, okay, whether the owner suffer any       losses.

Q. So the impact is it’s a marketing tool to encourage owners to go en bloc;  am I right?
A. Yes.

Q But it has nothing to do with the price they get en bloc? It doesn't impact the price they get?
    Am I right?
A. Yes.

Lee also goes on the say that since the FAQ was published two weeks ago, there have been new caveats lodged and so a new premium calculation is in order. 

Lee:

In their FAQ "Why should I sell at 1.32m", the MA/SC linked the RP to 50% premium of individual unit selling prices in Jun-Jul 2016 period. 

Today is 18 August, just about two weeks (their cutoff is Jul 2016) after MA's 50% premium calculation, there are new transactions in Jul and Aug 2016 in the range of $844K to $941K, the average for the eight latest transactions ($941K+$900K+$915K+$865K+$844K+902K+$910K+$850K from URA caveats) is $890.88K.
If MA/SC is to maintain the premium at 50%, the the RP should be adjusted upward to ($890.88 * 1.5) $1.336M.
The increase is ($1.336M - $1.32M) $16,000 per unit which is not a small sum of money.

 Whilst I do NOT encourage the use of the premium in any way shape or form, it would be interesting to follow it's disappearance... maybe I'll put in a premium countdown counter if I can find one :P

Since the MA chooses the latest figures, then we must, too. Jun & Jul now turns into Jul & Aug

lets look at those transactions:

(915k+900k+941k) = average $918.7k

Average selling price + 50% premium is (918.7*1.5) = $1.378 / unit

Wow, our RP should be increased immediately to maintain the 50%!

If not , then the premium just sank to 43% 

COSTS & EXPENSES (Blogger Table)

Deductions from Sales Proceeds 

I have tried to think of as many deductions as possible to my sales proceeds. The list is not exhaustive as this is my first time selling a private property, never mind selling through an en bloc sale and I don't know what to expect.

Owners should do due diligence on the possible deductions from their Sales Proceeds and request an Itemized Bill from the Lawyer and Managing Agent. Every dollar should be accounted for.

Remember, even if $100 goes astray, chances are it will be the same for all 560 owners. 100*560 = $56,000 going somewhere else.... small change to you, but big bucks to someone else.





Tampines Court Round III

(My reading of the CSA only, I have no legal or financial training, I am just a blogger and so there may be errors. Please seek professional advice before making any decision)

(a) Legal Fees

1. Professional Fees: around 0.28% of Sales Proceeds / unit 
2. Discharging of mortgage/CPF - individually charged. $ unknown
3. STB Application Fee: $35,000/560 = $63/unit
4. Disbursements: printing & photocopying @ $0.15/page, transport, telephone, faxes, legal research on property ownership, stamp fees etc.. the list is long and I don't know what the ballpark figure is. 
5. GST @7%
6. Extras: include work outside their scope of work, eg 'where a settlement agreement has to be negotiated and signed'. What is that exactly? High court expenses, SSD matters etc. Lawyers in general will bill you for every tiny little thing, it is in the nature of their profession. 

Who pays what and when:- 

1 & 2) To be paid by all owners on successful legal completion of the sale from their sales proceeds after Bank and CPF discharges. 

3 & 4) To be paid for by the consenting majority first after reaching the 80%.The Minority pay after sale completion from their sales proceeds.

Those owners who do not sign the CSA need not be bothered with fees or charges in the event of an unsuccessful Enbloc attempt. They are only liable for Costs & Expenses after the legal completion of sale.

(b) Marketing Agent Fees

• Professional Fees: 1% of Gross Sales Proceeds, To be paid by all owners on successful legal completion of sale from their sales proceeds after Bank and CPF discharges.

(c) Valuation Report and d) Method of Distribution Report are done by an independent firm of property consultants. The cost was between $20,000 to $30,000 in 2008. I have no updated estimate. I believe the marketing agent pays. 

(e) Differential Premiums: DP for Increase in Intensity & Lease Top-up LUP): 

The Purchaser only

f) RPA: Residential Property Act 31(2). also called the Qualifying certificate.

The Purchaser only
The housing developer shall, before he purchases or acquires an estate or interest in any residential property, apply to the Controller for approval to purchase or acquire the residential property.

g) Buyers Stamp Duty

The Purchaser only
All properties have to have their Sale & Purchase agreement stamped within 2 weeks of the document being signed. The STB sent out a circular to all lawyers highlighting the need to pay the stamp duty BEFORE an application be made or heard before the Board. The circular can be found here:- Strata Titles Board, Registrar's Circular 1/2009.

h) Sellers Stamp Duty (see here)

 All owners who are eligible to pay SSD have to pay within 14 days of the S&P being signed.  They can write to the IRAS to see if an arrangement can be worked out, usually it can be deferred to until after the STB Sale Order.

• Property Tax 
• CPF Log In 
• Law Society Singapore: Legal Costs 

Hougang and the MA's "Extensive Research"

Since the MA thinks it's a good idea for us all to move to equally old Hougang, let's look at how prices are in general with the ex-HUDC estates (all now privatised).

Well, it does seem that most are out of our reach even now, and so our paltry $1.3m (excl costs & expenses of the sale etc) won't allow us to side-grade. Wonderful, beautiful, convenient Hougang (sorry all Hougangers who are reading this) might have a few units up for grabs at $1m or so, but I expect with even 50 ex-Tampines Courters scrabbling for a new home, even Hougang's prices will spike and devour the whole of the sales proceeds.  These estates are also continually undergoing enbloc disturbances. It's bad here, but it's just as bad elsewhere. Here are excerpts from 2 emails sent from someone in one of the Hougang estates:

In Florence Regency, less than 20% of owners signed the requisition for an en bloc........... yet the MC is allowing them to convene an EOGM after the AGM..............This is seriously very irritating!

Today:  You will need to spend a lot on renovating your new maisonette if you were to 'sidegrade' here! Not enough from the paltry payout to render it worthwhile! 

Oh joy, let's move to Hougang.

Furthermore,  my Hougang source now informs me of the following:

I read over the FAQ leaflet provided by the MA posted on FB. They've stated that the average selling price of units in Rio Casa is 830k. You can point out that the MA has failed to qualify this statement. I viewed 3 units put up for auction by HDB in RC that had no takers since day one. .........  HDB eventually sold 2 under the hammer for 730k (2 #02 units in 349 next to the bin centre) and another on #14 at 840k. All 3 were in their original condition and without any kitchen cabinets - in the original  condition you won't like. If nobody wanted them in the 1980s for 190-210k, something isn't right. You can google for it. DTZ auctions marketed the 3 units. You would never get a decent move in condition unit in RC, though remote, at that price! The 2 on the low floor were not even liveable - dead cockroaches on the floor - and difficult to rent out and even I didn't want to buy it at 730k. Add in stamp duty and extensive renovation and you're looking at $830k! Even my vet neighbour who viewed with us said they were absolutely s*** and worth $300k!

The rock bottom auction prices of those units in Rio Casa were featured in the ST alongside a bank sale in Pine Grove at 930k. The third unit which sold at 730k was auctioned separately a few months after the first two were sold*. After checking with the DTZ auctioneer, she said it sold at 730k. ...... this sale is not on the URA database.....
.

The point is that the MA is manipulating statistics and has not discovered the unusual circumstances of the sale. Notice they didn't use Florence Regency prices because they're higher. 3 units sold under the hammer will definitely lower the average PSF price but there's no way you will have sellers let go of their strata titled homes at such rock bottom prices. The ST article on the auction didn't highlight the fact that HDB was the seller!

The above information can indeed be found on the ST website. The MA boasted tin the FAQ Flyer that the Casa Rio prices were 'based on their extensive research'. So, their extensive research failed to highlight to the owners that these units were unliveable, cockroach infested hellholes that even the HDB could not sell from day 1 and so were sold at auction by the HDB through DTZ after decades of decay. The MA highlighted none of this and instead proffered such bottom-of-the-barrel properties as suitable replacement homes to Tampines Court owners.

So, after we get the sales proceeds there is nothing left but to downgrade, downsize to a privatised cockroach hellhole or HDB.

It's important to remember that the record price for a Tampines Court unit is $1.25m. The RP at $1.3m is a joke. People laugh when I tell them what the RP is, the general consensus is we are being robbed.

From Realis:

Projects: Ex-HUDC estates  Contract Date: Jan 2016-Aug 2016

Reserve Price Published

It has come to my attention that the Reserve Price and expected sales proceeds/unit can no longer be considered secret.  The MA and/or SC (don't know which) have chosen to openly publish them on their Tampines Court Facebook Page for the world to see (10 Aug 2016). You do not even need to log in with a Facebook Account to view them (even though it encourages you log in or create a new account, it is not necessary I have found).

That FAQ flyer

The FAQ FLYER FROM THE MA

Two young marketing agents came to my door yesterday handing out 3 pieces of paper; 1) Letter of rebuttal to the 'Vice-Chairman's undated letter distributed to SPs', 2) Dates of the the next 2 signing sessions and 3) Tampines Court Collective Sale FAQ.

The first was dealt with my an Anonymous commentator in far more succinct terms than I ever could. The second needs no comment other that they obviously haven't gotten permission yet to use the air-conditioned Activity Room for free.
The third throws up a wonderful set of canned responses to the FAQ of enbloc.

(edited/truncated version, answers are in my own words)

Q. How is the reserve price  determined?
 A. The residual land Value Method.*
*Yet when I asked to see the RLV, the MA point blank refused to show me. 

Q. Why should I sell at $1.xx?

A. Because it is a premium price when compared with recent transacted sales. A 50% premium!

The TC record price was $1,250,000 set in May 2013. The fact that a TC unit can command this sum in a good market makes a mockery of the present RP. But why are they even talking about individual unit prices? The RLV on which the RP is based has no connection with individual unit prices. When I ask about apples why are they talking oranges?

MA's Letter of Rebuttal of Vice-Chairman's SP Letter

The MAs Letter of Rebuttal to the Vice- Chairman's undated letter to all SPs 

An Anonymous  commentator has rebutted the rebuttal and laid out the points brilliantly and I hope he/she will not mind if I publish them as a post. 

"From a one time fence sitter (Until today that is)

So Hutton's have come out with an official response to the Vice Chairman's letter, all well and good and they seem to rebut his concerns with clear and concise points.

Except, there is a glaring omission, and a rather large one at that.

Nowhere in the rebuttal does Mr Lian mention the reason he gave to the Sales Committee for the reduction of the reserve price, as recorded in the 'Minutes Of Sales Committee 13th Meeting' dated 28th July 2016, some 12 days ago, and I quote..

MA's FAQ Flyer

A FAQ Flyer was sent out to all owners . Couldn't they have found a more Singaporean-looking family for their front cover?

Alas, it has a disclaimer which prevents me from posting it in full which says:

It asks the following Questions:

• How is the reserve price determined?
• Why should I sell at $1.32m?
• Why nor set a higher reserve price?
• Will the land valuation affect the reserve price?
• Is it possible to get higher than the $1.32m?
• Is a 'down' market the right time to sell my property?
• Is there any legal cost upon signing the collective sale agreement (CSA)?
• Can I get a similar size replacement unit?
• With $1.32m what can I buy?
• Will I have the necessary funds to purchase my next property?
• When will I need to find my next home?

Utter Rubbish from the MA

I have just read the Minutes of the 13th Meeting of the Sale Committee.

I am dumbfounded by the MA's feeble excuse for lowering the RP by multi-millions to it's present farcical figure. 

Here it is:

 "the construction cost of a new development would increase due to the 'Silver Zone' which would hamper movement of heavy vehicles resulting in having to use alternative construction methods"

What utter rubbish! What 'alternative' methods are they dreaming of? Dropping in heavy machinery by helicopter? Having a human chain passing building materials mano-to-mano along Street 11?? 

Look at the present construction of the multi-storey carpark near the round market to see how they dealt with cranes, building materials etc. No problem as far as I could see - those drivers of impossibly long haulage trucks were expert at backing into that tiny road without even dismantling the carpark IU barrier at the centre. I watched them do it one day and was awestruck. A perfect execution that took less than 2 minutes. 

Tampines Court isn't even on a tiny side-road like that car-park. When they knock down TC they will have a HUGE EMPTY SPACE where they can leave a HUGE entrance so trucks can just turn off slowly. There will be no impeding structures, no IU barriers, nothing but open land. 

If that is not enough, then they can do what the new Storage Hub building did just off the PIE  ... have a temporary back entrance to the site. 

POSSIBLE ENTRANCES TO TC BUILDING SITE