To Enbloc or Not to Enbloc, That is the Question for 2008

Concerns about the US Economy and the Global Economy in general, economic slowdown worldwide. Research reports from real estate firms like CB Richard Ellis (here) which points to a drop in interest in private non-landed investment sales (as compared to the government tenders):

"Compared with the heightened investors’ interest in en bloc acquisitions seen in 2007, demand for private residential land turned lukewarm in the first quarter of 2008. Developers were observed to be less keen to acquire sites compared to last year as most of them have built a relatively strong inventory of freehold residential sites from the robust collective sales market in 2007. Purchases were limited to choice locations as response to recent new launches was subdued." (CBRE Singapore MarketView Q1 2008)

UBS Investment Research (available here) is even more cautious, pointing out that "real economy and home prices could worsen here, before recovering in 2009", and with negative news from Dakota Crescent and Sentosa Cove, home prices could be forced down further, with "high end prices most at risk due to lack of foreigner interest". They also pointed out that some of the enbloc sales that were bought during the frenzy last year, may now no longer be generating profits (if at all):

"Prices at some locations seem to have already fallen by 15% or more, bringing into question the profitability of certain sites bought by listed developers such as SC Global and Ho Bee."

So why do people still persist in trying for enblocs this year?

1. Condo raiders and investors who bought units last year, need to push for enbloc sales this year, before prices plummet and they can't even sell on the open market for any profit (or worse, a loss). Unless they have holding power to tide them through in estates that some of them have encouraged to deteriorate (hence making it hard for rentals), they are in financial trouble.
2. Estates that have achieved 80% consensus but failed to achieve a good bid, are now retrying, with many agents urging owners to accept a lower RP. They need to do this before their 1 year mark to obtain a sale expires, and they have to restart the collection of 80% again. Now adjusting the RP, especially to lower it, WITH OR WITHOUT owner agreement/permission is entirely up to how the CSA is drafted, so as always check with your lawyer on the conditions that allow SCs to adjust the RP downwards. You can read the BT Article on the race against enbloc clock here.
3. Plain arrogance and stubbornness, as overheard from a rather loud conversation between what appears to be SC members at a coffee cafe a few days back. They were absolutely convinced that "owners are sheep" and can be pushed into the sale, and that they must achieve the sale or no agent will take them on anymore. Colourful languages were used to describe owners who refused to sign the CSA, including the use of the words "idiots", "hammer them", along with various rather interesting suggestions such as not cleaning their corridors, ignoring maintenance near their flats, and for one member, even encouraging his kids to play the piano louder at nights, to irritate the stayer next door. Pats on each others' backs followed after such great suggestions. Pity no name of estate was divulged or I'd SO be contacting stayers there. Tip to SC folks: Don't discuss strategies in a public area where potential anti-enbloccers might overhear you and blog about it :)
   

I'm sorry but I was quite tickled by the SC conversation that I just had to write about it. Pity I didn't bring my trusty digital recorder but even then, the ambient noise in the cafe would make the audio hard to listen to. But thankfully not for God-given natural ears :)

I should visit that cafe more often lol :)

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Tags: collective sale, enbloc sale, enbloc, en-bloc sale, en-bloc, en-bloc, en bloc, condo, collective sales, singapore, property

The Ugly Side of En-blocs - The Press

In schools, students are taught that reporting the news is meant to be neutral, balanced and objective. It is with such sadness that over the Chinese New Year weekend, the local papers The Sunday Times decided to print a huge spread on 'serial en-bloccers', people who systematically gain profits from selling their homes, along with everyone else's, including those who do not wish to vacate.

What happened to the flip side of en-bloc sales? Why were there no reports of those people who were against such sales? Whatever happened to balanced reporting?

It is with great irony that a friend who consulted me over writing a letter to the forum had it rejected a few days earlier. (I have tried before and was unsuccessful in getting them printed.) I guess the tone and focus of the negative consequences of en-bloc sales would contradict the full page spread on the joys of making money at other people's homes.

Of interest in this particular spread is the story of the 2nd serial en-bloccer, Mr Patrick Kummar, who does not rent out the property but chooses to stay in them instead. I'm curious to know how he finds it so easy to move home so often. The 1st serial en-bloccer profiled stays in a landed property and buys up 'enbloc potential' units strictly for profits. Mr Kummar has decided not to move out of his 3rd home now in Orchid Apartments in Eng Neo Ave, another enbloc potential. He pointed out:-

" 'Every time I sell en bloc, I get pushed to a more inferior area of living. With the money I get, I can get the same kind of living, but not in the same area. Standard of living drops,' he said.
Also, homes sold en bloc can bring out the worst in neighbours.
Mr Kummar said that at Kim Lim Mansion, things got so ugly that one owner threatened the others who were unwilling to sell by saying: 'If this were Hong Kong, this would be settled by the triads.'"

I wonder how he would feel now, if he's on the other side of the fence - the minority - who do not wish to move? Or will he join the boat the minute the en-bloc process begins? We'll never know I guess. Still, everytime I think the local press has become more mature over the years, they do something like this that points to the one-sided reporting they're so good at.

I'm also printing my friend's unpublished forum letter, for what good it can do now. He's used some of my ideas but the words are his, and in exactly 400 words (which he complained struggling over).

Law needs to consider not just financial stakes, but social stakes, in any en-bloc sale
by Mr HH Khoo
Submitted to Straits Times Forum, Rejected 14th Feb

I refer to the letter by Valerie Ong (ST, Feb 9). Given the en-bloc frenzy, I believe the law (Land Titles (Strata) Act) regarding en-bloc sales needs to be carefully re-assessed, particularly with regards to the concerns of the minority who stands to lose their homes in the process.
The law clearly defines subsidiary proprietors (SPs) largely according to the financial stakes they have; decisions around en-bloc sales are made in terms of financial gains, distribution methods, financial losses, and share values. However, to an increasing group of SPs, a flat is more than a financial investment. They have a social stake invested in their home as well. Over the years, they have formed a community around them – conveniences, shops, clinics, schools, familiar places and people. Indeed, the government has been actively encouraging citizens to build communities around their homes. Yet, as numerous letters by minority SPs who decry the loss of their social stakes show, the law completely disregards the social value of a home.

The law needs to differentiate between ‘home-owners’ and ‘investment-owners’: Home-owners have lived in the development for a substantial number of years; investment-owners typically rent out their properties, have no social investment in them, and would not hesitate to sell them if the prices are good enough. I strongly believe there is a high correlation between most minority SPs and ‘home-owners’.

An analogy is that of the General Elections whereby only citizens are allowed to vote because they, not foreigners, have social and financial stakes in the country. Yet the en-bloc law collapses ‘citizens’/‘home-owners’ and ‘foreigners’/‘investment-owners’ together and allocate them equal ‘voting rights’. Why shouldn’t home-owners, given the social stakes they have in their homes, be given the greater say in deciding whether an en-bloc sale should proceed or not? A possible definition of home-owners could those who have stayed for more than 70% of the property’s age when en-bloc begins. Home-owners should then be given double the voting rights to reflect their social stakes in the place.

In 1995, Goh Chok Tong said “there is no better stake in the country than a flat or a house”. The law excludes social stakes invested by home-owners and force many home-owners to lose the very stake encouraged by our government. How can any sense of ownership occur if our homes are taken from us by a majority who often do not care beyond the dollar value?

Tags: Straits Times Forum, ST Forum, Serial En-bloccers, Singapore Press, collective sale, real estate, property, enbloc sale, enbloc, en-bloc sale, en-bloc, condo, collective sales, singapore, Enblocing Singapore, Enblocking Singapore