Wednesday, 19 September 2007

Parliamentary Responses to Collective Sale Queries

Yesterday's parliament had an initial foray into the Land Titles (Strata) Act Amendment Bill, which will be discussed this week. Facts and figures were offered in written response to questions posed. You can read the full CNA article here and reproduced here. I will add in additional information from the written responses.

  1. The average age of all developments which applied for collective sale from January 2005 to end-August 2007 was 25.9 years.
  2. The average age of the developments in the Core Central Region (CCR), Rest of Central Region (RCR) and Outside Central Region (OCR) was 25.3, 28.4 and 23.9 years respectively.
  3. The average percentage of owners who had signed the collective sales agreement at the time of application was 89.2 percent. About half of these developments received a consent level of 90 percent and above.
  4. The common reasons for objections raised by minority owners to the Strata Titles Boards were that they would suffer financial loss and that the transaction was not done in good faith in view of factors such as sale price of the lots and common property, the method of distributing the sale proceeds and the relationship of the purchaser to any of the subsidiary proprietors.
  5. Since 1 January 2005, a total of 3,700 private residential units have been issued Strata Titles Board orders for collective sale. When redeveloped, there will be 8,303 new units.
  1. Given the statistics above provided by MinLaw and Ministry of National Development, it is no surprise that the amendments did not consider the age of the estates as a possible factor for change (ie the 10 year arbitrary mark). A market-driven policy on enbloc sale has produced in the last 3 years or less, redevelopment for estates that are on average 25.9 years old. On its own, that average is a very good justification to leave the 10 yr mark as it is.
  2. What it does not show, however, are the following: (a) the quality of a 25.9 year old estate and whether it is a blighted/run-down estate or whether it has been carefully kept and well-maintained for decades by judicious owners and management councils; (b) the spread of estates that are increasingly being attempted to go enbloc. I compiled the TOP data of all estates in the En-bloc List I have, and separated them into two charts. One for completed sales (which would correspond with MinLaw's data), and one for tendered/ongoing sales (not in MinLaw's data). The document is available here as a pdf with the usual caveats that the data is not 100% complete due to unavailability of some TOP data. However, when broken into two charts, and 5 yearly ranges, the spread of estates going enbloc are clearer. For example, while my data more or less confirms the 25.9 year average, the data also shows that for ongoing attempts, there is a noticeable increase in attempts on estates that are less than average range of 1981-1985, ie 1986 and younger.
  3. This means that IF urban renewal is the driving impetus for enbloc policies then estates older than the average range should be going for enbloc. But instead, it is estates that are younger than the average range that are going enbloc, especially estates in the 1986-1990 range. These are pretty young estates by international standards. There's essentially an increase in attempts on estates that are younger than 1981-1985, and a decrease in attempts on estates that are older than 1981-1985. It is possible that the supply of older estates is decreasing. I can't comment on this because I don't have data on un-redeveloped estates that are older than the average range (which are enbloc potentials). However, the issue remains: Is urban renewal still the rationale and driver for enbloc sales (which my data that shows younger estates going enbloc suggests otherwise), or is it the rationale of economic maximisation of individual assets (selling for maximum profit)?
  4. The common reasons for objection runs the whole gamut, but anecdotally I'd have expected financial loss to be less of an issue nowadays, than issues of good faith and on points of law. It's a pity a breakdown of the various objections was not disclosed.
  5. A twofold increase in units available in the near future from redevelopment is a pretty good justification for enblocs but again, the statistics belie the qualitative aspect of urban living - that most of the newer units are smaller, with new estates more packed in. This will invariably affect the quality of living in Singapore's condos where increasingly the only major structural differences between mass market condos and HDB estates are the presence of security and sports facilities (swimming pool, tennis courts, gym).
  6. With half of the developments exceeding 90%, the other half would be less than 89.2% which sounds about right, given that larger estates would typically obtain a consent level in the lower range of 80.1% to 89.2%, while smaller estates would hit 90% and above easily. Or combining two values, 10.8% minority owners of 3700 units is about 400 units that did not agree to the sale. Again, without a breakdown by size of estates it'll be hard to gauge exactly how many minority owners there were (ie 10% in an estate of 1000 units is more than 10% in an estate of 20 units).
I'll keep you posted with more information on this.


Anonymous said...

Thanks again Dr. Minority for your succinct imput on the latest development of this piece of controversial legislation. I hope the relevant authorities take note of the mighty effort you have done to keep all of us informed and interested.

I don't seem to see any comments by developers as to why they are so interested in enbloc re-development besides profits as their main thrust.

Dr Minority said...

I think developers are businesses, and being businesses, being profitable is their main objective. Despite all the rhetoric about green construction, the wanton destruction of 25-26 year old estates, many of which are well kept and maintained, is a symptom of the marriage of two parties for personal gain(developers and sellers). The realists will say it's about supply and demand, but that economic rationale just obscures the real business rationale. It makes no business sense whatsoever to buy a land that has no redevelopment potential (eg maximised gross plot ratio) and hence no profit.

Besides, I've seen marketing agencies, law firms and even government organisations drop by, but no developers. They must be busy bulldozing Singapore :)

Anonymous said...

Yes, I guess the moneymakers are just busy bulldozing and sussing out all the potential plots. Just wait till HDB flats are available as their minting money machine.

If we all leave it to supply and demand, we are in danger of seeing some very exuberantly irrational behaviour that could be our downfall when we wake up and discover that all we have done is reduce our assets to zero.
There are some actions which have irrevocable consequences.
Memorable cities like London, Milan, Venice..celebrate their uniqueness because their people believed in protecting their heritage , their architecture for posterity at all cost. Singapore is a long way from learning the need to value heritage , history and art for its own sake ,because they define us and our past, which is priceless.
I agree with architect William Lim that each block should be examined for its intrinsic value , it's historical and architectural heritage...which should even include the first block of HDB flat for example.Perhaps the government should even encourage residents to preserve them and provide incentive tax breaks for them to do so .

The English Heritage has done sterling job maintaining some of the most beautiful and historical buildings in UK. I am proud to live in one with a blue plaque,built circa 1845, not long after Raffles discovered Singapore, it is like owning a timeless piece of history.