Is Collective Exchange a Good Deal?

For those of you who missed out on the meeting on Friday evening (and there are lots of you, from what I gathered from the upset crowd), here's some information from the Huttons presentation on collective exchange for BGV. Information provided here is based on what I've heard in the presentation and is provided as is, for the sake of transparency in the ongoing en bloc of BGV.

First, about Huttons :-

• They are 'affiliated' with Savills, but in terms of en bloc experience, it is unclear what they have done. They claimed to have completed one project (Tulip Gardens) but that's by Savills. They said they have 2 ongoing en bloc projects.
• What annoyed me and many others who felt they'd just wasted our time, was this - they were NOT invited by any owners to give the presentation at BGV on Friday!! In fact, if you checked the letter sent out by them, addressed to Mr Tan Chew of the Management Committee, as 2 members of the MC (including the chairperson) pointed out at the meeting, (1) there is no such person as Tan Chew, (2) while Huttons did speak to the chairperson, the latter did not give any greenlight for Huttons to use his name, neither did he give permission to Huttons to do the presentation.
• In fact, when someone asked if they have a protem sales committee formed to represent the collective exchange deal, the agent said they're in the process of forming one. When asked further, no names were provided and no owner from the crowd stood up to represent BGV in any way. This makes it very suspect if the agent even has any owner in BGV who is willing to represent all owners in the deal.
  
• It is not known where they obtained the namelist of owners from, since a number of them did not receive their letters in their registered addresses.
  
• They were apparently not aware that an existing protem sales committee had been set up with CBRE as the agent.
• They have a lawyer who will help draft the CSA, but that lawyer is not Phang & Co who is the only company that really specialises in collective exchanges, and has done the only successful exchange thus far (Paterson Lodge).
  

Now about the collective exchange proposal:

• The agent is in talks with 2 developers who have expressed interest in our super prime land. The sale will not be done by tender, but by private treaty between the owners and the developer.
• Prices in the letter are indicative only, and not confirmed. In fact, the figures in the two tables are more similar now so whether you do an exchange or opt out, you'll be getting the equivalent value.
• Huttons claim that while there are height restrictions due to proximity to Botanic Gardens, the developer can use a staggered design, so that it's only 4 storeys from the sides closest to the gardens, and then building up to 1.8 plot ratio further back into the estate, possibly higher storeys.
• While the exchange units are 30% smaller, owners can opt to 'top up' to their original size according to the formula : for the first 10% of the existing area = $2000psf, thereafter it's $2700psf. In other words, to retain the same size unit that you currently have in the new estate, you must pay the developers (upwards of $150-200k approximately)! To retain the 'same size'! We're not even talking about same facing, same floor yet.
• The most ironical part of the collective exchange proposal is that not everyone can obtain an exchange unit. It is subject to balloting. Like HDB flats. The exact number of exchange units are not known (can be anything from 1 to ?? depending on the developer and the deal). It is also not known how the balloting will be done (eg if you sign up earlier, will you get preferential treatment) and if you only want an exchange unit and not opt out, if you're unsuccessful in the ballot, can you pull out of the CSA (unlikely).
  

Some owners were very upset that this is happening in BGV - an agent coming in to give a presentation without permission from any owner at all. Some asked why is there a need to even consider selling the estate since it's in a prime location (as the agent willingly pointed out). Some questioned the integrity of the agent and their track record in pulling off what may well be a half-billion dollar deal. One owner suggests that since there is a crowd interested in collective exchange, that perhaps like-minded owners should get together to discuss this idea further, solicit from other agents (including Huttons) with the understanding that Huttons might not be the finalised company to handle an exchange deal.

I left very disturbed - how can an agent appear on our doorsteps without even the management committee's permission and attempt to sell themselves? I noticed that a good number of owners are in their late 40s and older; for these people a collective exchange is certainly ideal if they can stay in the same place again. But questions about collective exchanges remain:

1. Out of hundreds of en bloc deals that happened this year and last, only one was successful in a collective exchange (Paterson Lodge). Why is that so? I understand that for them, a 100% consensus was obtained and the logistics and legalities surrounding exchanges are not easy at all. Partly because it is not legislated (unlike Australia as mentioned by Dr Minority here) and partly because there's always different interests involved in the sale of an estate.
2. Because we won't really see the final product (our units) until the developer's built the whole place up, how will we know what we'll end up getting? Will we even have any say in the matter (will the architect give us plans/designs), will they let us know what floor, facing, size we'll be getting? Are they getting in a Feng Shui geomancer to ensure the place has good flow?
   
3. Given that next door's going to be a superluxury condo (Napier 8), will there be anything stopping a developer from giving exchange units that are nearest the road (for example), leaving the units they will sell at exclusive spots further in?
   
4. Also, even though a new development might have new units, it'll also have higher maintenance fees and an influx of tenants, possibly more than what we currently experience on the small roads and estate (since a developer will want to have more units in the estate than currently). Can we handle that?
5. If an exchange is done by private treaty, we won't know what's the maximum value of the land (since no bidding is done). We won't know what's the best value we can get when we sell our homes (if we do). If done by tender, on the other hand, we won't know what developer will we end up with, and what design/structure we'll get. There might be all sorts of unused spaces (corners, balconies) that make up to the size allotted, after all. Look at some of the new developments nowadays with wasted spaces in the units.
6. Ultimately the question is this - given that we're sitting on super prime land (it will always be a land in demand), and given that our place is still nice, big, spacious and well-maintained, does it make sense for us to sell BGV off now?
   

Can we ever find a place like BGV that we can call home? Our family, for one, won't.

Tags: collective sale, collective sales, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, botanic gardens, botanic gardens view, napier 8, napier road, singapore