For your information, the revised RP was done after this meeting, and of course, the Parliament has now passed the new amendments, which means it is now law.
Because the document is over 6 pages long, we have decided not to include everything in here. Readers can go to scribd (an online document storage site) and download or view the entire minutes here. We have included our overall comments below instead (it is the same as the last part of the document). We suggest you read the document on scribd first.
Overall Comments
During his brief about the new amendments, Mr Gan repeatedly pointed out that the new amendments will be other than them being a hassle (waste of time, effort and money), Mr Gan neglected to mention the benefits for us owners with these EOGMs which is to discuss the selection of property consultants, lawyers with all owners, to discuss the terms and conditions of CSA and SPA, apportionment methods and so on with all owners. Thus, showing transparency and accountability and fairness. He said that if every owner agrees that the SC has been very transparent, then there should be no need to follow the new amendments. However, we question whether the SC has been transparent or not – failure to provide slides, failure to provide formula for apportionment and valuation, failure to call for a meeting with sufficient time for owners, hard push to obtain 80% rather than taking the effort to conduct matters properly.
Mr Gan finally said that if he were to speak honestly, he will not do the sale for BGV under the new amendments because it would be laborious for him – he has to witness the signing, explain and clarify to owners with queries, sign off the notice of consent level every 4 weeks. In effect, it is more work for him. If it’s more work, even discounting the new amendments, what happens when things get complicated (eg legal complications that appear)? Will he back out because it is more work and most costly? We have to seriously question the ‘honesty’ of Mr Gan as a lawyer that is committed to the sale if he can say that under new amendments he will not do the sale since it’s too much work and effort.
Mr Gan also mentioned that it is not stated in our CSA that the sinking fund and maintenance fund will be given to us rather than go with the purchaser. But in the SPA when the tender goes out, they will try. So that means it is not a guarantee we have the funds returned to us. Did you know that under the new amendments, all management and sinking funds will be returned to the owners? That we don’t have to ‘try’ but we are entitled to the funds. We believe that there’s a substantial amount left in the sinking funds, and it should be duly returned to us, especially under the new amendments.
CBRE Mr Lake spoke saying the volume of successful transactions in the last 3 months (June:20, July: 12, August: 6) have been trending downwards. Mr Lake pointed out one strategy that exists at the moment is to hit 80% at whatever price you can, then worry about price later. He raised the spectre of Pacific Mansion and Rivershire where they raised their RP but did not succeed in a bid that satisfied the RP. He said that this is not the right basis or approach. The gist of the message is to hurry because the market might be turning down. However, we would like to point out a few things:-
- CBRE’s own report in the Straits Times on 18 September painted a very rosy outlook for the property market (“Investment Sales to hit $50B in ’07: CBRE”) where the article cited CBRE’s bullish prediction of Singapore ending the year on a strong footing with sales hitting an all time high. Residential investments (en blocs) comprise a large proportion of their prediction and target.
- If he is disdainful of the strategy of pushing up the RP to obtain 80% as Pacific Mansion and Rivershire did, why did he approve the SC decision to raise the RP up by more than 10%? Does this not defeat Mr Lake’s careful analysis of surrounding market rates which was his justification for arriving at $2000 in the first place?
- What if the higher RP does not achieve a successful tender? Is the SC empowered to decrease the RP (even below $2000) without the consent of the owners? The CSA is silent on this matter. After all, 5.2.1 states clearly amendments of a substantial nature must be made only with written approval by all Selling Owners, and yet we wonder if written approval was obtained for raising the RP (which the SC is entitled to under 14.(b)(ii) but it is still a substantial amendment). What if he/she does not approve of the amendment, especially if it is a downward revision of the RP? Again the CSA is silent on this matter. After all, 24.6 of the CSA states that “The Selling Owners hereby irrevocably represent agree and undertake from time to time and at all times to ratify and confirm whatsoever the Solicitors and/or the Property Consultants shall lawfully do or cause to be done by virtue of this CSA”. In other words, anyone who signs the CSA shall “ratify and confirm” anything done by virtue of the CSA. That is carte blanche to do anything they want in our books.
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2 comments:
Many comments on your website mirror my own thoughts and feeling, especially whether we have could have a better property agent and more rights, control and says in the process. I am not convinced nor do i agree totally with all the points Mr Gan or CBRE said. However the one thing I also learn about investments and money is that time is money. The question then turns to whether the open tender system is able to give me a reasonably fair price for my property. I also believe that if it is open tender, then all developers would bid based on what is achievable plot ratio. Even if one developer tries to get a cheap deal, the others would come in to take advantage of the same on higher prices and in the end I think the open nature of the system helps to solve that problem for us owners. All we have to do is to highlight what we think to various interested bidders or developers. I don’t think the sale committee nor CBRE is able to prevent any of us doing that. The agent fee and the legal fee could possibly be lower, but the overall time and process to restart and the % they would constitute, does that make it worth the while ? i firmly believe in certainty of having the cash in my hand, free for me to reinvest as opposed to be still out there locked in with the rest of the 145 units and the long process, not knowing and trying to guess if the market will turn, and if the market do turn, to end up stuck with an old property with no condominum facilities. My humble thoughts are these, if the market does not turn, the proceeds obtained from this one reinvested elsewhere at the same time and property cycle would not put us at a disadvantage. In the investment world, its all about property and cycle and I certainly wont want to try gambling it (that the cycle will not turn down) if I have a choice. If the bet (that the bull continues) and we are wrong, it may not be that easy to sell an old property compared to a new one, if i feel that the old property is too old to stay and live in.
Dear anonymous dated 25 Sep,
Because the CSA was drafted by the PSC without consultation from owners, one of the things you highlighted - open tender - may not happen. The CSA allows the beginning of the sale bidding process to be by open tender, but gives the option for the PSC to conclude the sale via private treaty later on (16.3.1). We will never know who are the bidders unless they tell us (if they chose to), and if it goes to private treaty, we may not even know if that bidder is the highest possible one. Furthermore, URA never explicitly stated that it will permit a redevelopment of up to a plot ratio of 1.8. Developers also have a height restriction of 4 storeys. Whether these may be deterrents for developers or not we do not know, but URA has highlighted that the permission to build up to intensity is based on policy principles; this means we should in principle be able to apply at a future date for the same building intensity to be used for redevelopment purposes.
In terms of investment, you have to balance between various factors, not just property market cycle (and whether we're on the up/down/plateau). Can you continue to rent the property for good returns if the sale happens say 5 years, later? Would your gains on your unit be higher if it's sold later? Considering that major developers have had their
landbanks sufficiently filled up, would it be better to wait until they have completed most major projects and then when they need to refill their landbank, to put up the place for enbloc? Part of the reason Eng Lok received 8 bids was because developers then were hungry for super-prime land. Most of Cairnhill, Leonie, Orchard areas are sold off to major developers now, so they can afford to be choosy. This will not gather the
bidding frenzy that Eng Lok had, despite our location. And the market will (in our eyes) remain strong - enbloc values will push the redevelopment values up in this vicinity at the least. We have seen, for example, Napier
8, Scotts Square, The Marq, Orchard Residences, Cliveden, St Regis all
hitting close to or exceeding $4000psf mark. Any developer would benchmark against these to market BGV at this level of prestige, given its prime appeal to expats (close to embassies, THE gardens - not some garden, Orchard Rd etc).
Some of us, as residents, don't see the investment perspective, but rather - if we're both forced to move, can we get a replacement home nearby? Not far away, certainly not Punggol 21. If not, could we enjoy some more years here, before we are resigned to the inevitable enbloc? By then, many of us are confident that land value will continue to appreciate, especially for BGV.
Our assurance from URA about policy fundamentals means we should be able to capitalise on the building intensity in the future, not just now. And our property, while certainly old in terms of age, isn't old in terms of upkeep.
Sure we don't have condo facilities but the maintenance has been very
reasonable because of that.
Many thanks for your comment. We love this place, for many reasons, not just monetary.
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