The New Law, the CSA and You

Dear residents and owners of BGV,

We thank CBRE and John Lee for their letter dated 27 August, including a reprint of the email by John Lee as well as 2 supporting emails in favour of Mr Lee’s insight into the future. We believe strongly that it is a gross misrepresentation when the consensus level is based on partial signatures and not fully verified, completed, witnessed and legally recognised signatures.

We’re sure Mr Lee is aware of this blog and the previous posting on his email. The BGV blog is for all owners and residents, whether you agree or disagree with the sale. We aim to update the blog every few days with new comments on the en bloc sale, and we have many issues that we would like to bring to light. It remains to be seen if these issues will be addressed or ignored.

The climate for en bloc sales has changed because of two major factors totally unrelated to the financial market. First is the Horizon Towers lawsuit that is specifically directed at the majority owners who signed the Collective Sale Agreement (CSA). Second is the new Amendment Bill to the Land Titles (Strata) Act which will be made law in early October. The first is hardly mentioned in discussions around BGV sale because many people are not aware of what rights they have, and more importantly what rights they surrender or do not have when they sign the CSA. As a nominated MP said recently, “just like any other commercial transaction, there are very real commercial and legal risks in collective sales”. Every owner must be aware of the liabilities and risks involved (something the new en bloc Law plans to address). Yet, in response to the new Law, CBRE and the PSC are trying to circumvent it by pushing as hard as possible for the 80% consent to be achieved before the Amendment Bill is made law. We find this ironic - and question this hard sell and push to sign - since the new Law is specifically aimed to improve and increase transparency and accountability of the PSC to all owners. The tighter procedures are ultimately good for all owners but by hoping to avoid it, what is the message that the PSC is sending out about being transparent and accountable to all owners? Maybe it’s too much of a hassle? After all, as pointed out in today’s Business Times, while consultancies believe the new Law will make the process “time-consuming”, add costs, slow down the process, are these the central issues that should drive the sale, or should it be that owners are kept properly informed, the process is completely transparent, and the PSC accountable to all owners?

Pros and Cons of Signing Now

We would like to highlight the disadvantages of signing the CSA at this time:

• You cannot sue any member of the PSC. In fact, not only can you not sue the PSC, they are completely indemnified in the 2nd longest standing clause in the document. To rub salt to the wound, the PSC is entitled to include majority owners as co-defendants etc
• On the other hand, you as an owner who signed the CSA can be liable for anything that may cause the sale to abort. This clause is the LONGEST standing clause in the document. It shows who the lawsuit arrow may be aimed at when things get ugly
• You can’t sell your unit unless you have a buyer who must agree to the collective sale (no matter how he/she disagrees with it)
• You give the PSC rights to agree to any terms and conditions the Purchaser may require, and to approve the sale and purchase agreement on your behalf; you have no say in the eventual terms of the sale.
• You bear the costs and expenses for any legal proceedings
• You give the rights to the PSC to conduct the sale by any mode (including private treaty which often is not transparent and may not offer the best value; there’s a reason why the new Law mandates sale by public tender or auction only)
• You do not know what the outcome of BGV STB hearings and appeals will be. Look at the problems facing the majority owners at Horizon Towers now
• You will quickly realise the costs to yourselves if STB does NOT AGREE to the sale.
• You agree to pay for the STB application costs up front
• You do not know if the entire application will be dismissed by STB because the sale does not comply with the new Law (unless 80% is achieved before it commences)

Advantages of being an owner who does not sign the CSA :

• You pay nothing unless STB AGREES to the sale
• No one can sue you as you have not signed any legal document
• You can retain all the rights to your home
• You get the same sale price as everyone else if STB allows the sale

For example, you would have noticed that the agent fees have been revised from 0.3% of the old sale price to 0.38% of the new sale price. Did you know the revision is effectively an increase in the agent's fee of $834,971.73 or $75,906.52 per month over 11 months of the agent’s work (using their timeline). This is not including the % excess or GST (in excess of $55,000). Will you be able to question this?

Not under the old en bloc Law. But under the new en bloc Law, yes, since it has to be properly considered and even voted in a general meeting.

We therefore urge you to seriously consider the en bloc sale, and the agreement that they are pushing you to sign. Given the new Law, there is an element of uncertainty about the repercussions of it on BGV’s sale, and it makes more sense now to wait, see what new rights you are entitled to, and how more accountable and transparent the PSC has to be to you. Consult an independent lawyer about the terms and conditions, bearing in mind the new Law and Horizon Towers. Remember that while some of the clauses in the agreement are 'standard', that doesn't make it right or fair to owners.

Tags: taman serasi, botanic gardens view, botanic garden view, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, collective sale, collective sales

Beware of Tsunamis and Hurricanes!

A number of owners have received via email an update from Mr John Lee of the Pro-tem Sale Comiittee (PSC) dated 17 Aug 07, which we have included in the Comments section for those of you who did not receive it.

We would like to thank Mr John Lee for his detailed analysis of the “Future Uncertainties”, and of the impending hurricane, tsunami and assorted scarring of the world economy. Mr Lee paints a picture of a very gloomy outlook in the future, one dominated by a global recession which will affect all countries. Mr Lee is entitled to his strong beliefs about the pessimistic future, undoubtedly from his experiences in an investment company.

We find it strange, therefore, that a systematic search through various media sources including Asian Wall Street Journal, Financial Times, Business Times, New York Times, London Independent, plus 30 other news sources, in the past 6 months revealed only four articles that talked about a global recession (Straits Times 19 Aug 07, Australian Financial Review 4 Aug 07, Montreal Gazette 2 Apr 07 and New Straits Times 6 Mar 07). All 4 articles pointed out that a global recession is not forthcoming.

For example, just recently, Sunday Times reported that “experts polled by the Sunday Times do not believe the sub-prime crisis in the United States will lead to a global recession” (19 Aug 07). The Business Times (17 Aug 07) also argued that the domestic economic growth will not be dampened; it'll be driven by booming building and construction activities that are not going to halt. David Lum from Daiwa Institute of Research pointed out that the “building and construction driver is not going to slow down at all, and that driver is good for a few more years, not just this year”, contrary to Mr Lee’s forecast of a downturn in fairly soon.

Perhaps we should turn to another Lee for his views. Minister Mentor Lee, founding father of modern Singapore, over the weekend assured Singaporeans that the market nervousness will go away soon. He asserted that "whatever the troubles, they will go away in weeks, if not months. What we are absolutely sure of (about) East Asia is that it is set to grow. Nothing will change the long-term plans and growth of China and India, and the rest of Asia”. MM Lee also stated that Singapore’s future is secure, and that “economic growth is here to stay for the next 10, 15 years or more”.

Ultimately, whether you believe Mr Lee or MM Lee is up to your own beliefs about the future, your risk disposition and whether you simply need the cash now or not. If you take Mr Lee’s gloomy outlook, then by that logic, if the tsunami and hurricanes are at your doorstep, it would make sense to individually cash out your property investment now, as opposed to taking the riskier route of going for an en-bloc which can take anything from a year to two, without a guarantee of a sale until legal completion.

On the other hand, experts will tell you that in the face of volatile economies, the best thing to do, if you are not strapped for cash, is to wait and hold out. The land value of Botanic Gardens View will always appreciate in the short and long term future.

Furthermore, and importantly, if developers are becoming more cautious, then perhaps we may already be too late in maximising our land value. After all, the MD of Credo has reported that developers have “bought more than they ever intended” and will be slowing their purchases down (ChannelNewsAsia 18 Aug 07). Will we then expect to see the PSC lower the reserve price, to make it more ‘realistic’? Or to put this in another way, to ensure that the sale goes through, even though it may not be the true potential value of the land?

Whether you believe we’re too late or not, wouldn’t it be better to just wait and see what happens in this "increasingly unfavourable economic situation", rather than push for the sale and get a less than satisfactory sales proceed?

You can believe Mr Lee or MM Lee. But regardless of which side you take, common sense tells you that you are the owner of a unit in a land that will always be in demand, and that you can afford to be patient, rather than be persuaded by hurricanes, tsunamis and assorted disasters.

(For those owners who did not receive Mr Lee’s email, you can find it in the comments section.)

Tags: taman serasi, botanic gardens view, botanic garden view, botanic gardens, botanical gardens, collective sale, collective sales, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, real estate, singapore

"Say No to En bloc" Support Group is Encouraging

Dear BGV residents and owners,

Many thanks for your words of kind support. We've been gathering a steady stream of owners and residents who believe that an en bloc sale at this time is inappropriate as well as those who would simply prefer not to sell.

We understand that some people are fearful of retribution from pro-sales owners - that they'd get their cars scratched, homes vandalised, etc. That's why they'd prefer to remain anonymous (while showing support).

As a colleague who's been through an en bloc and lost his home can verify, anonymity is an imaginary thing :-

1. The CSA contains a table with lists of names, and columns for owners to sign (along with a witness's signature).
2. When an owner signs the list, there is nothing stopping that person from 'glancing' through the list, checking which of their neighbours are delaying the sale.
3. There's nothing to stop the owner from asking the agents if so-and-so ("a fellow resident I can persuade, you know") has signed yet.
   
4. There's also nothing to stop SC members (who have primary knowledge of who signed and who didn't) from telling other owners in a friendly chitchat who has or hasn't signed.

The only group of people kept in the dark, are those who have not seen the CSA. Who have not signed. Those who for various reasons believe they shouldn't, or wouldn't, sign the CSA.

We're open to more support, as well as suggestions on how to protect the identities of people while at the same time allowing everyone to be part of the Say No to En bloc Group. Some pro-sales people can be aggressive. But we strongly believe that people who want to protect the right not to sign, or the right to have a home in BGV, can be equally vocal and principled.

So please continue to email us, even if it's only to say hi as an expression of support! Or if you have any issues with the current en bloc, feel free to let us know!

Email: enbloc_bgv@hotmail.com

Tags: Taman Serasi, Botanic Gardens View, Botanic Garden View, Botanic Gardens Mansion, 8 Napier, 8Napier, collective sale, collective sales, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, singapore

Starting a Support Group for Those who LOVE BGV

Today is a big day for BGV. There is an owner's meeting organised by the Protem Sale Committee (PSC) and CB Richard Ellis. I urge everyone to attend it, even if you are against the sale. This is not to show that people are interested (a common misconception.. just because I attend means I want to know more about selling my home meh?), but to gather information about what certain self-interested parties are trying to do to our precious homes.

Date: 5 Aug 2007 (Sunday)
Time: 2pm
Venue: Singapore Botanic Garden, Function Hall

It'll also be a chance for those of us who wish to remain staying in BGV to be known to one another.

I propose that we set up a Say No to En-Bloc support group, or SNEG for short.

Why need this? Simply put - knowledge is power and in any enbloc exercise, the people who hold the knowledge of what goes on is the PSC and their agent. Owners who object, who do not wish to sell, who do not believe in selling for various reasons, are usually left on their own or worse, left in the dark. A support group will allow those of us who wish to keep BGV to become a group to offer support, solidarity and a strong communication channel among like-minded people. Just like the PSC is a group of like-minded owners, a SNEB group is like-minded as well, but with the wish to keep BGV as their home.

At the Owners' Meeting, flyers will be distributed to anyone who wish to join the group. Or one of us may approach you.

But only if you speak up about your opinion about the whole enbloc thing! So please don't be afraid to express your views. After all, if nothing is done, we might find our home rapidly sold off, and the conveniences that we take for granted (like taking an easy walk to Botanic Gardens where the Function Hall is!) will be forever gone.

Even if you couldn't make it for the meeting, please do email us to show your support: enbloc_bgv@hotmail.com

Tags: enbloc support group, en bloc support group, collective sale, property, enbloc sale, enbloc, en-bloc sale, en-bloc, en bloc, condo, collective sales, real estate, singapore

Glaring Questions

Many of you have received the Collective Sale Agreement (CSA) from CB Richard Ellis by now. Isn't it really nice that a full CSA, and not a draft, has been prepared and ready for signature collection without any consultation with all owners at all? Given that they are planning to sign the CSA on the same day they present it, it almost certainly means that the PSC will not be entertaining any amendments to it.

So here are some questions you can think about, and maybe even ask at the Owners' Meeting:

1. Who is the Protem Sale Committee? A list of 8 names are provided with their business credentials. But who wants to know how rich or high up the food chain they are? What is important to owners should be: (a) Is a member an OWNER-OCCUPIER (and how long they've stayed in BGV) or is he/she an OWNER-INVESTOR (renting out their units)? (b) What enbloc experiences have they had? The Horizon Towers fiasco (as documented in Dr Minority's blog) shows very clearly a slightest technical error can undermine the entire process, so you want people who are representing you and people who know about enbloc. Not just people who are keen to sell.
2. Why is the PSC not officially nominated and elected in an EOGM? This is a requirement in the new enbloc laws and the law states very clearly (no matter how the CSA writes it) that it will apply to all enbloc cases that have not achieved 80% when it becomes gazetted. So if the PSC is not formally elected in an EOGM, things get into trouble. Now what should be of interest to owners is WHY not hold an EOGM to present, nominate, second, and ratify the PSC? An Owners' Meeting to nominate the PSC is NOT the right place because it doesn't require that everyone is informed (an EOGM does that by law) and it doesn't require that everyone attend.
3. Why is the ending of the CSA in two parts - 6 mths after the first signature and the possibility to extend the expiry date up to 12 mths after first signature? Why have 6 mths there at all? Why not leave it at 6 mths to give everyone a peace of mind (if they cannot achieve 80% in 6 mths, then the whole thing is obviously not going to happen)? Yes, legally the PSC has 12 mths to collect the 80% but one would expect the whole point of having 6 mths there is so that people will not be left 'in limbo' over the whole enbloc process!
4. Why is the method of apportionment purely by unit size ONLY and not by other methods such as 50/50 mix of unit size and share value or other valuation methods? Unit size works if most units in BGV are similar-sized but we have a mixture. The current method gives advantage to the smaller flats (ave of $2700 psf) compared to larger flats (ave of $2300 psf). The method of apportionment also ignores the fact that when the flats were purchased, the higher the flat, the more expensive it was. Now, it doesn't matter if you have a ground floor flat or a top floor flat - everyone gets the same amount!
5. Why is there no mention of the sinking fund and what is going to happen to it? For that matter, will the sinking fund be 'locked aside' which means any urgent repairs may not be possible during the entire 22 mths of enbloc process?
6. What happens if a 2nd CSA which covers collective exchanges appear? Will a person who signs the first CSA be stuck and not allowed to sign the 2nd one, even if it is a better deal?
   

There are many other glaring questions about the CSA (eg success-based fees of agents, indemnity clauses, impending legislation, RP/CSA revisions etc). It just shows that there is still a lot of consideration to be made before we jump right into signing the CSA.

Remember - once you've signed the CSA you:

• lose all rights to object to the sale during the STB mediation/hearings.
  
• lose all rights to have a say in any RP/CSA revisions
  
• give up your rights to the sales committee who can make decisions for you
• give up your ability to sign another CSA that might come along, one that might offer a better deal (eg collective exchange, higher RP)
  

Tags: Botanic Gardens View, Owners meeting, collective sale, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale

Update on 8Napier

Further to the last posting on the new development at Eng Lok Mansion, Business Times has provided new information on "8Napier" on 17 July 2007.

No of units: 46
Price range: $4000-$4500 psf
Developer: Napier Properties. Director Mark Wee & Tony Tan, former Parkway boss.
Details: 10 storeys, 40 apartments of 3-4 bedroom units, and 6 penthouses. All penthouses are duplex ranging from 4000 sq ft to 6000 sq ft and are expected to be sold by auction. Smallest 3 bed unit is just over 2000 sq ft and priced at about $8 million. Some units are already sold to a mix of Singaporean and foreign buyers. Current plan is to limit sales to just 10-12 units.

'We may sell another dozen or so apartments when our showflat is ready on site in a few months' time. But we plan to keep the rest of the project, including the six penthouses, for sale after the project is completed, which will probably be around end-2009' said Mark Wee.

'All the units come fully loaded with top-notch lighting, sound system and kitchen equipment, bathroom fittings and the like, so that our buyers do not have to do any renovations as we are fitting the units to the highest standard currently available in the Singapore market. This should minimise the hassle of moving in' said Mark Wee.

Points to note:-

• A replacement unit for owners if they want to stay in the same location and have to buy a unit in 8 Napier will cost only $8 million for a 3 bedroom 2000 sq ft unit. In the latest offer from CBRE, how much more will you have to pay out of your own pocket to buy a replacement unit?
  
• $4000-$4500 psf currently. That is the market benchmark for the area and I'd doubt any developer who buys BGV will attempt to sell new units at anything less than what 8Napier is marketing.
• Napier Properties are holding back units till end 2009, especially the prime penthouses. This shows their confidence in the market, and their expectation that they will achieve even more than $4000-$4500 in 1 and a half years time. Given the latest estimate of 20% increase in property price per annum, it would be fair to say they should be targeting about $5000 psf by end 2009.
• In a Business Times report dated 10 Nov 2006, they priced the units at a 'high $2000 psf' but 6 mths later, revised it to $4000-$4500 psf.
• That report also cited Mark Wee as stating that some of the priciest real estate in global cities like New York and London is around famous parks, and 8 Napier, which is just two minutes' walk to the Botanic Gardens, will be in that league. If 8Napier is in this league, what about BGV which is 30 seconds away from the Gardens?
• Profit to developer? They bought Eng Lok at $128million ($1218ppr) in Mar 2006 but they stand to gain a cool $344million (less development costs and proceeds). This for an estate half the size of BGV. What a steal for Napier Properties. Will this happen to us as well, to be sold on the cheap?
• To say that we have a goldmine on our hands, a piece of real estate around a famous park, is an understatement. But some people don't really care.
  

Tags: 8 Napier, 8Napier, Eng Lok Mansion, Napier Road, Botanic Gardens View, Botanic Garden View, en bloc, singapore, en-bloc, collective sale, enbloc

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