En bloc investors or just vultures?

May 27, 2007

En bloc investors or just vultures?

Traders who sniff out old units and push hard for collective sale stir up mixed emotions among residents

By Tan Dawn Wei

THEY call themselves 'investors', but property agents prefer to label them 'speculators'. Residents, rather less politely, describe them as 'agitators'.

The en bloc fever has spawned a small but growing number of entrepreneurs who sniff out old property developments and then gun for a collective sale.

They wheedle their way onto estate sale committees and fight to push a sale through, in the hope of pocketing some good money in these good times.

One man who was on two sale committees was upfront about his intentions, which grated on some of his neighbours. He got booted out of one.

'They were saying people like us have no emotion. We just want to make money and run,' he said.

And so it is. 'I just want to make money.'

Such traders usually jump into an estate late, buying units from sellers who do not want to wait for a collective sale to come through and are looking for a price 'somewhere between individual value and collective sale value', said Mr Jeremy Lake, executive director of investment properties at CB Richard Ellis.

Depending on when they bought the units, they can make between 20 and 80 per cent profit over what they paid for, said Mr Ho Eng Joo, director of investment sales at property firm Colliers International.

Collective sale trading has made Mr Mark Chow quite a tidy sum in the last three years.

In 2004, the 44-year-old oil and gas engineer bought two units at Phoenix Mansion in Cairnhill, which was sold en bloc less than a year later.

It netted him close to $1 million in what he called 'purely a gamble', given that the 40-year-old apartment block had poor rental returns.

He is now sitting on two sale committees - at Pearl Bank Apartments near Chinatown, and Tulip Garden in Farrer Road where a collective sale now could earn him $1.8 million, almost double what he paid for it.

Mr Chow admitted that some residents view him with suspicion - not surprising given that some of these amateur traders are aggressive in forcing a sale through.

He sees himself differently; he is merely sharing his experience. 'The most important thing is that you must be responsible and have ethics. Get the best value out of it for everyone,' he said.

Businessman Lee Peng Shu, 57, said such traders do have something to offer. He had a trader on the sale committee he was heading at Jervois Court, which was sold four years ago.

'He was very aggressive, very clear about the en bloc situation and all the rules,' he said. 'But that was good too because his experience helped, since many of us were first-timers.'

Disagreeing, a senior property consultant said their rush to cash in can create problems for residents who cannot find comparable replacement homes in time. 'They don't consider the social needs of residents. They are troublemakers,' he said.

Property agents who advertise sales of homes said they receive more calls when they include the words 'en bloc potential' in their ads.

'There's always interest in anything that's old,' said one property agent who has been advertising a unit in a River Valley condominium that is more than 30 years old. He is getting as many as 30 calls a day and is quite close to sealing a deal.

Insiders say even some property agents are getting in on the act, sometimes using their family members' names to purchase apartments with collective sale potential.

The frenzy is getting too much for retired librarian Dev Nair, 66, who gets mail and phone calls every day from property agents asking if she wants to sell her 32-year-old Neptune Court apartment. The 752-unit estate in Marine Parade got the ball rolling for a collective sale last year.

'I ask them why they are so keen to buy. They pretend they don't know about the collective sale,' she said.

One agent even offered her $1 million, which tops the latest sale transaction - at $975,000 - in that estate this month.

'These must be speculators but we don't have proof,' she said.

Striking a balance

'You want to make money but, morally, you should do the right thing too.'
- INVESTOR MARK CHOW, who roped in 200 agents from Knight Frank to help residents at Pearl Bank Apartments with their needs to find a new home. He is on the sale committee of this property and that of Tulip Garden