En bloc frenzy

Published July 2, 2007

En bloc frenzy

What safeguards should be put in place to make en bloc sale process smoother and fairer? Or is there a need for broader policy changes to cool the en bloc fever?


AS Singapore moves towards redefining itself, en bloc sales to rejuvenate and refurbish older buildings, as part of the city's transformation, is understandable and natural. Halting en bloc sales will be interfering in the market mechanism. This clearly is not the wish of the city planners. What is required though, is to clarify the underlying rules and laws pertaining to such sales, which will make it easier to understand, interpret and reduce litigation. Rights of minorities need to be defined clearly. That the government is currently in a consultation phase on laws relating to this, is welcome.

What we will also have to keep in mind is the substantial increase in overall operating costs of entities based in Singapore of late and the relative costs vis-a-vis other cities. This is to ensure that Singapore does not become uncompetitive and new companies wishing to set up in Singapore are not disadvantaged. This is critical for long-term sustainability and anything that will damage it should be resisted. Recent government order prohibiting conversion of office property in certain areas to condominiums is consequently welcome. Similar steps to balance demand and supply so that runaway rentals of both offices and apartments are reined in, will certainly assist in breaking the 'inflationary expectations' so evident in Singapore today.

- Girija Pande
Regional Director
Tata Consultancy Services

Leave it to market forces

I THINK the current measures are sufficient to ensure the en bloc process is fair to property owners. It is up to each individual owner or groups of owners to lobby the other owners on their views to sell or not to sell the property. Ultimately, the decision of the majority has to prevail and be respected. I feel that the en bloc process itself is an integral part of urban renewal for Singapore. Being land-scarce, the en bloc process helps to continuously rejuvenate the cityscape by removing older developments and replacing them with newer and more land efficient ones. Whether the en bloc fever needs to be cooled, I feel that it is best left to market forces. Ultimately, the developers will have to do their sums before they keep chasing each en bloc at higher prices and it is they who have to pay the price if they get their numbers wrong.

- Wee Piew
CEO
HG Metal Manufacturing

THE market forces of supply and demand for en bloc sales should be left to take its own course. The problem appears to be with the sales committee. Perhaps the government should take immediate steps to regulate the set-up of the sales committee and formalise the appointment of members to address the current concerns and unhappiness of homeowners involved in an en bloc sale regarding fair representation and conflict of interests.

- Lim Soon Hock
Managing Director
PLAN-B Icag

WE HAVE this unique process of unlocking asset wealth and people generally have different circumstances and needs. The en bloc sale process could never be fair for everyone. For those who have felt shortchanged because the neighbours are getting a better deal, they should just be thankful for the newfound wealth and enjoy their wealth instead of bickering about being shortchanged. As in all free market practices, we could never sell at the highest and buy at the lowest.

I think we should allow market forces to work as at some point, the law of supply and demand will cool this fever and those who could not get on the bandwagon will regret being too greedy. Give me an en bloc any day. I prefer an en bloc over a gazette!

- Fong Loo Fern
Managing Director
CYC The Custom Shop

EN BLOC sales are commercial transaction dependent on market forces. Therefore, there should be minimal government intervention to control prices. Although, the real estate boom does have an impact on public housing prices, but it is not inflationary.

Let the natural economic forces and regulatory processes moderate the fever in such sales.

En bloc sales is, in fact, a form of property renewal which rejuvenates an entire estate and has a positive effect on the property values.

- Derek Goh
Executive Chairman/Group CEO
Serial System

EN BLOC sales allow the renewal of the urban fabric. The market will find its own level. There is no need to cool this fever as long as it does not affect affordability to fulfil basic housing needs of the masses.

Some owners are unhappy as they tend to compare their gains with other developments with higher untapped development potential. Availability of replacement properties is also an issue. The application to get an order of sale from the STB is a lengthy process. Money comes too late for owners to reinvest in replacement properties.

- Tan Tiong Cheng
Managing Director
Knight Frank

Mind the minorities

EN BLOC sale of properties is a good concept for a country to grow economically and financially. The concept may be great but it may also harm people who love their homes emotionally and are not happy to live in other locations. The safeguard to make the en bloc sale smoother and fairer is to grant an option to those who want to stay back at the same location at a price they are forced to sell plus the construction cost of the new building. The broader policy to cool the en bloc sale fever is to amend the Act allowing the en bloc sale to be consummated with a minimum of 90 per cent, instead of 80 per cent, agreeing to sell. The buyer shall grant an option to the 10 per cent who do not want to sell to buy back at the price they are forced to sell, plus construction cost.

- Ng Kong Yeam
Group Executive Chairman
Sino-America Tours Corporation

MORE should be done to safeguard the rights of the minority. These are people's homes and a lot of sentimental value has been built into them. Unlike money, you cannot recover these things once they are gone and no amount of compensation can make up for the loss. People think they can just sell and make money, but with the cost of new property shooting through the roof, some sellers are even finding themselves in a 'homeless' state. Sure, development must continue, but we should really stop and ask ourselves whether we're paying too high a price for it.

- Glenn Tan
Group Chief Executive
Motor Image Group

TO ADDRESS the grievances of owners who are unhappy about en bloc property sales, it is pertinent for the Sales Committee, Marketing Agent(s) and lawyer(s) involved to be more proactive in terms of transparent communication.

We must understand that they are far from being recalcitrant criminals and should not be threaten with legal action. Rather, a softer approach through engagement via honest open communication, counselling and assistance (with alternative accommodation, etc.) is the key.

Developers should be socially responsible in executing the deal; and lawyers ought to assist them in understanding the relevant terms and conditions as well as their legal rights and obligations in clear layman terms.

The hard hand of the law MUST be tempered with compassion.

- Sam Yap S G
Executive Chairman
Cherie Hearts Group

Enforce stringent safeguards

THE current steep climb in property prices is a double-edged sword. Along with the vibrant en bloc sales and the sharp climb in property prices, more and more home owners are feeling marginalised in the process.

As more home owners lodged their complaints with Strata Titles Board (STB), the government had decided to change the ruling come this August/September. I support this move as I feel that more stringent measures should be in place to ensure that the en bloc process will be more transparent and fairer. Perhaps one of the suggested measures could be to increase the percentage of approval to 90 per cent from the present 80 per cent. The other factor could be to limit the properties eligible for en bloc by increasing the age of the property to more than 25 years.

With the growing chorus of dissent, there is definitely a need for broader policy changes. This will indeed help to safeguard the interest of the general public since no homeowners should be made to feel pressurised into entering a transaction that they are ill-prepared for. Globally, the current cycle of such unprecedented steep climb in both the housing and office sales and rental may ultimately hurt the competitiveness of Singapore. The sudden increase in both office and housing sales and rental is a double whammy for overseas companies looking to set up regional offices in Singapore. Thus, this may result in companies deciding to relocate their regional offices to a much more cost efficient Asian city.

- Benjamin Low
Managing Director, South-East Asia and India
Secure Computing

EN BLOC property sales need to be closely regulated by the government as well as independent bodies to ensure that the process is transparent and just, especially to innocent homeowners. Penalties ought to be enforced accordingly on any party deemed to have manipulated or influenced the process unfairly.

The recent proposed changes by the government on en bloc sales procedures such as allowing en bloc sale committees to be formed only at extraordinary general meetings convened by management corporations is one effective method to regulate the process.

These safeguards should ultimately result in an en bloc sale process that is fair to both developers and owners and will ensure the sustainability of a strong property market in Singapore.

- Charles Reed
CEO
interTouch

EN BLOC sales may be good news to people who want to make a quick buck from the sale of the property but not so good news for people who love the place and whose family calls it home. Collective property sales are necessary for a land-scarce country like Singapore. Collective sales can be a useful engine of growth in the key property sector of our economy. But now that they have become so important and so frequent, it is vital that some measures be put in place to check the frenzy we are witnessing now. This is not healthy for the fabric of Singapore.

- Dora Hoan
Group CEO
Best World International

THE en bloc fever has given rise to a steep uptrend in property prices and growing concern regarding the transparency and fairness of en bloc transactions.

To address this concern, stringent regulations are already being considered by the relevant authorities. Additional measures that can be implemented to enhance this process include improving accessibility to professional advice for affected residents to enable them to make a informed decision, discourage pressure tactics towards dissenters and exploring how efficiency of these sale transactions can be further improved.

Like all free markets governed by demand and supply forces, the property market also contains a self-regulating mechanism which will correct irregularities in the long run.

- Lars Ronning
President, North & South-east Asia, India, Australia & New Zealand
Tandberg

AN en bloc sale enhances property value and it helps the developer in acquiring group property and land faster. It is positive to property boom in Singapore.

The en bloc sale process, however, may take too long to complete, settle disputes, and obtain official approval. Before deal closing, a new wave of property price surge could have already begun, making the completed deal unattractive and out-of-date.

Guidelines on appointment of sales committee, marketing agent, and deal closing, option given to the objector of sale to buy back at a discount, bridging loans to sellers to facilitate their home purchase long before payment from developer, faster approval on closed deals - all this will help to make the sale process shorter, smoother and fairer.

- Tan Kok Leong
Principal
TKL Consulting

Raise awareness

THE proposed changes include an extraordinary general meeting (EGM) to start the intended en bloc sale. This will be a good implementation to ensure transparency.

There should be more informative and regular updates. Besides the mandatory eight-weekly notice, there should be encouragement to raise the awareness and understanding of the complexity of the collective sale process for the owners of the en bloc estate.

- Mohamed Ismail
CEO
PropNex Realty

IN A democracy a majority of 50%+1 is sufficient for electing a government, a super-majority is sufficient for changing the constitution. In an en bloc sale of a collective property like a condominium, an 80 per cent majority is currently required. In a private housing estate with individual titles there is no issue of an en bloc sale as every owner must agree. So condominium owners must be aware what their rights and obligations are before they buy a condominium!

- Choo Chiau Beng
Chairman
Keppel Offshore & Marine