Reserve prices raised to beat rule change in en bloc sales
Published July 19, 2007
Reserve prices raised to beat rule change in en bloc sales
Big rush to get 80% consent before amendment kicks in
(SINGAPORE) Some collective sale agents and sales committees have jacked up reserve prices significantly over the past few weeks in order to beat an impending change in en bloc rules. They are trying to obtain the minimum 80 per cent consent level from owners before the new legislation kicks in.
Under the proposed new rules, an en bloc sales committee must be set up and its members elected at an extraordinary general meeting (EOGM) convened by the estate's management corporation. This will apply to all projects which have yet to obtain the required majority consent from owners at the time the amendments are passed by Parliament, most likely this quarter.
'So if the en bloc sales committee in an estate was not elected via an EOGM as required under the impending legislation and if the minimum 80 per cent consent level from owners has not yet been bagged, then there's a danger you may have to unwind everything. That's the main reason we're seeing cases of reserve prices being raised substantially to get owners with at least 80 per cent of shares values to sign the collective sales agreement (CSA),' explains Knight Frank executive director Foo Suan Peng.
Even for cases where sales committees were elected by EOGMs, agents and sales committees are scurrying to jack up reserve prices to secure the required consent because the CSAs may be expiring soon.
'Under the law, owners have a maximum 12 months to get the 80 per cent consent, although in some instances, a shorter period of three to six months may be decided among the owners,' explains CB Richard Ellis executive director Jeremy Lake.
But this could result in projects being launched for sale with very high indicated prices, which can distort information of real current pricing, he adds.
Says Credo Real Estate managing director Karamjit Singh: 'Sales committees may prefer to raise the reserve price and secure the 80 per cent than to start all over again.'
Once the minimum 80 per cent consent level is obtained for estates 10 years or older (for estates below this age, the minimum consent is 90 per cent), owners have up to 12 months to find a buyer and make an application for a collective sale to the Strata Titles Board.
'If you get 80 per cent even at what may be a high price today, you at least have a chance of finding a buyer if the market runs up further,' a seasoned property consultant said.
In several recent cases the mode of sale was changed from expression of interest (typically used when the minimum consent has not been obtained) to tender, which requires the CSA to be signed by owners controlling at least 80 per cent of share values, after the reserve prices were raised significantly.
Examples include Rivershire at Leonie Hill Road (with the expected price raised from about $237 million or $1,500 psf ppr when the EOI was launched in April to $348 million or $2,200 psf ppr when the tender was launched last month) and Watten Estate Condo (where the reserve price went up from $400 million to $480 million).
The trend revealed itself around mid-June when the tender for Pacific Mansion was launched, after the reserve price was raised significantly to entice owners to sign the CSA. While the reserve price has not been made public, industry observers say that the asking price of $2,400 psf ppr for the property in the River Valley area is higher than the $2,337 psf ppr achieved for The Ardmore in a more choice location.
CBRE's Mr Lake sounds a cautionary note. 'As a result of this trend, owners' expectations keep rising in a vicious cycle and the consequence of that is that success rate of collective sales may diminish if the market does not rise to meet these inflated expectations,' he says.
Re: Reserve prices raised to beat rule change in en bloc sales
Quote:
Originally Posted by mr funny
Published July 19, 2007
Reserve prices raised to beat rule change in en bloc sales
Big rush to get 80% consent before amendment kicks in
(SINGAPORE) Some collective sale agents and sales committees have jacked up reserve prices significantly over the past few weeks in order to beat an impending change in en bloc rules. They are trying to obtain the minimum 80 per cent consent level from owners before the new legislation kicks in.
Under the proposed new rules, an en bloc sales committee must be set up and its members elected at an extraordinary general meeting (EOGM) convened by the estate's management corporation. This will apply to all projects which have yet to obtain the required majority consent from owners at the time the amendments are passed by Parliament, most likely this quarter.
'So if the en bloc sales committee in an estate was not elected via an EOGM as required under the impending legislation and if the minimum 80 per cent consent level from owners has not yet been bagged, then there's a danger you may have to unwind everything. That's the main reason we're seeing cases of reserve prices being raised substantially to get owners with at least 80 per cent of shares values to sign the collective sales agreement (CSA),' explains Knight Frank executive director Foo Suan Peng.
Even for cases where sales committees were elected by EOGMs, agents and sales committees are scurrying to jack up reserve prices to secure the required consent because the CSAs may be expiring soon.
'Under the law, owners have a maximum 12 months to get the 80 per cent consent, although in some instances, a shorter period of three to six months may be decided among the owners,' explains CB Richard Ellis executive director Jeremy Lake.
But this could result in projects being launched for sale with very high indicated prices, which can distort information of real current pricing, he adds.
Says Credo Real Estate managing director Karamjit Singh: 'Sales committees may prefer to raise the reserve price and secure the 80 per cent than to start all over again.'
Once the minimum 80 per cent consent level is obtained for estates 10 years or older (for estates below this age, the minimum consent is 90 per cent), owners have up to 12 months to find a buyer and make an application for a collective sale to the Strata Titles Board.
'If you get 80 per cent even at what may be a high price today, you at least have a chance of finding a buyer if the market runs up further,' a seasoned property consultant said.
In several recent cases the mode of sale was changed from expression of interest (typically used when the minimum consent has not been obtained) to tender, which requires the CSA to be signed by owners controlling at least 80 per cent of share values, after the reserve prices were raised significantly.
Examples include Rivershire at Leonie Hill Road (with the expected price raised from about $237 million or $1,500 psf ppr when the EOI was launched in April to $348 million or $2,200 psf ppr when the tender was launched last month) and Watten Estate Condo (where the reserve price went up from $400 million to $480 million).
The trend revealed itself around mid-June when the tender for Pacific Mansion was launched, after the reserve price was raised significantly to entice owners to sign the CSA. While the reserve price has not been made public, industry observers say that the asking price of $2,400 psf ppr for the property in the River Valley area is higher than the $2,337 psf ppr achieved for The Ardmore in a more choice location.
CBRE's Mr Lake sounds a cautionary note. 'As a result of this trend, owners' expectations keep rising in a vicious cycle and the consequence of that is that success rate of collective sales may diminish if the market does not rise to meet these inflated expectations,' he says.
This is the making of ppl who r 'GREEDY,' but never admitt, n not contended in their proportion of money they share. alway asking for the moon.
With enbloc becoming END BLOCK they have to say bye bye to millions tha r supposed to be in ther pockets earlier.
Some will make it in their lifetime, not all can. let wait n see.
Re: Reserve prices raised to beat rule change in en bloc sales
Enbloc has gone for a honeymoon.
