A Seller's Cautionary Tale From ST Forum 02 Oct 09

[Cactus72]

I AM compelled to share my experience as a cautionary tale after reading the report, 'Private homes still seeing high demand' (Sept 22). I was a flat owner of Gillman Heights, which was sold in a collective property sale exercise and for which I received $887,000 (around $520 per sq ft) for my 1,700 sqft three-bedroom unit.
By the time I received my money, I could only afford a similar unit far from the city and certainly not as central as Gillman Heights.
Former owners like me were assured we would receive priority in buying units in the new condominium - The Interlace - on the site of our former home.
But at $1,000 psf, I would have been effectively downgraded to a much smaller apartment at the same location. Worse, we were given only three days' advance notice of the exclusive preview for us to choose our units at the Shenton Way office of the developer, CapitaLand Residential.
The preview, like the units offered to us, was unfavourable. We were not given brochures and all we had to gauge the new condo visually was an amateurish miniature model which was a stark contrast to the sleek, three-dimensional and professionally crafted model displayed at the sales office at the public launch.
The preview seemed like a half-hearted attempt by the developer to meet its obligations under the sales pact.
Was the professional Interlace model completed and ready for viewing at the off-site sales office, and if yes, why was the 'private preview' not held at CapitaLand's temporary River Valley Road sales office instead?
Why were the preview for ex-owners and the public launch of The Interlace so starkly different? Former owners were not offered a discount and while it may seem like a public relations coup to announce that ex-owners of Gillman Heights would receive priority in selection of apartments in the new project, the ones we were offered were some of the most unfavourable.
So, if there is a moral to my experience for flat owners contemplating collective sale, I would say potential seller beware: Read the fine print over matters like priority purchase of the new condo.
Reginald Tan

[xebay11]

Notice he left out information exactly when he received his money and exactly where he bought, if 80% of the owners at that time felt that the amount was a windfall, it most probably was. This guy is just greedy.

[wqmai]

Notice he left out information exactly when he received his money and exactly where he bought, if 80% of the owners at that time felt that the amount was a windfall, it most probably was. This guy is just greedy.

Like what you had mentioned, at that time felt that the amt was a windfall. After that time, then they felt that the money received was actually peanuts as property prices sky rocketed.

[Antz621]

Notice he left out information exactly when he received his money and exactly where he bought, if 80% of the owners at that time felt that the amount was a windfall, it most probably was. This guy is just greedy.

It also depends on when he bought the enbloc condo. Just a few months ago an existing owner of hong leong garden condo wrote in to describe the enbloc amount he received was hardly "profitable" as he had bought the condo just a couple of years back so even during the enbloc to become Hundred Trees, he merely got back his buying price (abt 700k) but he still lose out on SD and reno stuff like that...

[Laguna]

It is a matter of timing, look at Farrer Court.
For GH, too bad, to blame the minority.
There is no winning chance at all. Wasting time and money.

[hans]

If I recall correctly, NUS hold a majority of units there, they went with the enbloc, then partner with the developer. Windfall for them. The minority was right to go against the enbloc. With $520 psf, what can you buy? Not even a new condo in suburbans

Like what you had mentioned, at that time felt that the amt was a windfall. After that time, then they felt that the money received was actually peanuts as property prices sky rocketed.

[hans]

Yes. I agree with you on the timing, GH with enbloc early in 2007 at 520psf, but FC was enbloc much later at above $1200psf. Both are former HUDC. Of course the minority of GH was unhappy.

Moral of the story, don't go for enbloc to early.

It is a matter of timing, look at Farrer Court.
For GH, too bad, to blame the minority.
There is no winning chance at all. Wasting time and money.

[wqmai]

If I recall correctly, NUS hold a majority of units there, they went with the enbloc, then partner with the developer. Windfall for them. The minority was right to go against the enbloc. With $520 psf, what can you buy? Not even a new condo in suburbans

Caspian at lakeside also cost more that $520 psf during recession period.

[Regulators]

very simply those gillman enblocers who sit in the committee to negotiate the deal are goons. the compensation is too little taking into consideration the land size.

[alamak]

If I recall correctly, NUS hold a majority of units there, they went with the enbloc, then partner with the developer. Windfall for them. The minority was right to go against the enbloc. With $520 psf, what can you buy? Not even a new condo in suburbans

...ha ha .. sound exactly like stock market operation ..pple inside know what is happening and .. poor minority as usual can only kpkb

[xebay11]

very simply those gillman enblocers who sit in the committee to negotiate the deal are goons. the compensation is too little taking into consideration the land size.

They would have realised much less if they sold the units individually and being a 99 year LH property, it is a ticking time bomb. Better they sold enbloc and yet they still want more......if the property is worth less it is because it is worth less.

[sealover]

I think after this case, every lawyer will draft at least one page clause in the en-bloc agreement cover mountain and sea on "priority selection" offered by developer

[jlrx]

They would have realised much less if they sold the units individually and being a 99 year LH property, it is a ticking time bomb. Better they sold enbloc and yet they still want more......if the property is worth less it is because it is worth less.

That's right.

Once an en bloc sale is sealed, an owner who wants to stay "hedged" in the property market should immediately buy a replacement property, and not wait until the developers offer them "choice units" in the new development.

Gillman Height's en bloc sale was closed in February 2007, before the steep rise in property prices (no doubt there were disputes and so forth, but that was a separate matter).

For example, with the $887 k, she could have bought a 797 sf Newton Suites apartment in Februray 2007 e.g. #10-04 $876,760 ($1,101 psf).

Today, the same floor 1,238 sf unit #10-02 was sold in 31 July 2009 at $2,100,000 or $1,696 psf.

Assuming the same psf price of $1,696 psf, the 797 sf Newton Suites apartment would be worth $1,351,712. She would have made $474,952.

If she wants to move back to Gillman Heights to stay at the Interlace, she can then sell her Newton Suites and buy a 1,350 sf Interlace apartment.

Although the new unit will be slightly smaller than her old 1,700 sf unit, her old flat was an old HUDC-type apartment similar to HDB design while this is a brand new real condo.

If she did not stay "hedged", then it was her own choice.

Probably she hoped that the market would go down further and she could scoop up something cheap? If that were the case, the market did crash early this year, but what was she doing?

I have a friend who was a Farrer Court En Bloc beneficiary who used the $2.3 million to buy a landed house, which is now worth more than $3 million.

The original HUDC flat only cost $20,000.

From $20,000 to $3 million. How can she say en bloc is no good?

What "cautionary tale" nonsense is she spouting?

[andy]

very simply those gillman enblocers who sit in the committee to negotiate the deal are goons. the compensation is too little taking into consideration the land size.

Gillman was one of those who started early off the block for the collective sale in 2006. At that time $500psf seems like a good deal before the market peaked in the end of 2007 eventhough public housing was still affordable.

It took 2 years of proceeding to complete. Now that Centro and others has reached over $1000psf in OCR, the compensation seems regretable.

Collective sales is about timing and time to completion. Get one or both of these wrong, it an utter disaster.

[andy]

I have a friend who was a Farrer Court En Bloc beneficiary who used the $2.3 million to buy a landed house, which is now worth more than $3 million.

The original HUDC flat only cost $20,000.

From $20,000 to $3 million. How can she say en bloc is no good?

Aiyo, pls don't compare Farrer. Farrer owners touched lottery. That was once a life-time thing.

Is your friend staying in his/her $3m house? If so, the money has not been realised.

[jlrx]

Aiyo, pls don't compare Farrer. Farrer owners touched lottery. That was once a life-time thing.

Is your friend staying in his/her $3m house? If so, the money has not been realised.

Yes her whole family is now staying in the landed house.

From an HDB-styled HUDC flat, the whole family has now moved into a multi-million landed house. That is several rungs up the ladder.

Money does not need to be converted into cash in order for it to be "realised". The feeling of wealth itself is a "realisation" of wealth.

In fact, of all things, money should not be held in the form of cash as it depreciates the fastest and earns the paltriest interests!

[hans]

That is provided she has the money pay the 20% and get a bank loan for the new property. And not all enbloc cases went through (like Horizon Towers), what if GH enbloc failed, she will be stuck with 2 properties. And when Lehmen collapse, property also collapse. Your hedged will incur huge paper loss, if she is using GH proceeds to finance the new property, she will lose big time.

That's right.

Once an en bloc sale is sealed, an owner who wants to stay "hedged" in the property market should immediately buy a replacement property, and not wait until the developers offer them "choice units" in the new development.

Gillman Height's en bloc sale was closed in February 2007, before the steep rise in property prices (no doubt there were disputes and so forth, but that was a separate matter).

For example, with the $887 k, she could have bought a 797 sf Newton Suites apartment in Februray 2007 e.g. #10-04 $876,760 ($1,101 psf).

Today, the same floor 1,238 sf unit #10-02 was sold in 31 July 2009 at $2,100,000 or $1,696 psf.

Assuming the same psf price of $1,696 psf, the 797 sf Newton Suites apartment would be worth $1,351,712. She would have made $474,952.

If she wants to move back to Gillman Heights to stay at the Interlace, she can then sell her Newton Suites and buy a 1,350 sf Interlace apartment.

Although the new unit will be slightly smaller than her old 1,700 sf unit, her old flat was an old HUDC-type apartment similar to HDB design while this is a brand new real condo.

If she did not stay "hedged", then it was her own choice.

Probably she hoped that the market would go down further and she could scoop up something cheap? If that were the case, the market did crash early this year, but what was she doing?

I have a friend who was a Farrer Court En Bloc beneficiary who used the $2.3 million to buy a landed house, which is now worth more than $3 million.

The original HUDC flat only cost $20,000.

From $20,000 to $3 million. How can she say en bloc is no good?

What "cautionary tale" nonsense is she spouting?

[hans]

Good for your friend.

In FC case, the enbloc went through without any hitch. The owners got their proceeds pretty fast, with over $2 million cash on hand, you have plenty of choice.

Yes her whole family is now staying in the landed house.

From an HDB-styled HUDC flat, the whole family has now moved into a multi-million landed house. That is several rungs up the ladder.

Money does not need to be converted into cash in order for it to be "realised". The feeling of wealth itself is a "realisation" of wealth.

In fact, of all things, money should not be held in the form of cash as it depreciates the fastest and earns the paltriest interests!

[EBD]

very simply those gillman enblocers who sit in the committee to negotiate the deal are goons. the compensation is too little taking into consideration the land size.

And that was the problem of the old enbloc. Anyone could form a committee, regardless of talent.

The deal for owners rests so much on these people. If you get greedy kan cheong types, you will be screwed.

Enbloc only works for owners if you are the last enbloc in the property cycle. The amount of time it takes to receive your sales proceeds is just too great, by the time you get the money you are priced out of the market.

Rarely worth it for owner-occupiers.

[Douk]

And that was the problem of the old enbloc. Anyone could form a committee, regardless of talent.

The deal for owners rests so much on these people. If you get greedy kan cheong types, you will be screwed.

Enbloc only works for owners if you are the last enbloc in the property cycle. The amount of time it takes to receive your sales proceeds is just too great, by the time you get the money you are priced out of the market.

Rarely worth it for owner-occupiers.

Exactly...

[EBD]

That is provided she has the money pay the 20% and get a bank loan for the new property. And not all enbloc cases went through (like Horizon Towers), what if GH enbloc failed, she will be stuck with 2 properties. And when Lehmen collapse, property also collapse. Your hedged will incur huge paper loss, if she is using GH proceeds to finance the new property, she will lose big time.

Yup, when I went to Lee & Lee to pick up my cheque I bumped into some owners of Tulip Gardens......... another one that fell through.

Some listened to the lawyers and didn't commit to a new property until they had the proceeds from the sale. They went to collect free money - the deposit.

Others followed the "hedging" advice & bought new places before the sale was completed. If they don't have strong cashflow and deep pockets they are in a world of hurt.

With enbloc there are too many variables. If minorities excercise their RIGHT to appeal it can drag things down , even if the sale is eventually approved.

enbloc is all about time. I got lucky through no skill of my own. Most dont.

[stl67]

Yup, when I went to Lee & Lee to pick up my cheque I bumped into some owners of Tulip Gardens......... another one that fell through.

Some listened to the lawyers and didn't commit to a new property until they had the proceeds from the sale. They went to collect free money - the deposit.

Others followed the "hedging" advice & bought new places before the sale was completed. If they don't have strong cashflow and deep pockets they are in a world of hurt.

With enbloc there are too many variables. If minorities excercise their RIGHT to appeal it can drag things down , even if the sale is eventually approved.

enbloc is all about time. I got lucky through no skill of my own. Most dont.

agree totally, en bloc is about timing. i was stucked in 2 properties when my enbloc failed at the last mintue. at that time, mkt went up too fast and I was also too "kan jiong". majority of my neighbours all in the same boat. luckily, we manage to find some rental to tie us through.

[jlrx]

That is provided she has the money pay the 20% and get a bank loan for the new property. And not all enbloc cases went through (like Horizon Towers), what if GH enbloc failed, she will be stuck with 2 properties. And when Lehmen collapse, property also collapse. Your hedged will incur huge paper loss, if she is using GH proceeds to finance the new property, she will lose big time.

agree totally, en bloc is about timing. i was stucked in 2 properties when my enbloc failed at the last mintue. at that time, mkt went up too fast and I was also too "kan jiong". majority of my neighbours all in the same boat. luckily, we manage to find some rental to tie us through.

To stay in the private property market game, one always has to have cash on standby to pay the 20% deposit. This is especially since she already knew that the en bloc was coming.

I do not know why the word "stuck" is used to describe properties. In fact, properties is something desirable to be "stuck" with; while cash is not. I would rather say that I am "stuck" with cash in the bank earning miserable interests, while awaiting buying opportunities.

Let's say the above letter writer bought the 797 sf Newton Suites I suggested in February 2007, and then let's say that subsequently Gillman Heights en bloc failed.

She will be "stuck" with two properties, but she will be a very rich and happy woman.

Newton Suites 797 sf was $$876,760 ($1,101 psf) in February 2007 but $1,351,712 ($1,696 psf) today. She would have made $474,952.

On top of that, she still has her Gillman Heights apartment. What is it worth today? Much more.

CaptitaLand paid $352 psf ppr for Gillman Heights and is now able to achieve $1,000 psf. Obviously CapitaLand is the one laughing all the way to the bank.

Imagine if the sale had failed at the Strata Titles Board. What is Gillman Heights worth today? Let's work backwards.

At a sale price of $1,000 psf, subtract $150 psf for profit margin, that's $850 psf. Subtract another $200 psf for construction costs, that's $650 psf.

That means if Gillman Heights were to be put en bloc today, developers can comfortably bid $650 psf ppr instead of $352 psf ppr.

That means the letter writer's Gillman Heights apartment should be worth ($650 / $352) x $887 k = $1,637,926.

She would have:

1. Got $750,926 more for her Gillman Heights apartment.
2. Earned $474,952 for her "kan jiong" replacement property at Newton Suites.

Total earned: $1,225,878 for this whole exercise!

[Regulators]

Gillman Hts is a classic example of being priced out of the market

And that was the problem of the old enbloc. Anyone could form a committee, regardless of talent.

The deal for owners rests so much on these people. If you get greedy kan cheong types, you will be screwed.

Enbloc only works for owners if you are the last enbloc in the property cycle. The amount of time it takes to receive your sales proceeds is just too great, by the time you get the money you are priced out of the market.

Rarely worth it for owner-occupiers.

[Reporter]

房地产获准集体出售 一屋主反对被驳回
韩宝镇
联合早报
星期二, 6-10-2009

位于如切路包括Koon Seng House在内的一项房地产集体出售交易获得分层地契局通过，其中一名男屋主提出反对并上诉高庭，但是昨天被驳回。

男屋主也被令承担代表多数屋主的销售委员会的1万元讼费。

这个座落于坤成路（如切路一带）永久地契地段的房地产由两个部分组成，第一个部分楼高四层，有24个寓所，称为Koon Seng House；另一个部分则是九个战前排屋。

这些排屋由同一名屋主拥有。至于寓所则分属不同屋主所有，拥有99万9999年租契（Lease），但不包括土地。

发展商以2100万余元买下 整笔款项将由33单位平分

发展商是以2100万余元买下这个房地产。整笔款项将由以上共33个单位平分。

起诉人吴德理（52岁）援用房地契（分层） 法令第84E节条文提出上诉。
他指出，根据该项条文，只有屋主的房子拥有至少999年租契，并不拥有土地，才能够申请集体出售。

可是，九个永久地契有地房地产（freehold landed property）并不符合这项条文规定。

换言之，24个寓所符合可集体出售的规定，而九个排屋则不然。他因此认为，九个排屋不能平分2100万余元。

主审法官翁安德烈之前在审理这起案件时，也就这类房地产是否符合84节条文的集体出售规定，指示诉辩双方另作陈情。

翁安德烈法官昨天在下判时指出，房地契（分层） 法令第84E节条文足以涵盖本案房地产的集体出售情况。

换言之，这项房地产将能够进行集体出售。

据了解，吴德理将会向最高法院上诉庭提出上诉。

吴德理和妻子共同拥有Koon Seng House其中一个寓所。2006年11月23日，房地产的18个寓所屋主和拥有九个排屋的屋主都同意集体出售，并在过后成立销售委员会。

他虽然反对卖出公寓，但是他的妻子却同意参与集体出售。

委员会无法获得100％屋主同意集体出售，于是向分层地契局申请批准。

吴德理提出反对，理由包括所得分配不公平、向分层地契局提出的申请已超过期限、集体出售的程序有问题等，但都被分层地契局一一驳斥。

分层地契局是在去年12月裁决批准集体出售。吴德理于是向高庭提出上诉。　

据了解，房地契（分层） 法令第84E节已修订，从之前的999年改为850年。本案援引的是修订前的条文。

[tericia]

To stay in the private property market game, one always has to have cash on standby to pay the 20% deposit. This is especially since she already knew that the en bloc was coming.

I do not know why the word "stuck" is used to describe properties. In fact, properties is something desirable to be "stuck" with; while cash is not. I would rather say that I am "stuck" with cash in the bank earning miserable interests, while awaiting buying opportunities.

Let's say the above letter writer bought the 797 sf Newton Suites I suggested in February 2007, and then let's say that subsequently Gillman Heights en bloc failed.

She will be "stuck" with two properties, but she will be a very rich and happy woman.

Newton Suites 797 sf was $$876,760 ($1,101 psf) in February 2007 but $1,351,712 ($1,696 psf) today. She would have made $474,952.

On top of that, she still has her Gillman Heights apartment. What is it worth today? Much more.

CaptitaLand paid $352 psf ppr for Gillman Heights and is now able to achieve $1,000 psf. Obviously CapitaLand is the one laughing all the way to the bank.

Imagine if the sale had failed at the Strata Titles Board. What is Gillman Heights worth today? Let's work backwards.

At a sale price of $1,000 psf, subtract $150 psf for profit margin, that's $850 psf. Subtract another $200 psf for construction costs, that's $650 psf.

That means if Gillman Heights were to be put en bloc today, developers can comfortably bid $650 psf ppr instead of $352 psf ppr.

That means the letter writer's Gillman Heights apartment should be worth ($650 / $352) x $887 k = $1,637,926.

She would have:

1. Got $750,926 more for her Gillman Heights apartment.
2. Earned $474,952 for her "kan jiong" replacement property at Newton Suites.

Total earned: $1,225,878 for this whole exercise!

An excellent write up i must say.

[paul phua]

An excellent write up i must say.

Yes,Yes,Huat Ah$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

[Laguna]

An excellent write up i must say.

Well, he forgot the cold sweat during the Lehman days and perhaps the sleepless nites as well

[andy]

To stay in the private property market game, one always has to have cash on standby to pay the 20% deposit. This is especially since she already knew that the en bloc was coming.

I do not know why the word "stuck" is used to describe properties. In fact, properties is something desirable to be "stuck" with; while cash is not. I would rather say that I am "stuck" with cash in the bank earning miserable interests, while awaiting buying opportunities.

Let's say the above letter writer bought the 797 sf Newton Suites I suggested in February 2007, and then let's say that subsequently Gillman Heights en bloc failed.

She will be "stuck" with two properties, but she will be a very rich and happy woman.

Newton Suites 797 sf was $$876,760 ($1,101 psf) in February 2007 but $1,351,712 ($1,696 psf) today. She would have made $474,952.

On top of that, she still has her Gillman Heights apartment. What is it worth today? Much more.

CaptitaLand paid $352 psf ppr for Gillman Heights and is now able to achieve $1,000 psf. Obviously CapitaLand is the one laughing all the way to the bank.

Imagine if the sale had failed at the Strata Titles Board. What is Gillman Heights worth today? Let's work backwards.

At a sale price of $1,000 psf, subtract $150 psf for profit margin, that's $850 psf. Subtract another $200 psf for construction costs, that's $650 psf.

That means if Gillman Heights were to be put en bloc today, developers can comfortably bid $650 psf ppr instead of $352 psf ppr.

That means the letter writer's Gillman Heights apartment should be worth ($650 / $352) x $887 k = $1,637,926.

She would have:

1. Got $750,926 more for her Gillman Heights apartment.
2. Earned $474,952 for her "kan jiong" replacement property at Newton Suites.

Total earned: $1,225,878 for this whole exercise!

I have very high regard for jlrx. His/her comments are perhaps the most insightful and to some extent the most intellectually stimulating in this forum.

Investment looks so easy on hindsight.

I'm just curious as to why there is a lapse of consistency between the comment below suggesting investment is nothing more than witchcraft versus how would the Gillman Heights would be enblocker know to buy Newton Suites.

http://forums.condosingapore.com/sho...3952#post63952

[tericia]

Well, he forgot the cold sweat during the Lehman days and perhaps the sleepless nites as well

yeah you have a point.

I think i should not do anything because investing in property is such a risky thing esp with so many banks having problems these days. It is worse if you have 2 or more properties.

If i don't make a single mistake, i won't have sleepless nights or be drenched in cold sweat thinking about my losses. It's better to have a peaceful life in singapore.

Easier to put the money in the bank or stocks so that they will be safe and the returns from these instruments are better.

Will take your advice.