THE report, 'Is S'pore's first condo worth preserving?' (The Sunday Times, Sept 24), conveys the advent of economic obsolescence of building structures here.
For property managers, economic obsolescence refers to a situation where the economic value of the building structures is less than that of the land on which the structures sit.
The building structures are encumbering the land, in an economic sense, and this encourages the owners of these buildings to demolish the structures so that new spaces, which will fetch a higher value, can be erected.
In a small country, it is not surprising that economic obsolescence seeps into our buildings at a faster-than- desired pace.
The debate is now between two groups of people: property owners who, apart from getting rent, also expect to get capital appreciation from the properties they own; and property conservationists, who are protectors of our national heritage, so that future generations will get to see the historic buildings Singapore has.
The matter is a delicate one. Properties are a good hedge against inflation.
In other words, instead of putting money into the bank and risking the weakening spending power of money, one can buy a property so that the appreciation in property value offsets inflation.
The appreciation in property value can come from the land itself, where the land value exceeds the value of
the building sitting on it, driving developers who want to pay for the appreciated land value to develop new buildings.
But who determines the 'intrinsic value' of economically obsolete buildings?
I am reminded of people who are prepared to bid for artworks, not for economic gains alone, but for the bidders' appreciation of the intrinsic value of the artworks.
It will take a sufficiently wealthy person to pay for intrinsic value, to retain a building's heritage.
The alternative would be for those who want to preserve economically obsolete buildings to pay the owners of these buildings.
Of course, the easier way is to ask the Government to intervene, but this should be a last resort. This way, we can test what society truly values.
Patrick Sio Puay Soon
