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Published August 31, 2007

Soilbuild paying $58m for Meyer Road site

Separately, URA launches tender for Sin Ming light industrial site

By KALPANA RASHIWALA

SOILBUILD Group Holdings has bought the freehold Margate Mansion off Meyer Road for $58 million through a collective sale.

The deal reflects a unit land price of $882 psf per plot ratio including an estimated $6.5 million development charge (DC) based on July 18, 2007 DC rates. Provisional permission for a new development has not been obtained, so the $6.5 million estimated DC quantum has not been locked in.

Soilbuild will have to pay DC based on Sept 1, 2007 rates, which most market watchers say will shoot up in tandem with sharp gains in residential land values over the past six months.

Asked why Soilbuild announced a deal just a day before the latest DC rates are announced, the group's executive director Low Soon Sim said: 'We have factored in a 20 per cent rise in DC rates for the area come Sept 1, and we see the potential of the area. This is a District 15 site located in the much sought-after Meyer Road residential enclave.'

Margate Mansion's collective sale, which is subject to approval by the Strata Titles Board, was brokered by CB Richard Ellis.

The 34,804 sq ft site has a 2.1 plot ratio - the ratio of maximum potential gross floor area to land area. Assuming an average size of 1,500 sq ft per unit, the site can be redeveloped into a new project up to 24 storeys high, with a total of 48 units, Soilbuild said in a statement yesterday.

The project may be launched towards the end of next year.

Separately, the Urban Redevelopment Authority launched a tender yesterday for a 5.13-hectare industrial site in Sin Ming Lane. The land has a 2.5 plot ratio and is being sold on 60-year leasehold tenure. Colliers International director (industrial) Tan Boon Leong reckons the top bid is likely to be in the $60 psf per plot ratio range. This would translate to a breakeven cost of $230-250 psf for the completed development.

'If a developer wants to maximise profit, he will build a ramp-up development,' Mr Tan said.

The site is zoned for Business 1 use and can be used for clean and light industrial use. It is within the established Sin Ming Industrial Estate.

The tender for the site, which is on the confirmed list of the Government Industrial Land Sale Programme, closes on Oct 24.

Published August 31, 2007

NEWS ANALYSIS

Horizon Towers saga reaches a turning point

By MICHELLE QUAH

(SINGAPORE) The long-running saga that has gripped the Singapore property market has reached a turning point; the majority sellers in the Horizon Towers debacle now have just over a week to respond to lawsuits filed against them.

Sued for allegedly messing up the en bloc sale of the development, the majority sellers need to decide if they should contest the action or give in to the demands.

BT spoke to several lawyers to determine the implications of each decision.

Background

The tale began in February when 84 per cent of Horizon Towers owners - the majority sellers - agreed to sell the Leonie Hill development en bloc to Hotel Property Ltd (HPL), Morgan Stanley Real Estate-managed funds and Qatar Investment Authority for $500 million.

The sale fell through when the Strata Titles Board (STB) in early August refused to grant an order for the collective sale. The board said the sale application was defective because certain documents were missing.

STB's rejection came just days before the Aug 11 deadline for the completion of the collective sale. To salvage the deal, HPL and its partners asked the majority sellers to extend the deadline and either to appeal against the STB's decision or file a fresh application.

When the majority sellers did not respond, HPL and its partners decided to make good on their threat to sue.

The lawsuit

Through their lawyers, Allen & Gledhill, HPL and its partners filed an originating summons in the High Court last week - naming all 255 owners and the sales committee members who signed off on the collective sale as defendants.

It is believed that HPL feels the majority sellers may not have kept faith with them - especially when some sellers were not keen on having the en bloc sale succeed, when subsequent collective sales of neighbouring developments fetched much higher prices.

HPL and its partners are now demanding that the majority sellers 'do everything necessary' to obtain the collective sales order - including extending the sale completion deadline by four months to Dec 11, appealing against STB's decision and/or filing a fresh application for a new sales order, if needed.

Should the sellers fail to take one of these actions, HPL and its partners will sue for damages of between $800 million and $1 billion. This means each of the majority sellers could be liable for about $4 million.

The majority sellers have until Sept 11 to decide on what to do.

The minority owners are not being sued because they were not part of the collective agreement to sell Horizon Towers, but the majority's decision would impact whether they would have to move out of their homes.

What should Horizon owners do?

The sales committee of Horizon Towers told BT they have asked the High Court to appeal against STB's decision, but have not yet decided if they should give in to the other demands.

Some sellers have indicated their intention to contest the lawsuit, with one apartment owner saying the sellers intend to raise up to $5 million to engage lawyers to prepare their defence.

The majority is now collectively represented by Tan Rajah & Cheah, but individuals have begun seeking their own legal advice.

BT spoke to lawyers not involved in the Horizon Towers saga. While refraining from making a direct judgment on the case, the lawyers acknowledged that the majority sellers are obliged to 'do everything in their power' to file a proper sale application to the STB, given that they agreed to do so in the sale-and-purchase agreement.

Patrick Ee, director of law firm Legal21 LLC, told BT: 'It's an accepted position in law that parties to an agreement have to use their best endeavours to achieve the condition precedent in that agreement. In a previous en bloc deal I was involved in, we advised the sales committee to extend the sale completion deadline because that was what was needed to ensure that the sellers were 'doing everything in their power' to make a proper collective sale application to the STB.'

Mr Ee also pointed out that in the case of Horizon Towers, the STB had rejected the collective sale order application because of improper documentation. 'Speaking generally, technicalities which can be rectified should be dealt with,' he said.

Some majority sellers have also indicated their intention to name the lawyers and sales agents who advised them on the collective sale application as third parties to the claims made by HPL and its partners.

A corporate lawyer, who asked to remain unnamed, commented on such a course of action: 'Naming their advisers as third parties doesn't absolve the sellers of their contractual obligations to the buyers; it merely serves to indemnify them against some of the damages which HPL is looking to claim against them.'

Alvin Chang of M&A Law Corporation explains the position further: 'Bringing in the advisers as third parties doesn't mean the sellers can shift the blame completely on the advisers. It just means that, should HPL prove its case against the sellers and succeed in their claim for damages, the sellers can try to get their advisers to indemnify them for those damages caused as a result of the advisers' negligence or inadequate advice.

'But whether the sellers have a case would depend a lot on the scope of work their advisers were supposed to provide during the en bloc sale application.'

Nicholas Narayanan of law firm Nicholas & Co believes the focus should be on resolving the issue, rather than assigning blame. 'I feel it's premature at this juncture to point fingers at various parties as to who's to blame for the STB's decision, when a resolution for the whole matter is clearly in sight. The majority sellers can easily rectify the situation: they can extend the deadline and refile an application to save the sale,' Mr Narayanan said.

Published August 31, 2007

Chevron House sets record price for office block deals

CapitaLand, partners sell Raffles Place building for $730m or $2,780 psf

By KALPANA RASHIWALA

(SINGAPORE) CapitaLand and its partners have sold their stakes in Chevron House (formerly known as Caltex House) at Raffles Place in a deal that values the leasehold office block at $730 million or $2,780 per square foot of net lettable area.

This sets a new record for an entire office building, surpassing the $2,650 psf set earlier this year for the freehold 1 Finlayson Green. Chevron House stands on a site with a remaining lease of about 81 years.

Market watchers are wondering if a new record price will soon be achieved, possibly for Hitachi Tower next to Chevron House and in which CapitaLand also has a 50 per cent stake.

The 999-year leasehold Hitachi Tower, which faces Collyer Quay, was earlier reported to have attracted a top bid of $3,200 psf of net lettable area, following an expression of interest exercise.

However, industry talk now is that negotiations with the top bidder may have met with some hitches - although it is suggested that this does not necessarily mean the deal is off. 'It could just mean that negotiations may now be open with the other bidders,' one observer said.

When contacted, a CapitaLand spokeswoman said: 'The owners of Hitachi Tower are negotiating with several parties to divest their interests, and we will make the appropriate announcement if any definitive agreement has been signed.'

CapitaLand owns Hitachi Tower jointly with National University of Singapore.

The property giant declined to identify the party to whom it and its partners have sold their stakes in Chevron House. But it is believed to be a foreign fund.

'Globally, in the real estate investment market, it is the international funds that are buying, because that's where the capital is being raised. And you have a whole variety of investors - including private equity, savings (including pensions), professional investment groups,' an industry player said.

Jones Lang LaSalle is understood to have brokered the sale of Chevron House.

CapitaLand owns a 50 per cent stake in Chevron House, with IP Property Fund Asia and NTUC Income Insurance Co-operative each holding 25 per cent. The three parties own their stakes in Chevron House through Savu Properties Ltd and under yesterday's deal, are selling their stakes in this company.

The completion date of the sale is Sept 24. 'Upon completion, CapitaLand will recognise in its group consolidated accounts a gain of approximately $150.8 million,' the group said yesterday.

The average prime office capital value rose 117 per cent year-on-year in the second quarter of this year to $2,500 psf, while average monthly Grade A office rental value in Q2 this year was $13.10 psf, up 92.6 per cent from the same period last year, according to CB Richard Ellis data.

Aug 30, 2007

Agents who discourage a transaction if told they won't get a commission

I HAVE a two-room flat which I rent out. I used to get agents to find tenants for my flat.

Because I am now retired and am free, I do the advertising, answering calls and taking all the details myself. But I encounter a lot of harassment by agents who want a commission although they do not do anything but just bring in clients who want to view the place. They want commission from both parties.

When I reckon that clients like my place, and the rental is negotiated, the agent approaches me for commission for which he had not done anything. When I tell him I don't intend to give him/her a commission, he/she would persuade the client to 'abandon' this place and go for a 'better' accommodation.

The client, therefore, loses the opportunity to rent this place. It is, in my view, unethical as the client has lost an opportunity. I guess this is a common case, but something must be done about it.

D Sambasivan

Aug 30, 2007

When an agent's presence prevents a legitimate property deal from going through

I READ with interest the letter, 'Why flat buyers should approach sellers directly'.

In some cases, agents become a stumbling block to a successful transaction.

My friend experienced this just a few days back. He went with his agent to buy an executive apartment. He liked the house as it met all his requirements. Both the seller and buyer agreed on the price.

Then the seller's agent dropped a clanger. As this was a negative sale (whereby the seller is incurring a loss and won't get any cash out of the sale), the seller will not be able to pay his agent's commission. Therefore the seller's agent said that an amount of $10,000 had to be paid in cash separately by the buyer and the selling price will be declared after deducting this amount.

My friend's agent was a genuine guy and he turned down the offer of the seller's agent, saying it was illegal. Now because of the presence of the seller agent's in the picture, a legitimate transaction had to be aborted. Both my friend and the seller are disappointed.

The seller's agent told my friend that since the $10,000 was to be paid in cash, there would be no record and no one would know about it. Should we attribute this to agents functioning unscrupulously or is it a genuine case where their efforts have also to be rewarded?

N. Nageswaran

Aug 30, 2007

Apartment price up $140K in 5 mins

I WOULD like to share my experience with a dishonest housing agent, in the hope that future sellers will not be fooled by unscrupulous 'I will try my best to get you the best price' agents.

Two years ago, I appointed an agent to sell my apartment for $940,000.

It took a while to sell it because market conditions at that time were not too good. Eventually, she called and said she had received an offer of $800,000 for the unit.

Desperate I might have been but I refused to sell because the price was too low. I told her that I would not sell for less than $900,000.

Playing the good, honest agent, she asked me if I would split the difference with her if she could get the buyer to pay more than $900,000.

Thinking that no buyer would agree to pay an additional sum of more than $100,000 after having offered such a low price, I agreed to split the difference with her.

Less than five minutes later, she called and said she managed to convince the buyer to pay $940,000, which was the price I wanted to sell my apartment for originally.

It was only then that I realised that I had been duped. I learnt an expensive lesson.

Goh Leng Choon

Aug 30, 2007

En bloc sales without tears

SELLERS both eager and reluctant in collective property deals will find out in time if the legislative changes Deputy Prime Minister and Law Minister S. Jayakumar tabled in Parliament on Monday balance their competing interests. What the latest draft amendments to the Land Titles (Strata) Act will do, as much as they can do for the time being, is to provide more safeguards and make the process more transparent for both groups. These will go a long way to helping them avoid doubt and dispute that could lead to drawn-out and costly litigation, such as in the current Horizon Towers case. The proposed changes could not have come sooner. They strengthen the practice in the crucible of a booming property market. Many - sellers, buyers, realtors and lawyers as well as the authorities - have learnt much in the last few months of en bloc frenzy.

More than 100 people recently made over 400 suggestions in six weeks of public consultation that resulted in more than 30 proposed measures. The intensive and extensive exercise appears to have thrown up fixes that are sorely needed. Up to now, no rules exist governing the establishment and conduct of an en bloc sales committee. With the changes, the decision to set one up and the consideration of its proposals will lie with the management corporation, thus effectively safeguarding owners from any sharp practices outsiders may have in mind. The requirement that a sale must be launched through public tender or auction will help ensure the best price. The five-day cooling-off provision will protect sellers from making a hasty decision. The presence of a lawyer to witness documents and to clarify terms will increase everyone's comfort level while guarding the deal from technical pitfalls.

Another significant change is that the consent owners must give for an en bloc sale will relate to the size as well as the share value of their property. The additional condition is a sensible attempt to deal with the concerns of owners of residential properties, which generally have a smaller share value than offices or shops in a mixed development. Beyond that, the 80 per cent and 90 per cent owner consent requirement will be left untouched for developments more than 10 years old and less than 10 years old respectively. It is probably felt that increasing the percentages will make such deals unduly onerous. If the proposals make possible en bloc sales without tears while encouraging urban renewal at an optimal pace, an objective not to be lost sight of, they will have done their job. If not, further tweaks can always be made.

Aug 30, 2007

Good class bungalow sold for record $29m

By Fiona Chan, Property Reporter

A GOOD class bungalow at 15 White House Park has become mainland Singapore's most expensive, after it was sold for a record $1,308 per sq ft (psf) - eight years after the historic property was restored and put on sale.

The 22,000 sq ft conservation bungalow - called Glencaird - was sold to a Singaporean for $28.8 million, Wheelock Properties said in a statement yesterday.

Wheelock has been managing the property for Oroll, a wholly-owned unit of The Wharf (Holdings), which is also owned by Wheelock's parent, Wheelock and Company.

Glencaird is one of 12 luxury bungalows that make up The Glencaird Residences and the only conservation bungalow in the series.

Oroll developed the bungalows.

The other 11 bungalows have already been sold at an average price of $838 psf.

Before it finally found a buyer, Glencaird - a restored, 105-year- old Victorian bungalow with five bedrooms - had sat empty since its completion in 1999.

'We received several offers for Glencaird over the years,' said Mr David Lawrence, Wheelock's chief executive officer, in the statement.

'However, we felt they were not reflective of the value, given that this is a very unique conservation piece in an excellent location.'

Prior to Glencaird's sale, the record for mainland Singapore's priciest bungalow was held by 63 Dalvey Road - sold in March for $16.45 million, or $1,091 psf.

On Sentosa, the highest price fetched by a bungalow plot is $1,473 psf.

Good class bungalows, Singapore's most prestigious homes, are now enjoying astronomical asking prices amid the property boom.

Aug 30, 2007

Prime state sites in Toa Payoh, Alexandra for sale

By Tan Hui Yee, Housing Correspondent

TWO prime state sites - an Alexandra Road residential plot and a commercial one in Toa Payoh - are now available for sale.

The Alexandra site is a 99-year leasehold plot near Tanglin View, Tanglin Regency and the upcoming Metropolitan just a stone's throw away from the Redhill MRT station.

The site area is 0.86ha and has a maximum gross floor area of 451,428 sq ft. With these dimensions, a condominium 40 storeys high with 360 to 400 homes can be developed on the site.

The Urban Redevelopment Authority is marketing the site, which is on the Government's reserve list.

It will go to tender once a developer commits to an acceptable bid.

Analysts agree that the site is a prime one but have given wide-ranging estimates on how much it will fetch.

Mr Nicholas Mak, director of consultancy and research at Knight Frank, expects a top bid of $375 to $400 per sq ft per plot ratio (psf ppr).

CB Richard Ellis executive director Li Hiaw Ho, however, tips it at $650 to $750 psf ppr, while Jones Lang LaSalle's regional director and head of investments, Mr Lui Seng Fatt, forecasts a bullish $1,000 psf ppr or more. That values the plot at $451 million.

Mr Li likened the condo that could be built on the site to the one going up next door - the 99-year leasehold Metropolitan, which drew long queues when it was launched.

'We expect the new project to be popular among prospective home buyers. Investors will be attracted to this project, too, as apartments in the locality are popular among tenants,' he said.

Mr Li expects the condo units to each sell for an average price of $1,200 psf to $1,300 psf.

The Toa Payoh commercial land, meanwhile, is a 99-year leasehold site in Lorong 6 with an area of about 0.14ha.

It can take up to 45,105 sq ft of built-up space comprising retail, food and beverage, office and entertainment outlets.

The tender, which is being handled by the Housing Board, closes on Oct 16.

Mr Lui of Jones Lang LaSalle estimated that the site could yield about 30,000 sq ft of lettable space and would fetch at least $70 million in the tender.

The small site near the bustling HDB Hub can accommodate a three- to four-storey development suitable for retail or food outlets serving the mature housing estate and offices nearby, he said.

Aug 29, 2007

Tender for Anson Road site closed

By Nicholas Fang

THE tender for a 99-year-old office plot on Anson Road closed yesterday with local-based Firstoffice lodging the highest bid of $237.2 million.

It outbid Mapletree Lighthouse Trust trustee VivoCity, which offered $201.7 million, and Winglow Investment, which bid $159.8 million.

The Firstoffice price works out to $941 per sq ft per plot ratio (psf ppr), which is below the $1,021 psf ppr a Mapletree Investments unit paid for a larger plot nearby last month.

Mapletree also had to beat four rival bidders for that plot; only three bidders contested the latest tender.

But industry experts say this is not an indication that the property boom is starting to lose its fizz.

For one, the earlier site is 39,733 sq ft compared with the latest plot's 27,281 sq ft.

Property consultancy Knight Frank's head of research and consultancy, Mr Nicholas Mak, said the two locations also differed in their appeal.

'The latest site is triangular in shape and one side faces a carpark and a large exhaust pipe from International Plaza.

'Even if the owners choose to build higher, the occupants would still end up looking into the offices of International Plaza just 20m away.'

CBRE Research executive director Li Hiaw Ho said: 'Based on the highest bid submitted, the break-even cost for the site is likely to be around $1,700 to $1,800 psf ppr.

'This would provide the successful bidder with a stabilised yield of around 4.5 per cent to 5 per cent based on a gross rent of about $9 to $10 psf each month.'

The site was launched for tender by the Urban Redevelopment Authority (URA) on July 4.

URA said that a decision on the award of the tender will be made once the bids have been evaluated. It will be announced later.

Firstoffice is owned by Homerun 28, which is based in Mauritius.

The Singapore firm's directors include Australian Andrew Heithersay, who lives in Hong Kong, Singapore permanent resident Ian Mackie and Singaporean Woo May Poh.