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Author: Ravi Philemon
Mixed-use redevelopment site People’s Park Centre has raised its Reserve Price from $1.3 billion to $1.35 billion and has also agreed on the method of apportionment for its first en bloc sale attempt. The Straits Times reported that the majority of owners who attended the extraordinary general meeting on Jan 9 passed the resolutions for the changes.
People’s Park Centre is yet to get the 80 per cent mandate for the en bloc sale of the mixed-use redevelopment site, but has one-year to get buy-in from the majority of owners.
Mr Lee Chin Chee, spokesman for the Collective Sale Committee (CSC) said that his Committee hopes to have the legally required support for the sale within four months in order to launch the en bloc sale by the middle of this year. Mr Lee added that the Reserve Price has been upped from a 41 per cent premium over valuation to 45 per cent premium to get support for the Collective Sale effort quickly.
“The method of apportionment is structured as such: 80 per cent is based on the valuation of the units, 10 per cent on the area of the units, and 10 per cent on share value,” he added.
Subsidiary proprietors who are apartment owners now will get between $1.885 million and $2.683 million under this apportionment method. While office owners, between $432,000 and $4.431 million, and shop owners, from $267,000 to $16.4 million.
The owner of the carpark at People’s Park Centre stands to gain $56.7 million, Mr Lee said.
But some owners have objected to the sale. “Only 62 shop units had their sales proceeds adjusted higher by a total of $9 million. The other 639 units remained unchanged. That is the main (source of) disgruntlement among those objecting. Some also think the reserve price is too low,” Mr Lee added.
People’s Park Centre is a mixed-use development, strata-titled development located along Upper Cross Street in Outram, Singapore. It has a mix of residential units, shops and offices. Constructed on the land sold in the first Government Land Sales (GLS) programme, People’s Park Centre marks an important chapter in the architectural history of post-independence Singapore. Completed in 1973, the centre is now slated for redevelopment.
The Straits Times reported in early last year that a CSC was formed for the collective sale of People’s Park Complex on March 5 2018 at an extraordinary general meeting following “unanimous consensus”, and that it intends to appoint a real estate firm soon.
The mixed-use redevelopment site sits on a 96,000 sq ft site, with a gross floor area of about 820,000 sq ft. It is zoned commercial under the current masterplan. The development, which has 120 apartments, 256 offices, 324 shops and a carpark, has more than 50 years left on its lease.
Mr Paul Ho, chief mortgage consultant of iCompareLoan said owners of People’s Park Centre have to act quickly and decisively. Whatever decision owners facing en bloc sale make, it is better to make it fast so that the sale (or non-sale) can be concluded with minimal delay and maximum benefit to the owners. One way he said was to conduct a Collective Sales Agreement (CSA) as well as concurrently collect a “Non Collective Sales Agreement (NCSA)”, so that once a NCSA reaches 20%, the collective sale process is called off. There is really no point to drag on.
As collective sale process takes 20 to 30 months to complete, during this time, the owners typically do not have sufficient funds for down-payment and their CPF OA funds are tied up in the property, hence they cannot buy a new condominium early.
By the time the transaction is completed in 20 to 30 months later, the property prices would have already moved up 10 to 20 per cent. This is already evidenced by sellers of older estate asking higher prices. Hence if the process takes 20 months to 30 months, owners may need to consider the cost of a replacement unit by that time, else they may want to hold up a higher selling price.
Mr Ho pointed out that the rules are quite onerous and stringent and is governed by the Land Titles (Strata) Act – section 84A. Over the years, additions and amendments by the Ministry of Law to the en bloc law have made the collective sale rules even tighter.
He said that many of the home owners who refinanced their home loans to fixed rate home loans or those with 2 years locked-in or 3 years locked-in period will incur full home loan redemption penalty. This penalty is usually 1.5% of the loan amount. This tends to affect those who have bought their properties in recent years as their loan size tends to be bigger and their corresponding home loan redemption penalty higher.
Mr Ho suggested that if one’s home is at risk of en bloc, the owner could consider a home loan where there is no locked-in penalty, but instead entails a higher housing interest rate cost. The next best option is to look for packages with a waiver of locked-in penalty due to sale of property. Such owners may contact a mortgage broker to assist them to find such packages with waiver of locked-in penalty.
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