Thursday, February 6, 2014

HUDC estate Braddell View designated for privatisation

HUDC estate Braddell View has been designated for privatisation, said the National Development Ministry on Tuesday.

Braddell View is the last of 18 HUDC estates to be designated for privatisation.

However, there are some issues that need to sorted out before the privatisation works can begin.

Braddell View was developed in two phases on two separate land leases, with different expiry dates.

In order to begin privatisation works, the two leases must expire at the same time.

To harmonise the leases, owners will have to pay for the top up premium, legal fees, survey costs and stamp duty. This will be determined by the residents themselves.

Analysts Channel NewsAsia spoke with say that while the privatisation is likely to go through, it will also likely be a long drawn affair as some owners may not be happy with the amount they have to pay.

Some owners may also choose to sell their units while others may hold on in anticipation of a potential en bloc sale.

Symbolic end to HUDC era

Writing in his blog on Tuesday, National Development Minister Khaw Boon Wan described Braddell View's designation for privatisation as the symbolic end of the HUDC era.

Mr Khaw recalled that the first HUDC estates were built in the 1970s to help middle-income families own their homes, and they were well received.

By the 1980s, demand for HUDC flats had dwindled as there were more HDB flats in the resale market by then.

HDB had also introduced the Executive Flats as an alternative housing option, and private properties had also become more affordable after a declining property cycle.

In 1987, HDB stopped building HUDC altogether.

In 1995, HDB started to privatise the HUDC estates, enabling their dwellers to become private property owners.

Mr Khaw noted, "Housing policies are dynamic and evolve with changing circumstances."

"The era of HUDCs has ended. However, HUDC estates will remain a testament to the creative ways in which we have housed our people and help them fulfil their dreams," he added.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
AsianPrime Properties Pte Ltd (L3010623G)

Most Braddell View flat owners give consent to privatisation

The Braddell View management committee said more than 80 per cent of flat owners have agreed to the privatisation of the HUDC estate, as of January 28.

This is already more than the 75 per cent mandate required for privatisation.

Residents have to pay a top-up to harmonise the two leases on which the estate is built, which have different expiry dates.

The committee said according to the chief valuer from Inland Revenue Authority of Singapore (IRAS), the indicative top-up value given in September last year was S$13.47 million.

Braddell View was put up for privatisation by the government last week. It is the last HUDC estate to be put up for privatisation.

The management committee had started getting consent for privatisation after its Extraordinary General Meeting held in November last year.

This was after more than 98 per cent of those who attended approved the resolution.

There are 918 flats and two shops in the estate.

Alice Liew, who has lived at Braddell View for 27 years, said: "We will feel more comfortable that it's our own estate finally, and hopefully, the property price may go up a bit.”

One issue that has to be resolved before privatisation could take place is the different expiration of the two leases. They have to be topped up so that they both expire in 2080.

Based on the indicative valuation, owners of flats built on the older land parcel, or Phase One, are expected to pay S$12,000. Residents under Phase Two will pay S$8,000.

The management committee plans to meet with the Housing and Development Board next week to discuss the next step and get a definitive top-up price.

The committee said it hired two private valuers in 2012, who both gave an estimate of S$8 million for the top-up, compared to the S$13.47-million figure it received from the chief valuer.

Alex Teo, chairman of the Braddell View management committee, said: "According to present circumstances, the economy and property prices, everybody is keeping their fingers crossed -- (for)... a much lower top-up price."

The committee said there have also been some owners who had raised concerns about paying the top-up premium.

Mr Teo said: "A lot of these retirees have been living quite some time without jobs and without income. These retirees don't have any children around. We’ll try to figure out how to help these residents."

The committee plans to hold a financial seminar once the final top-up value is determined to educate and present owners their financing options -- which include tapping their CPF or taking a loan from banks.

It also plans to use part of the estate's sinking fund to subsidise some of the costs.

There is currently around S$6 million in the fund.

Teresa Ng, who has been a Braddell View resident for almost 19 years, said: "The sinking fund can help close to half of the deduction of the privatisation fee so that it's affordable."

The whole privatisation process is expected to take about 15 months, barring any unforeseen circumstances.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
AsianPrime Properties Pte Ltd (L3010623G)

HUDC and the story of housing windfalls

First built as affordable homes for the sandwiched middle class, they were a ticket to a windfall three decades later. With the last HUDC estate heading towards privatisation - Braddell View - that chapter in Singapore's housing story is drawing to a close.

It began with little fanfare in the Budget debate of 1974.

MPs wanted middle-income earners to be able to buy private property with Central Provident Fund savings.

Then Minister of State for Labour Sia Kah Hui turned them down, but signalled: the Government would be building, "in the very near future", flats for this exact middle-income group.

Three days later, then Minister for Law and National Development E.W. Barker gave details.

The aim: to provide homes for the sandwiched class of young professionals and executives, who earned too much for a Housing Board flat but too little to afford private housing.

This, as Housing and Urban Development Company manager Lim Poh Guan put it in a 1976 interview, was "so that they could have a stake in the country".

The five estates of the pioneer batch were an ambitious alternative to condominium living.

Some, such as Braddell View - which the Ministry of National Development on Tuesday announced has been designated for privatisation - and Farrer Court, were conceptualised as green, sprawling spaces. The 618 units in Farrer Court estate, for instance, had 838,488 sq ft of land to themselves - about 21/2 times the size of the Padang.

Others commanded views of parkland, such as Lakeview estate in Upper Thomson Road, or the sea, like Laguna Park and Amberville in the east. They featured landscaped grounds, playing fields and covered carparks. And the three-bedroom flats they contained, which came in two sizes, were larger than any before.

The smaller ones, at 139 sq m, are more than twice the size of a new three-room flat today.

And the larger ones, at 158 sq m or 1,700 sq ft, remain among the biggest public flats ever.

Who lived in them? Four in five buyers were aged below 35, said the HUDC in 1976. They were doctors, teachers and engineers; architects, accountants and assistant managers.

The smaller, cheaper units proved more popular with these young professionals. In 1977, balloting began for the second phase of HUDC estates, and a waiting list began to build.

Going upmarket

BUT in 1979, things took a sharp, upmarket turn. Phase II units in Chancery Court, Amberville and the second part of Braddell View cost up to 20 per cent more than their predecessors.

And the HUDC added that it was going to focus on higher-priced, better-quality units.

The reason? A new option had emerged for middle-income buyers: HDB executive apartments, which would also be cheaper.

For the same reason, smaller HUDC units would no longer be built. Phase II flats were an intermediate size, at 155 sq m.

And the HUDC introduced grander options, such as 178 sq m maisonettes in Chancery Court.

In 1980, the income ceiling for HUDC buyers was also raised, to a maximum combined family income of $6,000, up from $4,000.

Coming down to earth

TILL then, HUDC estates might have been seen as exclusive preserves of the middle class, ensconced in leafy surrounds.

But that was an image that then Prime Minister Lee Kuan Yew, for one, did not want.

In 1981, at a New Year party in his Tanjong Pagar ward, Mr Lee urged the middle-income to live and mix with their less well-to-do neighbours. He also exhorted them to take leadership in their communities, for instance in residents' committees.

Later, then National Development Minister Teh Cheang Wan followed up with the announcement that more HUDC flats would be built in HDB estates, for a balanced mix of residents.

"They will become an integral part of public housing," he said.

Phase III thus included HUDC flats in Bedok North, Hougang and Jurong East, alongside Gillman Heights and Pine Grove developments.

Yet even as the scheme aimed to put the middle-income in touch with the ground, it was losing steam. Private property prices were falling at the upper end; executive and resale HDB flats provided alternatives at the other.

In 1984, one in five of the 2,142 Phase III units on offer was rejected. Phase IV faced a similarly lukewarm response. In 1987, there were 704 HUDC flats completed but lying empty.

And so, that year, the HUDC scheme came to an end. It eventually had 18 estates and 7,731 units to its name.

Going private, going en bloc

BUT the story was far from over for existing HUDC estates.

In 1995, the HDB announced that it would start privatising them, letting home owners have control of their estate.

This was not entirely out of the blue. In 1982, the HDB took over the estates from the original HUDC, and faced complaints about bad service. It decided to let the Phase I and II estates run themselves - while still remaining public housing - from 1986.

In 1996, however, it was the Phase III estates which first took the leap. Between then and 2001, Gillman Heights, Pine Grove, Ivory Heights in Jurong East and Minton Rise in Hougang went private.

In 2002, they were joined by Waterfront View and the newer Tampines Court - as well as their predecessors. From 2002 to 2004, four of the first six HUDC estates privatised.

At first, residents focused more on upgrading plans and the higher prices which their units now commanded.

But privatisation opened the door to an enticing prospect: a collective sale of the entire estate to private developers.The greatest obstacle was securing the approval of 80 per cent of all residents.

But in 2005, amid a feverish property market, one estate after another started to gain this approval and go on the market.

And in January 2006, the first HUDC estate went en bloc: the 168-unit Amberville estate, which sold for $183 million.

This works out to $1.09 million per unit, which was said to be at least 85 per cent over the market value then - and also quite a windfall, considering that a three-bedroom flat there originally went for under $100,000.

The next year-and-a-half saw a flurry of en bloc deals for Waterfront View, Minton Rise and Gillman Heights. In June 2007, the 618-unit Farrer Court went for $1.34 billion, in the largest ever collective sale of a residential site.

But that was to be the last collective sale for years.

The rest of 2007 saw failed en bloc attempts by Pine Grove, Lakeview and Chancery Court.

In the years since then, some have tried again, while others have tried and failed. Meanwhile, latecomers were finally getting on the road to privatisation.

Eunosville went private in 2011, and Shunfu last year. Four more estates have garnered enough votes from residents to begin the legal process.

Now, the last remaining HUDC estate has started its journey.

On Tuesday, it was announced that Braddell View was designated for privatisation. Its management committee says it is close to securing the required mandate of 75 per cent from its residents.

"Symbolically, the designation marks the end of the HUDC era," said Minister for National Development Khaw Boon Wan.

But though the historical chapter may have closed, the story will keep unfolding.

For one thing, Braddell View's privatisation will take about another year and a half, and four other estates are still in the process.

For another, as long as the possibility to go en bloc remains open, some may chase it. Eunosville, for one, launched its second en bloc attempt just last month.

And any such pursuit could be a long and trying one.

The sprawling size of HUDC estates makes them intimidating to developers, says Century21 chief executive officer Ku Swee Yong.

And getting all residents on board in the first place can be a struggle. In 2008, for instance, Laguna Park saw tussles between residents who wanted a collective sale and those who did not. The cars and mailboxes of the unwilling were hit by vandals. "There's a strong sense of attachment among residents too, in most potential en blocs, and some may be above monetary reasons for relinquishing their homes," said R'ST Research director Ong Kah Seng.

As Braddell View resident and retiree K.C. Lam, 81, put it: "This is my home. Might as well own it."

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
AsianPrime Properties Pte Ltd (L3010623G)

Collective sales of large HUDC projects to remain challenging

Analysts have said the collective sales of large HUDC projects will remain challenging amid a slowing property market.

Of the 13 HUDC estates that have been legally privatised so far, only five have successfully completed the en bloc deal.

Braddell View is the last of 18 HUDC estates to be announced for privatisation.

Analysts said that should it go through, residents will have greater flexibility in the management of the estate.

But those hoping to cash in on the en bloc market within the next few years could be disappointed.

Ku Swee Yong, CEO of Century 21 Singapore, said: "Braddell View apartments have been transacting in the last year around plus, minus S$800 per square foot (psf). So if they successfully privatise and went into an en bloc exercise, within the next two years, there have got to be developers who are willing to pay to each home owner a premium that is well above the S$800 psf mark that they could achieve by themselves selling individually.

“If the developers are only willing to pay let’s say S$900 psf, then that premium of 12-15 per cent is probably not attractive enough for 80 per cent of the owners to sign up for the en bloc."

Privatised HUDC projects like Laguna Park, Tampines Court and Eunosville have been launched for collective sale in recent years, but there have been no takers.

To date, only five have been successful.

They include the S$1.3 billion Farrer Court site where CapitaLand's d'Leedon is now situated, Amberville, Gillman Heights, Minton Rise and Waterfront View Estate.

Analysts said developers still have a strong appetite for land, looking at the number of bids from recent government land tenders.

But in view of the current market conditions, they said developers are likely to prefer smaller plots, as well as the comparatively hassle-free land acquisition process under the Government Land Sales Programme.

Market watchers said larger sites with an asking price of over S$1 billion would be a tough sell, and presently, the sweet spot for en bloc transactions is probably under S$200 million.

Donald Han, managing director of Chesterton Singapore, said: "The majority of these HUDC sites would probably, upon completion, see 1,000, 1,500 maybe 2,000 units. A lot of developers are not comfortable to enter in a market where you probably see a 30 per cent drop in volume of sales year-on-year.

"A lot of developers would probably want to see higher uptick in terms of your take up, new home sales and then you will see risk coming back for some of the larger sites, for developers to take risk and partake into such large HUDC sites that offer thousands of units into the market."

Meanwhile, Channel NewsAsia understands that residents at Eunosville have lowered their initial asking price of S$688 million for the site, and are in the midst of signing the collective sale agreement.

A resident shared that the sales committee has obtained approval from about 40 per cent of the owners.

Its marketing agent Jones Lang LaSalle said it is unable to comment on both the pricing and the sale process.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
AsianPrime Properties Pte Ltd (L3010623G)