Are you living in a 99-year leasehold condo that's nearing 30-year old? (Part 1)

Racing against time - As more 99-year leasehold condo approach the 30-year mark, owners are increasingly looking at collective sale. The question is timing, given developers'weak appetite for lareg sites and the release of a slew of government land sites.
+++++++++++++++++++++++++++++++++++++++++

Last month, six owners of units at Chuan Park got together to conduct a poll to gauge fellow owners’ interest in pursuing a collective sale. The 452-unit condominium sits on a 99-year leasehold site and with the lease starting from 1980, this means it is already 31 years old.

One of the reasons given in favour of a collective sale in a letter circulated to the owners is that “it will be increasingly difficult for new buyers to secure a full loan and [use] their CPF to fund a purchase in our estate as our property ages. We will face a possible property-decay situation where our homes, however priced, would have a diminishing pool of buyers”.

The letter also cited the case of The Arcadia, which was reported in May to have failed in its attempt to top up its lease to 99 years without going through a collective sale. This was despite having obtained 100% consent from the owners of the 164-unit condo, who were even willing to foot the bill for the top-up if permission was granted.

Chuan Park’s land area is 402,995sqft and it currently has a plot ratio of 2.1, which means a new development with a maximum gross floor area (GFA) of 846,289.5sqft can be built on the site. It was also estimated that based on the current average market transaction price of $850psf and assuming a 40% premium, the collective-sale price would be around $1,200psf.

The sale price of $1,200psf was probably benchmarked against the average launch price achieved at The Scala, a 468-unit condo across the road from Chuan Park, says a source. Launched by developer Hong Leong Holdings at the end of July last year, the 99-year leasehold condo had 75% of its units snapped up by balloting at an average price of $1,150psf on the first day of its public preview.

The site is located next door to the Lorong Chuan MRT station and has a plot ratio of 2.8, which is higher than the plot ratio of 2.1 of existing condos in the neighbourhood such as Chuan Park, Chiltern Park and Springbloom.

According to sources, about half of the more than 100 respondents registered interest in a collective sale at Chuan Park. “If 25% of the owners based on the number of units, or 20% by share value, express interest in a collective sale, they can call for an EOGM and form a sales committee, which will be the first step in the collective-sale process,” says Ian Loh, associate director of investment at Knight Frank.

Chan Chee Keong, 68, is a retired Singaporean businessman who has lived in Chuan Park for 11 years. He is also chairman of the Management Corporation Strata Title (MCST) at Chuan Park. “As chairman of the MCST, I want to remain neutral and keep an open mind,” says Chan. “When residents approach me to advise them, I tell them this is something they have to decide for themselves; it’s a very personal decision. To be honest, when people ask you if you want to sell [your property], it’s very difficult to answer. Where is the tipping point? What is the price threshold?”

Chan adds, “A lot of people think money is the only consideration [for the owners], but it’s not true. The location is very convenient – it’s near the Serangoon Garden Market, the [Lorong Chuan] MRT station and, for those who drive, the CTE is nearby.”

Quite a few owners at Chuan Park moved into the condo recently after selling their landed homes in the Serangoon Gardens housing estate nearby. “Many adult children moved to the area to be near their parents,” says Chan. “So it doesn’t make sense for the parents to move.” Chan’s son, for instance, recently relocated his young family to within 1km of Chuan Park. Previously, he lived 10km away.

In any collective sale, residents tend to fall into two camps, observes Chan. He understands the position of those in favour of a collective sale. “Their view is that at the current all-time-high market price, it’s perhaps a good time to consider a collective sale, as years down the road, when the lease run low, prices could drop,” he says. “So, both sides have a valid argument.”

Watching the en-bloc attempt at Chuan Park closely are the owners of units at the neighbouring Chiltern Park, a 500-unit condo that was completed in 1995. The 99-year lease on the site starts from 1991, which means it’s in its 20th year.

PS Lee, a 60-year-old businessman, owns two units at Chiltern Park. One is a 1,259sqft, three-bedroom apartment on the ninth floor that he purchased four years ago at $760,000 ($604psf) and uses as his residence. The other is a 915sqft, two-bedroom apartment on the 10th floor that he bought for $720,000 two years ago and rents out at $3,500 a month. “The units have high ceilings and I have unobstructed views of Marina Bay Sands and the city skyline even from the ninth floor,” says Lee.

He reveals that he has received offers of up to $1.2 million for his three-bedroom apartment and more than $900,000 for the two-bedroom unit, but he is not selling. Besides being located across the street from the Lorong Chuan MRT station, Chiltern Park and Chuan Park are also near the Stamford American School, Australian School and the New Tech Park coming up near the MRT station, he notes. “As such, units here are a draw for buyers, both homeowners and investors.”

Some of the residents at Chiltern Park are also considering doing a similar poll to the one conducted at Chuan Park to find out residents’ interest in a collective sale, says Lee. “In district 19, Chiltern Park and Chuan Park are the two condo developments with the greatest en-bloc-sale potential.”
{To be continued}

Source: THEEDGE SINGAPORE

.