En Bloc: New Frenzy In Offing?

Source : TODAY, Wednesday, August 29, 2007

Or will rule changes draw out time to close a deal, ask analysts

AS PROPERTY stocks fell yesterday in reaction to the proposed new rules on collective sales, less certain is what kind of impact the changes will have on the dampened en bloc fervour.

With Singaporeans spooked by the United States’ sub-prime woes, only one en bloc sale has been lodged so far this month, according to data from Savills Singapore— a far cry from April’s high of 20 and last month’s six. In all, 62 deals worth a total of $10.9 billion have been announced this year.

Now, enter the proposed new legislation unveiled on Monday, which could take effect in October.

Some industry players are apprehensive that the extra requirements, such as requiring lawyers to witness the signing of Collective Sale Agreements (CSAs), could draw out the time taken to launch a site for sale.

But others believe the new rules could re-ignite the frenzy that had just calmed.

Chesterton International’s research director Colin Tan felt the changes could reduce the “controversies” in an en bloc deal and actually speed up the process.

“There’s more transparency and fewer grouses and, ultimately, fewer grounds of appeal. Once concluded, the sale completion, including the hearing of appeals, would be much faster,” said Mr Tan.

But Dennis Wee Realty’s head of investment, Mr Daniel Ong, argued that some “illogical” changes would cause deals to bust their deadlines.

A CSA lapses if a sale committee cannot garner majority consent within a year.

Said Mr Ong: “Many owners call the sale committee members out of the blue and say, ‘You want to take my signature? Come to my house now, or I’ll be away for the next three months.’ How are you going to get the lawyer to be around?”

And by giving owners a fiveday “cooling off” period during which they can change their minds, owners would “ding-dong”, Mr Ong added.

“They should require the sale committee to set a date when it’s compulsory for all residents to gather and listen to the lawyer explain the CSA,” he said. This way, those absent “cannot turn around and say they are unaware of the terms and conditions”.

Nevertheless, some residents in the midst of en bloc transactions welcomed the changes.

Mr Harry Chia told TODAY the sale committee for his Bukit Timah apartment complex had “pre-empted, in a way” the new legislation — the committee, marketing agent and lawyer were appointed at a general meeting. As a result, the en bloc process begun last month has been “very smooth”, he said.

Meanwhile, some owners at Neptune Court objecting to an en bloc bid, launched in May, are planning to hold out until the new laws kick in. TODAY understands the sale committee is halfway towards achieving the required 80- per-cent majority consent.

Said unit owner Philip Williams: “I think residents would be happier following the new guidelines set out by the Government.”

Another resident added: “Currently, the regulations surrounding the sale committee are nebulous or, in fact, non-existent.”