Should Balloting Replace Queueing?

Source : The Straits Times, Aug 1, 2009

It's fairer, says developer but mixed feelings from buyers, consultants

AN ALTERNATIVE to queues and the 'first come, first served' principle at property launches is emerging as developers turn to ballots to allocate flats in an increasingly active market.

A ballot was used amid tumultuous scenes at the Optima condo on Thursday night when buyers swamped the Tanah Merah showflat a day before it was due to open.

It was also employed when two-room flats were released at Somerset condo One Devonshire in June. And Boon Keng condo Airstream is set to launch on Wednesday with balloting.

The process - essentially buyers' names are drawn out of a box - is getting backing from developers and buyers and may become increasingly common as activity gathers pace.

Mr Gerry de Silva, the head of group corporate affairs at Hong Leong, a partner in the Optima project, said balloting is fairer and stops people from trying tactics like selling places in a queue.

'Balloting is more transparent and the crowd can be dissipated faster,' Mr de Silva said. 'We wanted to ensure that genuine buyers come in and that they are not held up for too long.'

In Optima's first balloting round on Thursday night, about 300 buyers vied for the 120 released units that were going for an average of $790 per square foot. All units were allocated.

Buyers in the ballot had to submit one cheque for an individual unit. The most popular unit attracted over 40 ballots.

Yesterday, a further 156 units were released in the second ballot round. Optima has 297 units.

Buyers also seem to prefer balloting to queueing, although the reactions were mixed.

'Balloting is quite fair, whereas queueing is not; whoever gets there first gets the flat,' said prospective buyer S.B. Chung, an engineering firm owner, who entered Optima's second ballot yesterday.

But some felt balloting was not completely fair. Ms Christina Lee, who managed to get a three-room Optima unit in the first round, said: 'If five people are balloting for one unit, then the other four who don't get it have to re-do everything. If they still cannot get a unit on their second try, they have to keep repeating the process.

'Nobody wants to queue. But if you want to do a ballot, you should say so from the start,' added the manager, who took time off work to line up for nearly four hours on Thursday.

'I was upset that they switched to a ballot at the last minute; I felt that they had no proper system.'

She added that 'developers should let those who did not get a unit have priority to choose a unit before the second ballot", because they would have wasted a lot of time queueing.

Mr de Silva said that those who miss out in the first ballot do not get preference if they enter the second round.

'Each round is a fresh chance for interested buyers,' he said.

Property consultants said that neither system was absolutely fairer or better than the other.

Ms Tay Huey Ying of Colliers International told The Straits Times: 'In queueing, time will be wasted, but there are ways to overcome the inefficiencies.

'For example, if developers know that there are 100 units, then they can give out 100 queue numbers. Whereas balloting very much depends on your chances so it can be deemed as unfair.'

Dr Chua Yang Liang of Jones Lang LaSalle noted that both systems were suited to different market conditions.

'Queueing is simpler to execute and is more manageable when the demand is within a certain threshold. But once it is too large, it becomes hard to manage - that's when ballots have to come in, or other alternatives,' he said.

Mr Eric Cheng, executive director of HSR Property Group, said that up to a quarter of properties were sold via balloting during the market boom of 2007.

But he noted that there had been 'a couple of complaints' in the past about agents and officials selecting friends and relatives.

'Developers can use balloting to beef up numbers for different segments because balloting goes by phases and the developer decides which units to release,' he added.