Tuesday, February 10, 2009

Appeal Dismissed

Source : The Straits Times, Feb 9, 2009

Gillman Heights en bloc saga

SINGAPORE'S highest court on Monday dismissed the appeal by minority owners to stop the en bloc sale of Gillman Heights.

Monday's ruling sets a precedent for all other HUDC estates which want to go en bloc, and clearly demarcates what criteria should be used in the future. -- PHOTO: CAPITALAND

This brings the former HUDC estate's two-year en bloc saga to an end.

CapitaLand and Hotel Properties, with two private funds, inked the $548 million deal to buy the estate in 2007. But a group of minority owners, in a last-ditch attempt to stop the collectve sale, went ot the Court of Appeal to try and overturn the previous High Court's ruling which gave the greenlight.

The main contention was the date used to calculate the age of the estate, and to a larger extent, the level of consent that was required for the sale to go ahead.

Monday's ruling sets a precedent for all other HUDC estates which want to go en bloc, and clearly demarcates what criteria should be used in the future.

In Gillman Heights' case, the judges ruled that 80 per cent was required.

Appeal To Halt Gillman Heights Collective Sale Dismissed

Source : Channel NewsAsia, 09 February 2009

The Court of Appeal has dismissed the last-ditch appeal by 10 minority owners of former HUDC estate Gillman Heights to stop its collective sale.

Minority owners at the huge estate at Alexandra Road have been battling the S$548m collective sale since it was approved by the Strata Titles Board (STB) in 2007.

This appeal was the last recourse for the minority owners. They had argued that STB was wrong to approve the en bloc deal when the prospective buyers received consent from less than 90 per cent of the owners.

Senior Counsel Michael Hwang, who represented the minority group, argued in court last week that the en bloc sale of Gillman Heights needed consent from 90 per cent of owners and not the usual 80 per cent.

His reason was that Gillman Heights obtained its certificate of statutory completion in 2002 and was thus less than 10 years old.

Under the government's en bloc rules, 90 per cent consent is needed for estates less than 10 years old, and 80 per cent for those older.

But the Court of Appeal ruled on Monday that only 80 per cent consent was needed for the collective sale of Gillman Heights to go through.

The ruling sets a precedent for all other HUDC estates which want to go en bloc, and clearly demarcates what criteria should be used in the future.

CapitaLand and Hotel Properties, with two private funds, inked the deal to buy the estate in 2007. - 938LIVE.

Office Demand Plunges

Source : The Straits Times, Feb 9, 2009

CAPITALAND Ltd, South-east Asia's largest property developer, said demand for Singapore office space plummeted last year as the global financial crisis knocked the city-state into recession.

'There was a big surge in demand for offices 10 or 11 months ago ... but it suddenly stops and falls off a cliff,' CapitaLand Chief Executive Liew Mun Leong said at a news conference. 'We know the market is softening and volume has gone down, and prices will be softening.'

The company's fourth quarter profit fell 88 per cent to $78 million from $675 million a year earlier, Mr Liew said. CapitaLand also plans to raise $1.84 billion by selling one new share for every two held by investors.

Singapore's real estate market is reeling from a deep recession and job losses in the financial industry, which helps support demand for the country's most expensive residential and commercial property. The economy contracted 17 per cent in the fourth quarter from the previous quarter.

Property prices rocketed between 2005 and 2007, luring some investors looking for a quick buck with speculative purchases.

Private home prices surged 31 per cent in 2007 as the economy expanded 7.7 per cent.

Last year, prices fell 4.7 per cent and economic growth slowed to 1.2 per cent. The government expects gross domestic product to shrink as much as 5 per cent this year.

'This was a classic property market bubble,' said Mr Tim Murphy, managing director of Hong Kong-based property investment company IP Global. 'By the end, you had taxi drivers trying to double their money in 10 minutes. That only leads to one thing - a crash.'

The government said last month that prices of private residential property dropped 6.1 per cent in the fourth quarter from the previous quarter, their steepest fall in a decade, and office rentals fell 6.5 per cent.

High-end residential and commercial property will likely fall between 15 per cent and 20 per cent in the first half and remain flat in the second as a deepening global economic slowdown undermines consumer confidence, Mr Murphy said.

'With the data that's coming out, I can't see anyone in Singapore who reads a newspaper being confident enough to buy real estate,' he said. 'People have been too frightened.'

Mr Liew declined to say how much he expected property prices to fall this year. -- AP

Some Prime Projects Trading Lower

Source : The Straits Times, Feb 9, 2009

Sub-sale prices of some units fall below or near average launch levels

SOME uncompleted residential properties in the prime districts have changed hands recently at prices below that which they were sold initially.

Caspian drew a big crowd at its preview last Friday. It extended its opening hours till 1am and managed to sell 80 units. It sold another 220 units over the weekend. -- ST PHOTO: DESMOND FOO

These may be merely a handful, but it reflects the extent of the damage wrought by the economic downturn on the high-end market, analysts say.

According to data compiled by consultancy Savills Singapore, sub-sale prices at some popular projects are edging close to the average prices sold by the developers.

At several yet-to-be-completed prime projects, many units were even done recently at prices below their launch average.

The data is culled from recent sub-sale deals done at 39 prime non-landed residential projects that were launched from 2005 to 2008. They are located in the core central districts of 1, 4, 9, 10 and 11.

A transaction is known as a sub-sale when a buyer acquires a property and sells it before its completion.

The conclusion: Recent transacted prices for projects that were launched in 2005 remain well above their average launch levels.

But the situation is not so sanguine for buyers of properties that were launched for sale in 2006 or later.

Based on caveats lodged, units at 11 developments that were launched between 2006 and 2008 have come down to below their launch levels.

These include projects that saw overwhelming interest during their launch, such as the 175-unit The Sixth Avenue Residences in Sixth Avenue.

Another project, Duchess Residences in Bukit Timah, attracted numerous buyers during its 2007 launch, with units crossing the $2,000 per square foot (psf) mark. It was the first time homes in the area crossed the $2,000 psf mark in nearly 10 years.

But deals done in the third quarter of last year were well below that level.

A 1,604 sq ft home at Duchess Residences was recently advertised for sale at $1,500 psf.

Explaining the low-priced deals, Mr Steven Ming, the Savills Singapore director for investment sales and prestige homes, said: 'There will always be a few who are forced to sell in a downturn.

'The market is likely to remain choppy in the next quarter or two but at this point in time, there are still a lot of investors who are holding out or have the capacity to hold out for better sale prices.'

Those who have missed out on the bull run are also waiting on the sidelines, he added.

At a few popular projects, prices appear to be edging closer to their launch levels or have fallen substantially from the peak.

Two most recent caveats lodged for deals at Park Infinia at Wee Nam in Lincoln Road were at $1,180 psf for a 969sqft unit and $1,061 psf for a 1,442sq ft unit, compared with prices of up to $1,500 to $1,600 psf last year.

All three caveats lodged last month for One Amber near Amber Road were at $761 psf to $816 psf. This compares with its average launch price of $725 to $730 psf in 2006.

To get to the few buyers these days, sellers appear to be getting more aggressive.

In recent classifieds, there were sellers for The Sea View at Amber Road at $1,030 psf, compared with prices of up to $1,500 psf done last year.

Last Wednesday, one unit at One Shenton in Shenton Way was advertised at $888 psf, compared with its launch price of between $1,500 to more than $2,000 psf in early 2007.

Some luxury condos offered steeper discounts.

A unit at The Orchard Residences was advertised for $2,600 psf while a unit at Ardmore II was put up for sale at $1,750 psf. The Orchard Residences and Ardmore II had sold for an average of $3,301 psf and $2,271 psf respectively at their launch.

New Positive Spin On S'pore's Real Estate Sector

Source : The Business Times, February 9, 2009

Economist calls bottom in 2010, based on an 18-year cycle seen in US

With observers seemingly falling over one another to come up with the most bearish forecasts, Phil Anderson - who calls himself a renegade economist - stands out from the crowd and confidently calls a property market bottom next year.

'There will be substantial real estate buying opportunities for people with cash next year, which will set them up comfortably for the next 18 years,' the founder of Economic Indicator Services told The Business Times recently.

Investors, however, will need cash to buy because, by then, banks will have no money and will be very reluctant to lend, he said. So individuals, companies and even countries with no debt, such as Singapore, will be well-placed to take advantage of the next boom.

Mr Anderson bases his prediction on an 18-year cycle which he says has manifested itself in the United States since 1800. 'The cycle is as regular as clockwork. It is quite bizarre,' he said.

The US began selling real estate, officially and under a set legal structure, on May 10, 1800, he said. 'Since then there were speculative peaks every 18 years.'

There were peaks in land sales or real estate speculation in 1818, 1836, 1854, 1888, 1908, 1926 and 1944. The peaks were followed by downturns or depressions, typically lasting four years. World War II disrupted the pattern. But the cycle resumed in 1955.

The real estate market in the US again peaked in 1989 and bottomed in 1991. And 18 years later, in 2006-07, it hit another high. We are now into the third year of downturn, so by next year the market should bottom, which will mark the beginning of the new 18-year cycle, according to Mr Anderson.

The next boom, peaking around 2024, will be huge because hundreds of millions of Chinese will enter the market for the first time, he said. 'Singapore is well-positioned to take advantage of the next boom because of its proximity to China. I am very bullish on Singapore. It is uniquely placed. Although real estate is already expensive in Singapore, it is going to be more expensive.'

Mr Anderson is confident the cycle will repeat itself as long as land is tradeable and in private hands. 'It will continue to happen because people will chase the capitalised rent of land,' he said. 'It will be gone only if the rent is collected by the government.'

China's privatisation of its real estate market guarantees a real estate cycle, according to him.

Also, everything that has been done to tackle the current financial crisis is to preserve the system. 'So the system will start again.'

There are smaller cycles within the big 18-year cycles. The first seven years are characterised by a gradual improvement in activity and confidence following the previous crash. The next seven years see steeper increases in activity and prices, with the sharpest gains taking place in the final two of the seven years.

'That's when most people take on more debt. That's also the easiest time to buy real estate because loans are easy to get as banks have a lot of money. But that's absolutely the wrong time to do so,' said Mr Anderson.

The next four years, of course, are the downturn, during which the banks will clear their problem loans, the market will absorb the excess stock and the governments will get organised.

Mr Anderson has detailed his research in a book The Secret Life of Real Estate - How it moves and why, published last year. Based in London and Melbourne, his firm has 'several hundred' online subscribers who pay £200 (S$442) a year each for his 'big picture analysis and ways to take advantage of turning points in market cycles'.

Can Foreigners Inherit Landed Property?

Source : The Sunday Times, Feb 8, 2009

Q My boss is a Singaporean but she lives in Malaysia as she's married to a Malaysian. She has a few landed properties in Singapore. In the event of her death, can her children and/or husband legally own the properties if willed, as they are not Singapore citizens or permanent residents (PRs)?

A In general, only Singaporeans are allowed to own land and landed properties in Singapore.

The following descriptions of land/landed property in Singapore are classified as restricted residential property:

# Vacant residential land;

# Landed property (that is, detached house, semi-detached house, terrace house including linked house or townhouse); and

# Landed property in strata developments which are not approved condominium developments under the Planning Act.

Foreigners and PRs are allowed to own restricted residential properties only if they have obtained the prior approval of the Land Dealings Approval Unit (LDAU).

Your boss may will her landed property to her husband and/or children even if they are not PRs or Singaporeans. However, upon her death, a foreign beneficiary will have to obtain LDAU approval before he is eligible to legally own such landed property.

If the foreign beneficiary is not granted approval to acquire the landed property, the trustee of the estate of the deceased person will have to sell the foreign beneficiary's share in the landed property within 10 years of the date of death of the deceased person.

If, for some reason, the trustee is unable to sell the property within the 10-year time limit, he will have to apply to LDAU for a time extension.

Lim Choi Ming

Condo Developers Biding Their Time

Source : The Sunday Times, Feb 8, 2009

Few launches likely until sentiment picks up; the ones available offer interest absorption

The Chinese New Year is usually a lull period for property launches. But with the celebrations almost over, it appears the lull will continue.

With the general mood still sombre as the economic climate worsens, few developers want to launch their projects.

With much of the housing market staying soft, the largest soft launch this year, the Caspian, drew interest with 180 units sold by early yesterday evening. -- PHOTO: FRASERS CENTREPOINT

A seasoned property market watcher, who declined to be named, said a few major projects are ready for launch any time, but until sentiment improves, most of these launches are unlikely to happen. 'The bad news is just coming out. Developers will wait for the dust to settle,' he said.

'Now, even if I want to upgrade, I will ask myself if I'll still have my job. There is no impetus to buy.'

Furthermore, he added, 'banks are unfortunately very cautious at the moment. Most of us need a loan to buy but the banks' credit review is a lot more thorough'.

Once the Singapore stock market stabilises, the property market may resume some momentum and that could be another three to six months, he suggested.

For now, those eager to check out new projects will have to make do with a handful of new ones or previously released projects.

Most of these projects offer the interest absorption scheme, which is almost similar to the popular deferred payment scheme.

Like the deferred payment scheme, interest absorption allows buyers to defer the bulk of their payments after they have paid the 20 per cent down payment.

The difference is that they have to take up a bank loan at the point of purchase, and only with the bank that has tied up with the developer to offer the scheme. The developer will absorb the interest payments on the loan until completion.

The biggest condominium to be soft-launched so far this year is the 712-unit Caspian next to Lakeside MRT station in Jurong West.

Frasers Centrepoint chief executive Lim Ee Seng said a pre-marketing testing survey showed that there was 'very good' interest in the condo. 'This gave us the confidence to launch despite poor general sentiment,' he said.

Initial response has indeed been very strong, with 180 units of the 99-year leasehold condo sold as of early yesterday evening.

About 31 per cent of the buyers opted for the interest absorption scheme, which means they have to pay 3 per cent more on the price.

Frasers Centrepoint first released Caspian for sale at a staff preview last Thursday, followed by the public preview. The official launch is slated for Valentine's Day. It is offering 250 units at $580 per sq ft (psf) on average - a sum described by a consultant as 'priced to sell'.

World Class Land is also absorbing interest payments for its 38-unit Palmera Residence project in Telok Kurau until its temporary occupation permit date in October 2011. It said it has sold 25 units.

It is not charging a premium for those who take up the scheme and said that about 70 per cent of its buyers opted for it.

Over in Balestier, Roxy Homes is launching its 48-unit Nova 48 in Prome Road, after releasing it at a soft launch earlier in the year. It is priced at just below $1,000 psf and the interest absorption scheme is available.

The freehold 293-unit Alexis @ Alexandra, near Queenstown MRT station, is an upcoming project that will also offer interest absorption at no extra cost, industry sources said. Its private preview will be held this weekend.

The project consists mainly of small units - there are 114 one-bedroom units costing around $450,000 each and 77 one-plus-one bedroom units at some $550,000 each.

Natura Loft, an HDB design, build and sell scheme project in Bishan launched by QingJian Realty late last year, began a two-day Chinese New Year marketing drive yesterday, where it offered visitors door gifts and an instant glamour family portrait.

'These are just gimmicks,' said a market watcher. 'Ultimately, it is pricing and location that matter.'

Seller, Protect Yourself

Source : The Sunday Times, Feb 8, 2009

A property agent should work in his client's best interest, so look out for anything that indicates otherwise.

1 Do your homework. Always get a valuation done on the property so you know if you are being cheated, said Mr C.M. Tan, 64, a retired bank manager who has worked on home loans.

2 Don't rush to appoint an agent. Meet a few and have detailed discussions with them before deciding on one, said Ms Ivy Lee, chief executive of Ivy Lee Realty.

3 Get a reputable agent from recommendations by friends.

4 If an agent is unwilling to advertise or co-broke your property, he is not exposing it to a maximum number of buyers, said experts.

5 Be wary of agents who make promises that sound too good to be true, said Ms Lee.

6 Do not leave your agent alone to do his work. Check up on him every two weeks or so to ensure that he is working hard to sell the property.

Other Dirty Tricks Some Agents Play

Source : The Sunday Times, Feb 8, 2009


Co-broking is when more than one agent is involved in a property transaction - for example, if one agent introduces a buyer to another agent.

Because the commission from a co-brokered sale will have to be shared, some agents may refuse to meet or follow up on clients from other agents, to avoid splitting up their commission.

'This prevents a client's property from getting maximum exposure and is not in his best interests.

'To see if this is the case, clients can call their agent from an unknown number, pretend to be another agent, and see what they say,' said Mr Mohamed Ismail, chief executive officer of PropNex.


'Some agents tell sellers they have a ready buyer for a very high price so that sellers will appoint them exclusively for a period of time,' said Ms Florence Choo, a real estate agent in her 50s.

'It may then turn out they did not actually have a ready buyer, and sellers may be forced to settle for a lower price as they cannot hold on to the property any longer.'


Agents should work for only one company, but some carry more than one name card - that is, they get to access more than one firm's client listings.

Because different agencies have different pay structures, such an agent may take a client under one agency's listing but close the deal under another agency which pays him better.

In such a situation, the client may not suffer a loss but the affected property firm gets the bum rap.


Hijacking refers to an agent going behind another agent's back and stealing his clients by promising them a better deal and urging the clients to sign with him instead.

'It's really not nice and unethical of some agents to approach the seller on their own without notifying the original agent and stealing their client,' said Ms Susan Lim, 28, a property agent.

This is an example of the cut-throat competition among property agents.

Buyer Dragged Into Legal Tussle

Source : The Sunday Times, Feb 8, 2009



All Mr Teo Su Kee wanted was to buy an apartment in the Clarke Quay area to invest in. He got more than he bargained for.

The engineer was dragged into a lawsuit between the previous owners of his two-bedroom apartment and property giant ERA Realty Network, over the latter's unethical behaviour.

Mr Teo, 48, who works in a multinational company, was called to appear in court to give his account of how he bought the flat.

'I am just an innocent buyer, I do not wish to be involved in this. I am very frustrated,' he said of having to take time off work to testify.

In July 2007, Mr Teo responded to an advertisement put up by ERA senior group division director Mike Parikh for the sale of a Riverside Piazza apartment.

He told The Sunday Times yesterday that he checked out the apartment with Mr Parikh and another man, whom he could not remember.

Mr Teo had been eyeing several apartments in River Place and Riverwalk that were going for more than $1,000 per sq ft (psf). When Mr Parikh offered him $998 psf for the flat, he accepted readily.

'It was a good deal as I had been surveying the prices of several properties in this area, and it was within the market value,' he said.

He learnt about seller Madam Wong Wai Fan's plight only when she visited him at his Toa Payoh home.

'I was surprised that she sold the apartment at a price that was way below the market rate,' he said.

There was another twist to the tale - Mr Teo found out from his wife that Madam Wong used to be her boss in a recruitment agency.

With the court case over, he wants to put the experience behind him.

He intends to sell the flat, but not immediately after his tenant, Mr Yuji Kubo, moves out. He also does not know the price he might get.

A resident at Riverside Piazza, who got a valuation from a bank, told The Sunday Times yesterday that the unit is likely to fetch only about $860,000 now.


'All I know is that there has been a change of ownership, but I'm still paying the same rent, thus it is nothing related to me.'
MR YUJI KUBO, 57, tenant of the Riverside Piazza apartment, on the legal tussle between the unit's previous owners and ERA

They Thought They Had Good Deal

Source : The Sunday Times, Feb 8, 2009



Her name was Natassha Sadiq.

They thought that sounded like she was from the Middle East, which meant she had to be rich and could afford to pay top dollar for their property.

And so the Yuens told their property agent: Okay, done deal.

But six months after Mr Yuen Chow Hin, 50, and his wife Wong Wai Fan, 48, sold their Riverside Piazza apartment to Madam Sadiq for $688,000, they discovered their error.

Madam Sadiq was actually the wife of the boss of their property agent.

And even before she had inked the deal to buy their unit, she had already resold it for $945,000.

That turn of events eventually led to a High Court case that ended last Thursday with the judge ordering property agency ERA Realty Network to pay the Yuens the $257,000 difference.

The saga began in June 2007.

Less than a fortnight after the Yuens engaged ERA property agent Jeremy Ang to sell their Riverside Piazza apartment near Clarke Quay, they were told that a buyer had been found.

Mr Ang said a regular client of his was offering $650,000 for the two-bedroom unit, which is just below 1,000 sq ft.

He added that OCBC Bank had valued the flat at between $650,000 and $700,000.

When the couple asked why they were not offered $700,000, Mr Ang said it was because they had recently renewed a two-year lease with their tenant Yuji Kubo, a 57-year-old Japanese trader. The couple charged him $2,000 in monthly rent.

Madam Wong told The Sunday Times yesterday that she took Mr Ang's word about the price, and did not check with other property agents if this was an industry norm.

'We had no reason to be suspicious. Our main thought was that agents will try to get the best price for us because it means they get a higher commission too,' she said.

Of the potential buyer, she noted: 'Jeremy said Madam Sadiq had bought many properties from him before and, judging by her last name, we got the impression that she was a rich Middle Eastern woman who regularly invests in property. We assumed we were getting a fair price.'

The housewife and her husband, a vice-president in an information technology firm, live with their two teenage sons in a terrace house in Serangoon Gardens.

The couple had bought the Riverside Piazza property in 1995 as an investment - the first time they had done so - paying about $609,000.

They decided to sell it to help pay for a new condominium unit in Serangoon, jointly owned by Mr Yuen and his sister, for Mr Yuen's aged parents to live in, said Madam Wong.

'I had told Jeremy to liaise directly with Mr Kubo about scheduling visits from potential buyers. Once, Mr Kubo complained to me that Jeremy had turned up at the flat without notifying him first, so I assumed Jeremy was doing his job,' she added.

She said they did not set any price and had asked Mr Ang to obtain a bank valuation.

The Yuens offered to sell the flat to Madam Sadiq for $688,000 on July 12. The latter said 'yes' on July 26. The couple did not meet Madam Sadiq in person.

'For most lay people, once the price is agreed upon, you hand it over to the lawyers, banks and the CPF Board. It's a process that you don't think about because it's too complex,' said Madam Wong.

In October 2007, the Yuens received a call from the Central Provident Fund Board about the discrepancy between the value of the flat - based on a valuation done by the new owner's bank - and the amount they had sold it for. That was when they sensed that something was amiss.

After getting their lawyers to check on the caveat lodged on the property, they tracked down the new owner, engineer Teo Su Kee, 48, at his Toa Payoh home.

They discovered that the transaction was handled by ERA agent Mike Parikh, who had put up newspaper advertisements - dated July 7, 9 and 14 - for their unit.

They also found that Mr Teo exercised his option to buy the flat from Madam Sadiq on July 25 - a day before she agreed to buy it from the Yuens.

Suspecting an internal arrangement among the parties, the Yuens checked with the Registry of Marriages and found out that Madam Sadiq was married to Mr Parikh.

It was a 'surprise', said Madam Wong. Mr Parikh had handled the sale of her brother-in-law's HDB flat in Pasir Ris in 2006.

Mr Parikh had also recommended Mr Ang, his subordinate, to handle the sale of her mother-in-law's HDB flat in Hougang in early 2007.

The smooth transactions led the Yuens to entrust Mr Ang to sell their property as well.

They wrote to ERA about their findings and refused to pay Mr Ang's commission of $7,361.

'We tried to arrange a discussion with their directors. We only wanted some accountability and answers,' said Madam Wong.

ERA wrote back to say that the two agents had done nothing wrong. In January last year, it made a claim against the couple at the Small Claims Tribunal for failing to pay the commission.

It was this that prompted the Yuens to file the lawsuit against the company.

Now that the judgment has been passed, Madam Wong said she feels some relief as the saga had caused her sleepless nights.

But with ERA saying last Thursday that it intends to appeal against the court's decision, she acknowledged that 'it's not over yet'.

'We don't know what the next step will be, but we will try to put it aside for now and get on with our Chinese New Year celebrations,' she said, adding that she has not made any plans for the money yet.

'I will be more careful the next time and definitely not be so trusting,' she added.

'Flipping' Property For A Quick Profit

Source : The Sunday Times, Feb 8, 2009


Agents speak out on how common practice is, and conditions for an ethical transaction

A couple flipped when they found out that the flat they sold through a property agent had been 'flipped' by his boss' wife.

She quickly resold it - for a big profit.

The couple went to court, and last week a judge decided the agent was unethical, and ordered the firm he worked for to pay the sum of the profit to the couple.

What exactly is 'flipping of property' and - given that there are claims it is a common practice - when is it unethical?

Last week's case sheds some light.

'Flipping' takes place when someone - usually a speculator or even an agent - buys a property and resells it quickly to make a quick buck.

The court heard that Mr Yuen Chow Hin, an IT company vice-president, and his wife, Madam Wong Wai Fan, a housewife, had sold their two-bedroom downtown flat for $688,000.

Their ERA Realty Network agent had told them this was the best price they could get. But they later checked and were shocked to learn that the buyer of their Riverside Piazza unit had immediately re-sold the flat for $945,000.

There was another shock: The first buyer was the wife of their property agent's boss.

The judge, deciding that the agent and his boss had not acted in the Yuens' interest, ordered ERA to return them $257,000.

The Sunday Times spoke to six real estate agencies. Most said the verdict was fair.

Said Mr Steven Tan, executive director of property firm OrangeTee: 'I think the verdict is correct. The moment we decide to let agents represent us, we have to be accountable for their mistakes.'

Agencies agreed that cases similar to the Yuens' are uncommon. But they were divided over how common flipping is among agents.

'I don't think it's widespread... As agents, we are trained and we have a code of conduct and ethics,' said Mr Ho Tian Lam, DTZ's chief executive officer.

Some agencies disallow flipping. At C&H Group, when agents join the company, they must sign an agreement with a clause that they must not act as an agent to buy a property under their own name or a nominee's name, like a wife or a friend.

Other industry players say flipping by property agents is not uncommon but is usually done in an 'ethical' manner.

Mr Mohamed Ismail, chief executive of PropNex, said flipping usually happens in a buoyant market.

'It is not wrong for an agent in a good, speculative market to take a risk by buying property from a client and then selling it,' he said.

But two conditions have to be fulfilled for it to be an ethical transaction, he said.

First, the agent must be transparent to the seller about who the buyer is.

Secondly, if the agent buys the flat, he must buy it at a reasonable price from the seller and he cannot make a 'secret profit' by underpaying the seller.

Said a property agent who wanted to be known only as Ms J. Tan: 'We are human and we buy property too. If we are interested in buying it ourselves, we have to make it known and not keep the owner in the dark.'

Ms Ivy Lee, chief executive officer of Ivy Lee Realty, said that if the agent pays the clients the price of their choice, it is acceptable.

But she added this proviso: 'The agent should make the seller aware of the prices involved relative to the value of the property.'

How did the Yuens smell a rat?

The discrepancy was spotted when the Central Provident Fund (CPF) Board asked why they sold the flat well below the valuation obtained by the new buyer.

Said a CPF Board spokesman of its procedure: 'When a member sells his property, he is required to refund the full CPF principal withdrawn and accrued interest.

'If he is unable to do so, because he has to pay the bank first or the sale price is not sufficient to cover the required refund, CPF Board will ask for a valuation report to check that the property is sold at market value.'

There are also agencies which, on their own initiative, take steps to protect clients in the event of a breach by their agents.

Mr Ismail said PropNex ensures that all staff are covered with professional indemnity insurance so clients can make a claim if the agent is professionally negligent.

HSR Property Group is also going to introduce professional indemnity insurance covering each agent for $400,000.

A spokesman said it plans to launch it in phases soon.

Also, there are agents who eschew any form of flipping, which they see as unethical.

Said Mr Jeffrey Sim, a property agent with DTZ: 'If there's an opportunity to flip properties, sellers would jump on it. It's only human to do that, but I wouldn't do it because I don't want to take this risk and tarnish my name.'


Mr Yuen Chow Hin, an IT company vice-president, and his wife, Madam Wong Wai Fan, a housewife, sold their two-bedroom Riverside Piazza apartment for $688,000 in 2007.

They let it go at this sum as their ERA Realty Network agent Jeremy Ang said that this was the best price they could get.

Unknown to them, the buyer of the unit turned out to be Madam Natassha Sadiq, the wife of Mr Ang's boss, Mr Mike Parikh. She quickly resold it for $945,000.

The Yuens sued ERA for the 'secret profit' made in the second deal.

Last Thursday, a High Court judge found that the conduct of Mr Ang and Mr Parikh amounted to breach of duty and fraud, and ordered ERA to return $257,000 to the couple.

He also had a stern reminder for the industry of its ethical responsibilities.

'If I'm interested in buying a client's property, I will always ask his permission. I tell him I'm the one buying it and I will match the price that he is asking for. Often, clients are happy to get the price they ask for and they don't care who buys it. You have to be upfront about it, declare yourself and explain the prices involved.'
- MS IVY LEE, chief executive officer of Ivy Lee Realty

'Last year, the market was very hot so there were a lot of speculators, and a lot of agents earned money from flipping. Such cases do happen, but I will not do this. I feel that there will be a conflict of interests. If I were the seller, I would trust the agent to sell the property at the best price. There is no way to safeguard against people who may cheat clients when they flip property.'
- MR MUHAMAD SALLEH, property agent from HSR Property Group