Sunday, May 31, 2009

Regent Garden Enbloc Deal: Majority Owners Lose Appeal

Source : The Business Times, May 30, 2009

THE Court of Appeal yesterday dismissed an appeal by the majority owners of Regent Garden who oppose a $34 million collective sale deal with Allgreen Properties.

The appeal was lodged on May 15, 2008, by 23 of 25 majority owners of the 31-unit project, who were unhappy that Allgreen made extra payments totalling $2 million to six minority owners who initially opposed the collective sale.

The appeal was lodged after Allgreen obtained an order from the High Court on April 16, 2008, compelling the majority owners to complete the sale and purchase of Regent Garden.

Four months earlier in January 2008, the Strata Titles Board rejected the sale on the grounds that the valuation was too low and the deal was not done in good faith.

In its judgement, the Court of Appeal dismissed the appeal of the majority owners, saying that there was nothing in the agreement between buyer and seller, or the law, to prohibit Allgreen making additional payments to the minority owners.

The Court of Appeal also reiterated that the Land Titles Strata Act exists to protect minority owners and not to protect majority owners from their own 'improvident' bargain.

Allgreen, represented by Davinder Singh of Drew and Napier, also relied on an affidavit of Knight Frank managing director Tan Tiong Cheng which said: 'It is also my experience that it is not uncommon for the developer to contribute to the payment of the premium to the minority owners to procure their consent to the collective sale.'

On whether the collective sale was done in good faith, the Court of Appeal said: 'A purchaser does not owe any duty of care, much less duty of good faith, to a vendor of property in relation to the price of the property. The general principle is caveat emptor.'

In its concluding observations, the court said collective sales committees that do not want to find themselves in a similar predicament vis-a-vis incentive payments can easily make provision for similar contingencies by providing for them in the sale-and-purchase agreement.

Canadian School's Campus Rumpus

Source : The Business Times, May 30, 2009

With work on Jurong West Campus stalling, some parents threaten to stop paying building fee

FOR an institution that is in the business of providing answers, the privately-owned Canadian International School (CIS) has left a group of irate parents with a $7.7 million question, now that the school's new campus development has failed to materialise.

AT A STANDSTILL - Since late 2007, $7.7 million has been raised from about 1,600 parents of students in three of CIS's campuses for the construction of the school's new Jurong West campus. However, construction on the campus - slated to open in February this year - has stopped since last October.

Since late 2007, $7.7 million has been raised from about 1,600 parents of students in three of CIS's campuses who have been paying $1,100 per semester for what they believed had been contributions to a Building and Development fund set up for the construction of the school's new Jurong West campus.

The new five-storey campus will consolidate three out of four of CIS's campuses on the island. Construction on the campus - slated to open in February this year - has stopped since last October.

'There has been no explanation for why the work has stopped and they have been less than precise about what will happen,' said Anthony Phillips, who has paid $8,800 in building fees to date for his two children over four semesters. 'The site appears to have come to a standstill, but we've been getting an invoice every six months for building and development fees.'

When contacted by BT yesterday, CIS's head of school, Glenn Odland, said that the halt in construction was 'a function of the change in global economic circumstances'.

'We have reassured the parents that construction will resume by the end of this school term, which is June 12.

'By then, we will also explain to our parents in detail the reasons behind the delay and how we've resolved them,' said Mr Odland.

He was unable to provide BT with an estimated date of completion.

There are also conflicting views on what the fund was originally intended for.

'We were told that the money went for maintenance purposes, but that was not what the Building and Development fee was for, and that is unacceptable,' said Martine Guerin, who has contributed $4,400 for her son who is now in Grade 3 at CIS.

Mr Odland maintains, however, that this was never the case. 'We have made it clear from the start that the building fee would go towards maintenance of existing structures as well as new developments; it is mentioned in our admissions policy online,' he said.

In a letter - issued by the previous principal - dated October 2006, the new campus is mentioned as the reason for the Building and Development fee, but not the existing facilities.

The school will continue to include the fee on invoices. 'The building fee is a common part of the fee structure in many international schools, and it will continue as a permanent element in the fee structure,' said Mr Odland.

Fanning the furore, news of a Korean school's impending takeover of CIS's Bukit Tinggi campus in August 2010 has surfaced, leaving parents to wonder whether their children will still have a middle school campus if the Jurong West site is not ready by then. Mr Odland refused to elaborate on current negotiations with the Korean school. 'While it is ongoing, it would be grossly unfair to the process for it to be published to the public,' he said.

Despite a CIS email to parents on Tuesday that reassured them about ongoing negotiations with the Korean school and the resumption of work on the site before June 12, some of the parents remain unplacated.

'With the new West Jurong campus running almost two years behind schedule, many parents are extremely disappointed at there being almost nothing to show for the multi-million dollar investment in the project,' said Mr Phillips.

Mr Phillips and John Cappetta will be among the many parents who will not be paying future Building and Development fees. 'I was initially happy to pay, because my son, who is in Grade 1, would get to use the new facilities. But there has been absolutely no transparency over what's been happening to these funds,' said Mr Cappetta.

Parents like them might find themselves in a standoff with the school as a result. 'We will treat it as we would a delinquent account; we are pursuing and trying to facilitate payment. No family will be allowed to not pay,' Mr Odland told BT.

S'pore Home Prices Slide Down The Ladder

Source : The Business Times, May 30, 2009

From being among world's best performers last year, it's among the worst in Q1

FROM around the top of the heap to near the bottom of the pile in just 12 months!

A year ago, Singapore was ranked as the fourth best-performing market in the world under Knight Frank's Global House Price Index based on the first-quarter's year-on-year price change. This week, it emerged as the third-worst in a table that listed a total of 46 markets.

The house price index for Singapore slipped 23.8 per cent in Q1 2009 over the same year-ago period. And with the index declining 16.2 per cent quarter-on-quarter in the first three months of this year, Singapore emerged as the second worst-performing market based on a quarter-on-quarter ranking, compared with its ninth position a year ago.

Knight Frank's index for Singapore was pegged to the official Urban Redevelopment Authority's price index of non-landed private homes in the Core Central Region.

Israel was the top performer over the 12-month period ending Q1 2009, recording price growth of 10.9 per cent, followed by the Czech Republic with a 9.9 per cent increase. The worst performers were Latvia, Dubai and Singapore with declines of 36 per cent, 32 per cent and 23.8 per cent respectively.

On a quarter-on-quarter comparison, Dubai posted the worst performance with a fall of 40 per cent, followed by Singapore.

Hong Kong, saw its Q1 ranking (based on a year-on-year comparison) slip from third spot last year to 40th position, with a price drop of 15.7 per cent. United Kingdom was ranked 42nd on an annual-change comparison (the price slide was 16.5 per cent) while the US was in 43rd position with a 16.9 per cent decrease.

India made it to the top 10 list; it was ordered fifth with a 5.1 per cent year-on-year price appreciation in Q1 2009.

The percentage changes are calculated in local currency terms and are hence not affected by fluctuations in exchange rates.

'There is sporadic evidence of buyers snapping up relative bargains. However, of those buyers in a position to move, many are still waiting for clearer signs that markets are approaching the bottom of the cycle,' Knight Frank said.

Fourteen of the 46 markets covered by the index had not reported Q1 data at the time of the writing of the report.

'The latest data suggest some easing in the plight of markets. On a quarterly basis, 48 per cent of the countries from whom we received Q1 data reported a drop in prices, compared to 88 per cent in our Q4 2008 index.

'On an annualised basis, 48 per cent of countries also showed a fall in values compared to 77 per cent in Q4. Given the high proportion of 'absentees' for Q1, however, it would be potentially misleading to jump to too many hasty conclusions, although over half had shown annual and/or quarterly price falls at the last time of reporting. Nonetheless, the shorter-term future direction of most underlying economies suggests that the world's residential markets are likely to continue to suffer for some while,' Knight Frank's report said.

The consultancy's director of research and consultancy in Singapore, Nicholas Mak, said that while there has been a pick-up in private home sales lately (with developers managing to inch up prices for better-selling projects), a sustained price recovery will hinge on an improvement in the jobs market. 'If expats are not coming into Singapore, the strength of the rental housing market will be affected and that will, in turn, affect investment demand for residential properties,' he added.

A developer said: 'While we are seeing price stability in the mass-market segment, I think the high-end sector will not stabilise until the perception of DPS-buyers defaulting clears away'.

The government scrapped the Deferred Payment Scheme (DPS) in October 2007.

The 30 to 40 per cent slide in high-end residential prices, coupled with more cautious bank lending to property investors, could mean that some DPS-buyers may not complete payments for units bought during the 2007 peak. A surfeit of such properties making their way back to the market could depress prices. While developers could take legal action against local buyers, they may have a harder time pursuing foreign buyers, especially companies registered in the world's tax havens.