Hong Leong Group Approaching Property Launches With Caution

Source : The Business Times, January 5, 2008

CDL may consider putting off redevelopment

THE Hong Leong Group, which includes Hong Leong Holdings (HLH) and City Developments Ltd (CDL), appears to be taking a cautious approach to new property launches amid the fallout from the US sub-prime crisis.

The Aalto: The development will be officially launched at an average price of $1,800-$1,900 psf

After selling about 60 per cent of the 196-unit Aalto at Meyer Road since August 2007 through soft launches, HLH has decided to officially launch the development at an average price of $1,800-$1,900 per square foot (psf).

And asked about future launches, including those on en bloc sites like Lucky Tower in Grange Road, CDL, which has one of the biggest landbanks here, said that it may consider putting redevelopment on hold.

'Depending on construction schedules, where there are opportunities we may consider other alternatives like short-term leases,' a CDL spokesman said.

According to CB Richard Ellis, CDL alone could have about 2,800 residential units ready for launch this year.

With this sort of figure, it makes sense for developers to tread carefully, with some preferring to test the market first.

HLH's Aalto will only be officially launched this weekend but monthly data from the Urban Redevelopment Authority reveals that sales began as early August last year.

According to the data, about 60 units were sold at a median price of $1,597 psf that month. The highest price achieved was $2,470 psf while the lowest was $1,389 psf.

A month later, HLH sold one unit at $1,570 psf, followed by 49 units in October at a median price of $1,632 psf. In November, it sold six units at a median price of $2,052 psf.

A spokesman for HLH said: 'The units released during the soft launch were mainly units on the lower floors, hence the average price for the units sold during the soft launch was lower than for the six units sold in November, which were on the higher floors. We are opening up high-floor units for the official launch and henceforth the estimated average price for the whole development will be at $1,800-$1,900 psf.'

Knight Frank's director of research and development Nicholas Mak reckoned that the pricing for the official launch is on the 'aggressive' side but said that because more than half the development has been sold, the developer can afford to test the market with higher prices. 'Developers can choose to price high and sell at a slower pace, or price low and sell at a faster pace,' he said.

Pricing developments too high can be a 'gamble', depending on how the US sub-prime crisis plays out, he added.

HLH said that 50 per cent of the buyers so far are Singaporeans, with about 5 per cent thought to be HDB upgraders. The remaining buyers are foreigners.

HLH said that it is still allowed to offer deferred payment to Aalto buyers and about 40 per cent have taken this up.

Horizon Towers Saga - Let Judges Decide

Source : TODAY Weekend, January 5, 2008

En bloc is about losing homes, Strata Titles Board need to reflect that

Dharmendra Yadav

EN BLOC sales were the buzzwords of 2007 and if the economic indicators are right, the story will continue to dominate the headlines this year.




















The en bloc craze of the past year has meant a lot more work for the Strata Titles Boards (STB). Since 1999, the board has shouldered the additional role of approving collective sales of developments that cannot get a 100-per-cent consensus from the sellers of the land but where 80 to 90 per cent of the sellers support the sale, depending on the age of the development.

Last year, Parliament passed changes to the law that require the 80 or 90 per cent consent level — depending on the age of the development — to also take into account the unit sizes of the Strata Title owners.

Lawyer Lee Liat Yeang of Rodyk and Davidson said in December 2005: "One important legal condition to be satisfied before the STB can grant an order for sale is that there is no objection filed by an owner on 'financial loss' ground.

"Another important legal ingredient … is that of good faith. In the Act, the good faith element has to be determined by having regard only to the following factors: Sale price, the method of distribution of the sale proceeds and the relationship, if any, of the purchaser to any of the owners."

Not surprisingly, the increased volume of work undertaken by the STB has brought in its wake its fair share of controversy and criticism.

In a case last year, High Court Judge Andrew Ang described a collective sale approved by the STB as "a real mess".

He then ordered a stay on the collective sale.

To be fair to the STB, such a stay order is rare. Also, the board rarely rejects an application for a collective sale. Nevertheless, the STB did withhold its approval in at least two en bloc cases involving Finland Towers and Horizon Towers last year. The high-profile Horizon Towers case saw some of the best legal minds in the country slog it out as minority owners tried to block the sale and initially secured the STB's support.

The High Court eventually sent the sale back to the STB for reconsideration. After reconsideration, the STB approved the sale — although the minority owners are now appealing against the decision.

These en bloc cases have prompted many to look at the STB to see how its work can be made better or easier.

At a seminar last August, lawyer Ong Ying Ping raised this question: "Would it be better to revert to the original position before the 1999 changes? Is the present regime manifestly superior to the pre-1999 position where 100-per-cent consensus is required?"

Going back to the pre-1999 position would serve little purpose, since the changes were a pragmatic policy response to the promotion of urban redevelopment in Singapore.

Thus, it is more important to see how the work of the STB can be made better. Such impetus for improvement appears to have become more necessary in the light of recent legislative changes that gave the STB more discretion and powers.

The STB can now do three key things. It can:

• Increase the sale proceeds of minority owners who have filed valid objections to an en bloc sale application.

•Approve an en bloc sale application and disregard any technical irregularities that are non-compliant with the collective sales requirements if such non-compliance does not prejudice any owner's interest.

• Issue guidelines on the permissible expenditures that will count towards the evaluation of financial loss claims.

In effect, these new powers have enhanced the legal role that the STB plays — wider than the technical or mediatory role envisaged of the STB when it was first set up. That is why the board has had panel members with a wide range of experience, and only its president and deputy presidents are required to be legally qualified persons.

In addition, the discretion of the STB now appears to be more subjective and a body of precedents will be needed to control the application of these powers.

Indeed, one criticism of the STB, when it first rejected the Horizon Towers' collective sale application, was that it had not justified its decision with a detailed basis.

There thus appears to be a need to increase the legal expertise found on the STB.

When the Ministry of Law consulted the public on the changes it made last year, respondents had expressed a desire to see a "fairer and more transparent" process.

Lawyer Ong Ying Ping also noted: "Unlike policies that are both initiated and driven by government agencies, the en bloc legislation was largely a public-private initiative. The members sitting in the STB are all volunteers."

In February last year, the blogger of Enblocing Singapore wrote: "Given that nowadays, most objections are not really about financial loss … but about losing their homes …. there is a surprising dearth of the very people who should be involved in hearing these minority owners' plight."

Perhaps, for a better balancing of such interests, the time has come for the Ministry of Law to allow the STB to be operated by a team of full-time professionals rather than volunteers.

A newspaper reader suggested that a sitting judge should head the STB. Arguably, to take the idea forward, why not hand over the whole operation of the STB to the judiciary?

In his Second Reading Speech on the Land Titles (Strata) (Amendment) Bill in September, Deputy Prime Minister Professor S Jayakumar emphasised that en bloc sale legislation required the maintenance of a careful balance.

They should "provide additional safeguards and ensure greater transparency for all owners" but should not make it "unduly onerous to bring about an en bloc sale".

Who better than a group of impartial persons to manage this delicate balance other than the judiciary?

There is clearly a need to take a comprehensive look at the structure of the STB in light of its enhanced legal role, and to enable this enhanced legal role to be exercised by persons qualified to do so.

The writer is General Committee Member of the Singapore Corporate Counsel Association. These are his personal views.

Minority Retort - Horizon Towers Saga Revived As Opposing Owners Appeal Against Sale Order

Source : TODAY Weekend, January 5, 2008

Just when some prayed it was all over, the owners of Horizon Towers could be in for more sleepless nights — exactly a month after the Strata Titles Board granted the sale order for the contentious $500-million deal.

That decision would have brought a closure to the long-running saga, but for unhappiness among minority owners with the ruling.

On Thursday and Friday, these dissenting owners filed appeals against the board's decision, just meeting the one-month deadline to do so.

Lawyers representing all three groups of minority owners, who had contested the deal, told TODAY they had submitted the originating summons to the High Court. But they were tight-lipped about what the grounds of appeal were, as they were preparing the affidavits which have to be submitted in a week's time.

TODAY understands, however, that some minority owners were still sore over the price of the deal and what they alleged was a breach of duties on the sale committee's part in not securing a better deal.

Sale committee chairman Lim Seng Hoo did not relish news of the appeal. "We were unsure if the minority owners would appeal, so we didn't expect it. But we felt we would cross the bridge when we got there," he said.

On the prospect of another protracted legal tussle, Mr Lim said: "Litigation is not something anyone is pleased to be involved in but unfortunately, this seems to be the trend for en bloc sales in Singapore."

The lawyers for consortium Horizon Partners Pte Limited (HPPL), which is buying over the site, declined comment as they had not been served the legal papers.

The en bloc process for Horizon Towers began in May 2006 when a sale committee was formed to collect signatures for the Collective Sale Agreement.

A deal was sealed eight months later but since then, has been fraught with controversies. Some majority owners tried to back out of the sale, after witnessing how neighbouring properties such as Grangeford revised their reserve price upwards to reflect the booming property market.

At the height of the wrangle last year, the majority owners managed to stave off a $1-billion lawsuit HPPL had brought against them for loss of profits, when they successfully appealed against the board's original decision in August to throw out the deal over technical irregularities.

Back then, the High Court overruled the board and sent the case back to it, which culminated in the approval of the sale order.

TODAY understands that the minority owners would have to apply for a court injunction to halt the sale which, as things stand, should be completed by the first week of March.

And it remains to be seen if HPPL will revive its lawsuit against the majority owners — it will be withdrawn only upon the completion of the sale.

Whatever the outcome of the latest appeal, the case can still be brought to the Court of Appeal, which will be the final avenue for the condominium's owners, said lawyer Philip Fong.

Added Mr Fong, who represents some of the minority owners: "There must be a resolution at some point in time." - TODAY/so

Horizon Towers Minority Owners Appeal Against Strata board Ruling

Source : The Straits Times, Jan 5, 2008

Estates like Finland Gardens, Regent Court are caught in similar legal battles

JUST as the long-running saga over the Horizon Towers collective sale looked about to end, another chapter is unfolding - and other similar disputes are looming.

The minority owners opposing the $500 million collective sale have appealed to the High Court against a ruling last month by the Strata Titles Board (STB), which had permitted the deal to go ahead.

Now, it has emerged that Horizon Towers is not the only condominium caught in a legal battle over a collective sale.

Owners at other estates such as Finland Gardens are also embroiled in similar tangles. The majority owners of the 48-unit estate in Siglap have filed an appeal on the instructions of buyer Sing Holdings - after the STB threw out the $49.5 million sale application in late November.

Another case, that of Phoenix Court, may go to the Court of Appeal, said an industry source who declined to be named. The STB tribunal that heard the Horizon Towers case said it had been guided by the Phoenix Court case. An objecting couple appealed against an STB decision to approve the Phoenix Court sale. The High Court upheld the STB order on Nov 9.

Over in Serangoon Road, Regent Court owners are preparing to file an appeal in the High Court against an STB decision to grant the $34 million sale, sources said.

Also, owners at Airview Towers in St Thomas Walk have filed an appeal in the High Court against an STB decision to reject its collective sale on a technicality.

The sale of Horizon Towers at Leonie Hill was finally approved by the STB - which had earlier thrown out the sale - on Dec 7 after a lengthy hearing, much sweat and tears, and nearly a year after the deal was inked.

The transaction hit a snag after some owners felt the $500 million price, which works out to $810 to $820 per sq ft (psf) on average, was not enough in a fast-rising market. Neighbouring The Grangeford was sold en bloc last June for just over $1,800 psf.

The dispute descended into acrimony and the STB then threw the sale out on a technicality before an earlier High Court appeal which resulted in a fresh STB hearing.

Horizon Towers became the first collective sale where majority owners were slapped with a lawsuit for alleged breach of contract. The suit was lodged by the buyers: Hotel Properties, Morgan Stanley Real Estate and Qatar Investment Authority.

Over the past two days, three sets of minority owners or objectors filed appeals with the High Court. The owners had a month after the STB ruling to appeal, and yesterday was the final day. They now await a hearing date - expected within three months.

One minority owner said even if the High Court appeal failed, he would take the case to the Court of Appeal. If this happens, the deal could be delayed by another three months. 'My chances of winning may not be high but I will exhaust all legal means to protect my home,' said the owner, Mr K.K. Then, 53.

The retiree said he and his wife have been drawn unwillingly into the sale process. He said he never had the intention to sell his home as it is something money cannot buy.

The objectors are believed to be aggrieved by the STB decision as they feel the hearing was not fair.

At the STB hearing late last year, a key point of contention was that the sale committee sold the estate at the reserve price even though it knew the market had already moved up.

The reserve price of The Grangeford was revised higher before the Horizon Towers deal was inked. But the sale committee stuck with the $500 million price, which was a reserve price set in 2006.


Saying a collective 'no'

BLOCKING THE SALE

Over the past two days, three sets of Horizon Towers minority owners filed appeals with the High Court. They now await a hearing date.

The objectors are believed to be aggrieved by the STB decision as they feel the hearing was not fair.

A key point of contention: The sale committee sold the estate at the reserve price even though it knew the market had already climbed.

The reserve price of neighbouring The Grangeford was revised higher before the Horizon Towers deal was inked. But the sale committee stuck with the $500 million price, which was a reserve price set in 2006.

PROTECTING HIS HOME

One minority owner, retiree K.K. Then, 53, says that even if the High Court appeal failed, he would take the case to the Court of Appeal.

If this happens, the deal could be delayed by another three months.

'My chances of winning may not be high but I will exhaust all legal means to protect my home.'

He says he never intended to sell his home as it is something money cannot buy. 'My wife and I feel we are victims of the collective sale system.'

Horizon Towers Court Case - Minority Owners Want High Court To Overturn STB Decision

Source : The Business Times, January 5, 2008

This again throws successful completion of en bloc sale in doubt

The Horizon Towers saga is far from over. In fact, it's starting anew. Disgruntled minority owners have banded together to appeal against a decision by the Strata Titles Board (STB) last month to approve the en bloc sale of the development.

All nine of the minority owners who originally opposed the collective sale have appealed to the High Court to overturn STB's decision - doing so yesterday, on the last possible day.

What this means is, the successful completion of the collective sale of Horizon Towers is again in doubt, pending the outcome of the appeal.

The High Court is scheduled to hear the minorities' objections on Feb 1.

STB's approval of the en bloc sale was delivered on Dec 7, just days before a Dec 11 deadline for which the sale had to be finalised. The entire sale process is expected to be completed in March.

Lawyers for the minority owners have told BT they will consider applying for a stay of conveyancing proceedings - that is, delaying the completion of the sale - if the outcome of their appeal is not known by then.

The grounds of the appeal filed by the minority owners yesterday are similar to their original objections, heard by STB last year.

The minority owners are appealing against STB's decision on the grounds that the board erred in law by approving the sale and ordering minority owners to be bound by a sale and purchase agreement signed by the majority owners.

The minorities contend that the en bloc sale was conducted in bad faith and prejudiced their interests. They say the then-sales committee had failed to do its duty to ensure the best price was obtained - by failing to ensure the property was properly marketed and failing to ensure the best offer was procured.

The Horizon Towers sales committee agreed to sell the Leonie Hill development to a consortium led by Hotel Properties Ltd (HPL) for $500 million in February last year. The minorities argue that this price is too low, saying property prices had already begun to climb significantly at the time the deal was inked and there had been other offers, above $500 million, for the development.

They said this was a breach of duty, a result of conflicts of interest on the part of some of the sales committee members, lawyers and sales agents who handled the deal.

The minorities also argue that STB prevented them from fully presenting their case when it refused to subpoena former sales committee chairman, Arjun Samtani. The minorities say Mr Samtani acted in bad faith and influenced the sales committee's decisions. They say he was motivated by self-interest because he bought an additional unit in Horizon Towers during the initial stages of the collective sale talks.

Six of the nine minority owners objecting to the en bloc sale are represented by Senior Counsel Michael Hwang and SK Phang. The remaining three are represented by Harry Elias Partnership (HEP).

HEP is appealing on grounds similar to those put by Mr Hwang and Dr Phang - but it is also arguing that there was no fair hearing by the STB, in that the board rushed the hearing and failed to give adequate reasons for its decision on Dec 7.

STB only said then that it had been guided by recent case law and parliamentary debates on rules governing collective sales, and that the minorities had failed to prove their claim that the transaction was carried out in bad faith. The board will release the detailed grounds of its decision later.

HEP partner Philip Fong told BT: 'It's an unfortunate situation the minorities have found themselves in - in which one is deprived of one's rights to one's home, having been told to give up one's home without being told exactly what the reasons are for such a decision.'

The Horizon Towers case has dragged on for almost a year - and is the most closely watched collective sale transaction ever in Singapore, given its dramatic twists and turns.

The majority owners - some of whom were said to have aligned themselves with the minorities when property prices started climbing - have been accused of trying to renege on their agreement with HPL and its partners, and face a potential $1 billion lawsuit from the buyers.