26 March 2007

Estate maintenance; Time-bar to next en bloc attempt

1. Adverse impact on estate maintenance and urban landscape - Estate maintenance of a development with en bloc potential/risk is a Catch-22 issue. In Singapore's high-density high-rise living - if regulations are not sufficiently robust, high-class slums (in itself an oxymoron!) can evolve willy-nilly in our so-called Global City.

The never-ending cycle of collective sales directly and adversely impacts on estate maintenance which in turn translates into asset valuation at a micro level and building standards/urban quality at a macro level.

2. Time-bar for next en bloc attempt relative to estate age - The Gahmen should have a scaled time-bar for next CSA attempts relative to the estate's age (ie, shorter time-bar for older estates). Example: After a failed CSA attempt, impose a 5-year time-bar against the next CSA for estates between 30-50 years from Temporary Occupation Permit (TOP), a 2-year time-bar for estates above 50 years.

If owners have an assurance that this CSA cycle has a timeline (and not go into infinity), then the quality standard of buildings in Singapore will be upkept and maintained properly. As it stands at present, even ESSENTIAL maintenance of common property is being sorely neglected during and post-CSA attempts either as a pressure tactic to coerce dissenters into signing the CSA or as a cost-saving measure in case of an eventual CSA success. This may drag on for years as CSA attempts go into INFINITY. This likelihood of neglect in upkeep/maintenance hits the internal strata-title area too. With Singapore's high-density living, what your neighbours do (or FAIL to do) can affect lots of other owners and their properties.

Example: Due to a never-ending cycle of CSA attempts, I may choose to ignore water seepage or air-conditioning leakage so long as they don't obviously affect my neighbours and there are no complaints which my neighbours can enforce against me under the present regulations. But such internal dampness over a sustained time period may lead to termites to start invading my apartment (which risk I may not be cognizant of until it is too late) and once the termites infest one apartment, it will infest others in no time.

On the other hand, if buildings are well-maintained, it will be a WIN-WIN for tenants/owner-occupiers (enjoy well-maintained property and common facilities), landlords/investor-owners (better rental returns based on lower capital outlay) and city planners (higher urban quality in our cityscape).

3. Definition of en bloc failure - If a CSA attempt fails to garner the 90% / 80% majority within a specified time frame (which should be kept short as the facts are known and time is of the essence for both the condo owners and the developer buyer, say, 3 months from the start of Expression of Interest) or, if such consensus was obtained but the Strata Title Board declines to issue an order for collective sale (say, 2 months from the date of application to STB for a collective sale order), then that CSA attempt should be deemed as "failed".

4. Adverse impact on tenants, investor-owners as landlords and owner-occupiers - As it stands right now, this spate of collective sales will hit hard on:

(a) Tenants who won't be able to find a decently maintained place to rent at affordable rates. Double-whammy effect: SUPPLY of apartments of 10-20 years old is drastically shrunk; DEMAND for new units is forced up as owner-occupiers from successful en blocs need replacements and investor-owners who buy high will naturally rent-out-high.

I am no statistician nor a clairvoyant but I reckon that the Gahmen's efforts to keep Singapore as an affordable place to do business will (NOT may) be negated as rentals rocket.

Not only rentals will go up but the monthly management fees and utilities costs will rocket too, especially with the all-glass facades so typical of the new condos in this millennium (tilting open at 30 degrees and minimizing cross-draft ventilation). These whole-wall window panels will be kept sparklingly clean by professional window cleaners dangling outside from gondolas. Little wonder that for the new condos now under construction, developers in the big estates are already quoting management fees in the range of $600-$800 per month (perhaps hitting 4-figures one of these days as labour costs continue to climb) because window-cleaning is part of building maintenance nowadays.

Cost-of-Living Index will also shoot up mainly because of the multiplier effect of high housing costs (not to mention GST hike) unless there are compensating dips in other components. Although our Gahmen ostensibly doesn't meddle with market forces, this 90% / 80% majority for CSAs is in fact facilitating the distortion of Supply and Demand - way to go, eh???

(b) Investor-owners who may not find ready tenants if the en bloc fails as no tenant will want to become a refugee in case the next CSA attempt succeeds and who wants to live in a dump in the meantime?

(c) Owner-occupiers who are reduced to Squatter, Refugee, Downgrader or Downsizer if the en bloc succeeds. Similar to the abovementioned predicament of tenants, owner-occupiers will also have to bear higher $600-800 monthly management fees and heftier utilities bills if they buy a new replacement property in the better condo developments. SEE MY OTHER COMMENTS UNDER "ONE-FOR-ONE EXCHANGE" IN THIS BLOG-SITE.

No comments: