24 February 2009

3. APPETIZER: How to bring our people along in Singapore's Re-making?

In my earlier blog entries, I have whined and harped ad nauseum about bringing our people along in the Re-making of Singapore. How? By adding one more settlement option for en bloc sales, viz, 1-4-1 exchange.

Hence, as early as 1 Mar 2007 (two days before the then Minister for Law, Prof S Jayakumar’s parliamentary speech was reported in the press about upcoming legislative review of the Land Titles (Strata) Act), I submitted a paper to the then Law Reform and Revision Division of the Attorney General’s Chambers on this principle of equity in offering “exchange” option to owners ensnared in en bloc sales. My first “exchange” blog entry was on 26 Mar 2007, as further refined with the passage of time and repeated in numerous subsequent blog entries in Apr, Nov, Dec 2007 and culminating in my last National Day blog entry of 7 Aug 2008. http://singaporeenbloc.blogspot.com/2008/08/so-whats-alternative-in-end.html

In fact, my proposed solution is more than 1-4-1 exchange. It encompasses about a HOLISTIC APPROACH to "manage" the en bloc beast instead of letting the crazed bull run helter-skelter in an en bloc frenzy. How?

One suggestion: By developing an en bloc quota system by (a) geographic regions, (b) estate type and (c) estate age - in much the same way that Singapore "manages" (i) land allocation for our transportation network on one level (roads, rail tracks, cycle paths, walkways) and (ii) time/distance demand by different vehicles on our road network on another level (Certificate of Entitlements, Electronic Road Pricing).

From a macro-economic perspective, an en bloc quota system would also be healthy to minimize asset bubbles and regulate redevelopment land reserves. Lessons that should have been learned from the 2006-07 en bloc frenzy that created the TRIPLE WHAMMY EFFECT: (1) supply contraction with demolition of estates sold en bloc, (2) immediately matching demand spike for replacement units (both purchase/rental) and (3) increased competition for construction resources/labour, thus fuelling price spirals on ALL fronts. Various government agencies were caught on their back foot, scrambling for sand, granite chips, foreign workers and housing for these workers that in turn spun-off into another barrage of complaints about increased sleaze in residential areas and new dumps in countryside areas.

Greater diversity in urban landscape and architectural legacy would result from en bloc quotas because redevelopment land would be made available at different points in time to capitalize on evolving building technologies/efficiencies and new design trends. As it is, the whole stretch of condos along Paterson Road will have the sameness of all-glass facades with disproportionate emphasis on bay windows, planter boxes and balconies brazenly exploited under the building regulations prevailing at that time.

Another suggestion: By calibrating incentives for plot amalgamation to create the spatial vista for better light and improved ventilation and also minimise the wastage of set-back boundaries in-between many small land plots where the apartment blocks jostle neck-by-jowl with each other (eg, with sub-tiered Development Charges for different ranges of land plot sizes).

Just as the legislative review was being prepped for parliamentary debate in Sep 2007, I specifically pointed the Ministry of Law official in late Aug 2007 to South Korea’s urban renewal model of “Hapdong Re-development” that mandates 1-4-1 exchange.
[Interesting trivia: The etymology of “Hapdong” in the Korean Hangul language traces back to its roots of the Chinese word for “Cooperation”.] To me, the South Korean urban renewal model is more neo-communitarian in approach. Isn't time to curb the Excesses, the Unsustainability, the Imbalance? Isn't it time to "manage" en bloc urban renewal?

4 comments:

Midl-life Crisis 4 said...

I tell you - most of us minority owners asked the developer so many times during our en bloc - we want a NEW replacement unit wihin 1km or we don't mind if we move out but they give us back same-size unit after they build the new condo. But they just ignore us!

They say that replacement must be about same age as our condo. Why should we? Then with so many older condos going en bloc one after another - we will be moving house every 3 or 5 years. Big Headache!

It is very unfair - kena exploited!

The Pariah said...

Dear Midlife Crisis:

I have heard similar stories from various other condos where the Minority Dissenters also tried to negotiate with their Developer-buyers for 1-4-1 exchange - but to no avail.

That's why I advocate an ADDITIONAL MANDATORY OPTION for 1-4-1 exchange.

En blocs should NOT be a One-Size-Fits-All. There should be at least 2 options - CASH OR EXCHANGE.


There are many more considerations in "managing" 1-4-1 exchange. Details are available in:
http://singaporeenbloc.blogspot.com/2008/08/so-whats-alternative-in-end.html

Anonymous said...

Why Government do not offer exchange? It wd be fairer - at least same size.

Only thing that is no good about exchange is that it wd be easier to get 80%. Now they are stuck cos they can't get 80%. So our family can stay in this place. But if can get exchange and we can move back here, then it is not so bad.

Actually, even exchange can still make money for developer. They build double height in the new condo.

The Pariah said...

Dear Anonymous:

As you may note from my Nov 2007 blog entry - Part B, para 4.1: Various MPs also suggested offering 1-4-1 exchange during the Second Reading of the Amendment Bill in Sep 2007.
http://singaporeenbloc.blogspot.com/2007/11/whats-next.html

From MinLaw's parliamentary replies, MinLaw think that 1-1-4 exchange would delay the sale process and reduce the en bloc sale proceeds. MinLaw were apparently MISGUIDED by listening only to corporate developers with whom they are engaged in ongoing dialogue/consultation as part of the general PPP (Public-Private Partnership) framework that underpins Singapore's economy.

It is the equivalent of the US Treasury asking Merrill Lynch, Goldman Sachs, Lehman Brothers whether Glass-Steagall Act should be repealed, eh???

(a) MinLaw's concern about 1-4-1 exchange delay - Even for cash-only settlement, it is ironical that the law provides for up to 24-month window in an UPWARD MOVING market where the Reserve Price is SET UPFRONT. Yet within this 24-month window, there is no provision for exchange.

Even for architects to draw up the design for the whole estate OR urban planners to approve the redevelopment applications OR the home-buyers to buy their dream units available at soft launches, it does NOT take 24 months!

(b) MinLaw's concern about reduced en bloc pay-out - Cash is King, whether in good times or bad times; more so, in bad times.

So the choice is up to the owners as they could choose between (i) Cash OR (ii) Exchange.

Those who opt for Cash can deploy the proceeds freely to capitalize on immediate opportunities at the time. Even if en bloc proceeds are reduced for those who opt for cash, that's the "trade-in" they pay for immediate liquidity.

Those who opt for Exchange can still encash by selling the new unit subsequently if they decide not to move back to the same neighbourhood after redevelopment. For later-encashment, the owner takes the market risk that property prices could shoot up further or crash thereafter.

To me, it is quite clear that MinLaw's concerns are ill-placed. Two possibilities:

(1) MinLaw have been had by the corporate developers and they still don't know it; or

(2) MinLaw do not mean what they say - despite what they said in Parliament in 1998 that the en bloc law will "create many more housing units in prime areas for Singaporeans", MinLaw are NOT honouring this assurance despite (i) the "twice the price; half the size" predicament faced by owners after en bloc and (ii) the URA statistics confirming Singaporeans' displacement from the Core Central Region in condo purchases from 2000-2007.

ACTION SPEAKS LOUDER THAN WORDS!

NON-ACTION IS ALSO ACTION!

So, MinLaw's NON-ACTION is proof that Minlaw DOES NOT CARE ABOUT THE PLIGHT OF SINGAPOREANS post-en bloc, eh? Reasonable surmise, you think?