Fools - and not just for April 1st ...

Let's commemorate April Fools' Day ... because throughout the past en bloc frenzies since 1999, owners have been outfoxed by corporate developers. In turn, corporate developers were outfoxed by Gahmen and that made them cry foul, as shown in the immediately preceding blog.

The best antidote to prescribe on April Fools' Day is a potent dosage of a famous quote from Sūn Zǐ’s ( 孫子 ) “The Art of War”:

知彼知己，百戰不殆；
不知彼而知己，一勝一負；
不知彼，不知己，每戰必殆.

Translation:
If you know others and know yourself, you will not be imperiled in a hundred battles;
If you do not know others but know yourself, you win one and lose one;
If you do not know others and do not know yourself, you will be imperiled in every single battle.

1. Land supply. As part of the effort to “know others”, let’s understand a little about land supply.

In Singapore, there are two sources of land supply:

(a) From en bloc sales – Privately owned freehold land or remaining tenure for leasehold land, most of which are typically in prime, choice, popular, mature areas or districts. Condo owners – NEVER EVER FORGET THIS – Location, location, location. Without you, how can corporate developers ever get hold of such choice sites that are already built-up?

With a choice location, the developer’s risks are much lower because the project saleability is significantly improved (ie, quicker turnover, higher price), all other things being equal. But there is less certainty in securing the land plot through en bloc sale (eg, collective sale order may not be issued if the Minority Dissenters win the legal battle, the law has been breached, etc). Also, the process will take longer (eg, in collecting the requisite number of signatures to achieve majority consent, in awaiting the outcome of legal battles, etc).

Although the en bloc process could be lengthy, developers put in their stake only at the stage of bidding, or exercise of option or execution of Sale and Purchase Agreement, ranging from 1%-5%, subject to negotiation.

(b) From Government Land Sales programme – State land, most of which would be in less prime/choice areas or districts other than some exceptions of land pockets or as a consequence of new infrastructural/re-zoning enhancements. GLS process is faster and more certain compared to en bloc route.

2. Government Land Sales (“GLS”) Programme. Let’s delve a little into how GLS works. MND works closely with the following land sale agencies (viz, URA, HDB, JTC, SLA) to sell state land under the following two systems with GLS announcements usually made twice a year in Jun and Dec:

(a) “Confirmed List” system: Where sites are scheduled to be released by Gahmen for tender at a pre-determined date each year. The award of the sites will depend on the acceptability of the prices submitted at the closing of tender and the tender period is usually 16 weeks.

Upon close of tender, Gahmen (say, URA as the land sale agency) would be advised by IRAS Chief Valuer as to the Estimated Market Value (“EMV”) against which the submitted bids would be evaluated.

In other words, nobody (not even the appointed land sales agency) would know what would be Chief Valuer’s EMV valuation until the clock strikes High Noon on the day of tender close.

Perhaps, this was why REDAS was trying to get Gahmen to disclose the Reserve Price so that their members can gauge the EMV (likely to be 15% higher than Reserve Price) so that they wouldn’t overbid in their exuberance. So it would appear that – despite their cunning - foxes are not immune from occasional exuberance, eh? I have seen wild foxes during my hike in Patagonia – Hmmm ... I wonder what does a wild cunning exuberant fox look like? As the Greek historian, Polybius, taught us – learning from our own misfortunes is the “most unmistakable”. I reckon exuberant foxes also learned in such unmistakable manner. Yeow ... (human beings say “Ouch”; foxes say “Yeow") ... searing pain no doubt!

If the submitted bids are at/above Chief Valuer’s EMV, then highest bidder would usually win and the award would be announced shortly after due evaluation. If none of the bids are acceptable, that land plot would remain on Confirmed List unchanged or with amended parameters, be withdrawn or be relegated to Reserve List.

(b) “Reserve List” system: Where a site for public tender would be launched only if a developer commits to bid at a minimum price acceptable to Gahmen (except for a bypass introduced on 8 Mar 2010, as per Para 3 below). The Reserve List system was introduced in June 2001 to inject more flexibility into GLS as it would make available sites for GLS without pre-determined tender dates. If there is no accepted application from any developer, no tender would be called for such Reserve List sites and Gahmen would not incur tender expenses frivolously and wastefully.

Upon receiving a developer’s application stating the Minimum Price at which such developer would be prepared to bid for Reserve List site, Gahmen would check with IRAS Chief Valuer. If such Minimum Price is within 85% of EMV, Gahmen would accept offer and require that developer to (i) sign an Agreement for Tender, committing to tender at such Minimum Price and (ii) make a deposit.
Consequently, similar to Confirmed List procedures, a tender would then be called EXCEPT that in a tender triggered from Reserve List, the “Minimum Price” would be disclosed. All bids submitted must be at/above such Minimum Price (including that from the developer who signed Agreement for Tender). Upon close of tender, then highest bidder would usually win and the award would be announced shortly after due evaluation.

If no tenders are triggered, that land plot would remain on the Reserve List unchanged or with amended parameters or be withdrawn or be moved to the Confirmed List.

GLS are no fire sales nor are they at basement bargain prices. No need to die-die-must-sell! Flow-chart of revised Reserve List system (source: MND press release dated 8 Mar 2010 entitled "Enhancing the responsiveness of the Reserve List System"):

3. What the Dickens – More, more and more! As shown in previous blog entries, Progressive Corporatism pervades on this little island, whether wittingly or unwittingly. Gahmen under advice of the Economic Strategies Committee are already very accommodating towards corporations but REDAS are still grunty-grumpy! As you read on, you may be reminded of Charles Dickens’ Oliver Twist where, in the adapted Broadway musical, Oliver holds out a bowl in his tiny thin hands and asks for “more” gruel ... except that many of REDAS’ shining lights are on Forbes’ List of Top 40 Singapore Billionaires – certainly they are no Olivers!

Here are some recent “goodies” from MND and REDAS is still asking for “more, more and more”:

(a) In Oct 2008, the Confirmed List was suspended in the aftermath of unprecedented meltdown and credit freeze globally. However, on 14 Sep 2009 (ie, in less than a fortnight from an initial ministerial hint), MND swiftly announced that they would reinstate the Confirmed List for 1H2010 GLS programme.

(b) On 6 Nov 2009, Gahmen made an early announcement of land sales programme for 1H2010, thus deviating from the traditional norm of announcements in Dec. Based on Business Times (7 Nov 2009) report: “According to Urban Redevelopment Authority (URA) land sales and administration senior group director Choy Chan Pong, the market has been waiting for updates since National Development Minister Mah Bow Tan said in September that the confirmed list would be reinstated. 'Since people say there is some anxiety about housing supply, it's better to tell people now,' he explained.”

Note URA’s choice of words: “people”. Who are these “people”?

Q: Who would be directly impacted by Confirmed/Reserve Lists?
A: Corporations that are land developers.

Since when did “companies” become “people”?

Ahhhh ... but can we blame URA when they work and play together with developer corporations every other day? Remember the preceding blog entry where it was mentioned that URA and REDAS even play with their food during Chinese New Year “Lo Hei” festive dinner, eh? Isn’t it a travesty? On the one hand, Gahmen humanize corporations. On the other hand, Gahmen demonize us human being citizens as “lesser mortals”! Tsk, tsk … shameless or shameful - any difference???

In any case, this points to yet another instance of Gahmen being so understanding towards REDAS and yet it doesn’t send them to Seventh Heaven, eh?

(c) 6 Nov 2009 was also a Bonanza Day for developers as the 26 sites from Confirmed and Reserve Lists could generate 10,550 private residential units – the HIGHEST from any GLS programme since the Reserve List system started in 2H2001! No doubt, such bonanza would ultimately cascade down to end-buyers but only if the tenders are successful.

(d) On 8 Mar 2010, MND issued a press release: "To ensure that the Reserve List system remains responsive to dynamic market conditions and business needs, the Economic Strategies Committee (ESC) has earlier recommended that the Government review and make improvements to the system to make it less onerous for developers to trigger sites on the Reserve List. This will enable supply to be more easily activated when needed. ... The Government will consider launching a Reserve List site for sale once it has received sufficient market interest for the site. A site is deemed to have received sufficient market interest if more than one unrelated party submit minimum prices that are close to the Government’s Reserve Price for the site within a reasonable period."

CNA report (9 Mar 2010) elaborated: “Analysts said the change will make the Reserve List System more dynamic, especially in down cycles where reserve prices may not be in sync with market conditions. And it could also help developers obtain sites at less favourable locations at lower prices.”

Uh-oh, has IRAS Chief Valuer been defamed in public ... are these “analysts” insinuating that IRAS Chief Valuer is frequently out-of-sync in making such EMV valuations??? Maybe that’s why no names are attributed to such analysts ... wink, wink, blink, blink!

But evaluating the above change FROM ANOTHER ANGLE, it amounts to foreplay with no commitment to go all the way!!! Man, this is no rough horseplay! Rather, it is a slow dance called the foxtrot where G ("G" for "Gentleman" or "Gahmen"?) holds F ("F" for "Foxy lady" or "Fox"?) up close and personal – slow-slow, quick-quick, slow-slow, quick-quick.

It is pretty seductive. If you recall the procedures in Para 2 above, if the site stays on Reserve List, a tender would not be launched unless there is a commitment by a developer to bid at Minimum Price. But under this new "improvement", it offers a bypass because a Reserve List site would be released for tender if more than one unrelated party submits a Minimum Price that is close to Gahmen’s Reserve Price within a reasonable period. A bypass - How??? By this trigger, it would lift the commitment burden off the developer’s back (no need for deposit and no need to bid at indicated Minimum Price at the very least) and yet it would launch a tender. Whilst EMV continues to be secret until High Noon, the triggered release would be noted within the industry, bearing in mind that the developer community is relatively small in teeny Singapore (REDAS have only 128 ordinary members as of Mar 2010). The trigger is set off by the Minimum Prices submitted by more than one unrelated party that are close to the Reserve Price which "is set at 85% of the Chief Valuer's EMV" - kinda like flying a kite to check the wind direction, ain’t it?

Also, it would appear that the playing field under the "bypass" route is not as level as the "normal" way. The "bypass" route would narrow the bidding range for the parties whose interest in the site triggered the tender launch. These "interested parties" would likely bid around their trigger Minimum Prices, thus improving their chances of success whilst capping their risks of over-exuberance. In contrast, other tenderers not in the know suffer a higher probability of under-/over-bidding (whereas under the "normal" way, the Minimum Price is disclosed to ALL tenderers and that sets the base level). Although these bumps and humps on the playing field would work to the advantage of "interested parties", they do NOT ensure tender win because other tenderers may over-bid. But should the playing field even have little bumps, not to mention humps??? Should Gahmen limit the potential incidence of over-bids by creating such kite-flying "bypass" route as it could be to the detriment of public coffers? Surely "caveat emptor" should be given free rein in the Jungle where foxes roam, eh?

Gahmen should take heed that they are mere "custodians", and NOT "owners" of public coffers!!! What is already in there and what could potentially go in there belongs to Singapore citizens! At the expense of potentially compromising our public coffers, the one REDEEMING FACTOR of the "bypass" route is that the tender would NOT be awarded if the Reserve Price (ie, 85% of EMV) is not hit. Whew ... that's a close shave! Even then, as things stand, it could potentially be a 15% haircut! When you are talking about hundreds of millions or tens of billions of dollars, that 15% haircut is more expensive than the Guinness World Records' most expensive haircut by London's Stuart Phillips for Beverley Lateo in 2007 at £8,000 (perhaps records set by royalty don't count as the latest highest is chalked up the Sultan of Brunei)! [Incidentally, Ms Lateo is a retired Italian property developer! See, things just add-up, eh? Vixens (female foxes) enjoying expensive hair cuts ... at our expense, no doubt!]

Nonetheless, the industry is also highly competitive as land is precious in Singapore. Hence, there should be natural checks-and-balances as foxes try to outfox each other in a Dog-eat-Dog world. Although this is far from being a foxhunt, there is still a foxhound master on a horse (IRAS/MND) with several foxhounds padding around out there (viz, URA, HDB, JTC, SLA). Overarching these is the Competition Act (Cap 50B) and an oversight body called the Competition Commission of Singapore to ensure good order and deter bid rigging or other forms of misconduct. No doubt, the authorities would have procedures in place to cross-check and sniff-out any form of anti-competition.

In connection with the above, it was interesting to note the following views of a Mr Philip Ng Lin Ai, Director, OCSC Global, who wrote in Business Times (22 Nov 2009): "I have written to URA a few times about the need to review the policy of putting sites in the reserve list as I strongly felt that the policy is seriously flawed. URA maintained that the reserve list policy is market-driven. The property market is dominated by a few big players with large land banks. The motivation of the major developers is to maximise profit and value of their land bank and not to maintain price stability. Does it make sense to increase supply and thus lower the value of their land bank by making a bid for the sites in the reserve list? The way the property game is played is intriguing. Developers play with their cards close to their chests. URA not only plays with its cards on the table but also shows its next card. ... URA should consider the impact of its policy on those who buy properties for their own use, particularly Singaporeans. Sharp hikes in prices result in massive transfer of wealth from buyers to banks and developers. It has also serious social ramifications - on population growth, savings for retirement, and leads to discontentment." [Bold emphasis is by The Pariah.]

Such foreplay under the "bypass" route is also free. If the tender had been triggered in the "normal" way from the Reserve List, there would be a deposit of 3% of Minimum Price subject to a cap of $5mn. If developer failed to bid at Minimum Price (or higher), that deposit would be forfeited. Incidentally, this deposit was reduced from 5% previously – see, everything goes up in price but this goes down! Still not enough for REDAS?

Also, note that this change was given immediate effect - nothing wrong with swift implementation as it is a hallmark of confidence and efficiency. But it is all the more PERTURBING when applied INCONSISTENTLY AND UNEVENLY ("suka-suka", as they say in Malay - "at whim and fancy") -Contrast with my previous blog about how URA issued a circular in Jul 2008 to change GFA calculations for planters/bay windows and – despite giving six months’ notice period to developers – new projects launched in Mar 2010 continue to be under the old rules ... from 2008-2010 – Sheesh! Ditto for pro-speculation measures of Deferred Payment Scheme which was withdrawn in Oct 2007 (ie, more than 2.5 years ago) but developers could continue to offer them for projects launched in Mar 2010. Yet REDAS don’t count their blessings, eh?

For all the above (in addition to the goodies under 2009 and 2010 Budgets), REDAS still wanna gripe??? When push comes to shove, ... when accountabilities have to be answered, ... perhaps even foxes would have to be neutered as soon as they emerge from their foxholes, you think?

4. En bloc sales. Let’s understand en bloc at SOURCE, ie, this piece of legislation called Land Titles (Strata) Act (“LTSA”). A brief synopsis of how the law is skewed at the outset and continues to be skewed even after the Oct 2007 legislative amendments can be found in the blog entry made way back in Aug 2008 entitled “Greek mythology: The SOURCE and Themis” at: http://singaporeenbloc.blogspot.com/2008/08/greek-mythology-themis-and-source.html

All points made in the above Aug 2008 blog entry continue to apply today except Point 8 about “qualified privilege”. That point about "qualified privilege" has since been settled in favour of Minority Dissenters by courtesy of the Horizon Towers en bloc fiasco. Yeh!!! Through five rounds of battles (two at Strata Titles Board, two at High Court and the finale at Appellate Court), the Horizon Towers Minority Dissenters fought all the way to sweet (but expensive) victory at the end. This mega-battle paved the road for all future en bloc sales in establishing this legal point of “qualified privilege” as a landmark case law precedent! Once again, I would like to place on public record my heartfelt appreciation for the courage and determination of the Horizon Towers Minority Dissenters.

However, as they say, “Change is the only constant”. Therefore, it is no surprise that new behavioural en bloc patterns are already evolving to undermine LTSA and render it irrelevant through reverse engineering tactics whilst invoking all-powerful majoritianism. Essentially, en bloc sales would likely evolve to be legalized scams – Way to go, eh, for a country that prides herself for “rule of law”???

5. Sauce for the Gander is NOT sauce for the Goose. Just to rub it in – Office buildings owned by corporate developers are being re-modelled and converted for residential use at huge costs whilst suffering loss of rental income during conversion period. Example: 76 Shenton Way is already being redeveloped by the City Development group. Ditto for Starhub Centre on Cuppage Road and UIC Building along Shenton Way. As a Chinese folk saying goes: "Man has two hearts – no more, no less”. When the building is theirs, they will think thrice before “wasting” it. It is not a bad thing – it makes sense for building sustainability, environmental friendliness, etc.

But, on the other hand, residential gems (eg, The Futura at Leonie Hill, The Habitat at Ardmore Park, etc) face the wrecker’s ball. For these condos above 20 storeys that went en bloc, how much extra Strata Title Area was harvested through redevelopment? Did URA/BCA even bother to track and assess? In terms of Net Saleable Area, a lot more (no doubt) but that would be more a function of clever marketing and exploitative selling tactics (as opposed to effective usable space), eh?

To conclude: Picture this scene of Sun Tzu, Clint Eastwood and The Pariah gathered round a table, discussing this serious phenomenon of en bloc sales in Singapore on April Fools’ Day:

Sun Tzu stroked his beard and said: Using the yardsticks in my book of “The Art of War”, I think Gahmen and developers are in Category 2: “If you do not know others but know yourself, you win one and lose one”. What is your opinion of en bloc owners – how would you categorize them?

The Pariah snapped: Category 3: “If you do not know others and do not know yourself, you will be imperiled in every single battle“.

Clint Eastwood in “Dirty Harry” with a menacing glint in his eyes as he barely squints: “Opinions are like assholes. Everybody has one”.

The Pariah quipped: “Yeh, but some are bigger than others”.

Size matters … at times. To see who is the biggest of them all, please click on the bird cartoon at this blog-link: http://singaporeenbloc.blogspot.com/2010/03/trilogy-part-c-pm-said-i-am-saying.html

If you wanna hear a fox howl from its fox-hole, please click on this:

Foxes outfoxed ... then the Chief Cockerel crowed

In true Darwinian spirit, it is survival of the fittest.
Big fish eat small fish. Small fish eat shrimps.

So we shrimps (viz, we the "lesser mortals" as Singapore citizens) should heed the wise words of Greek historian, Polybius, who said: “There are two roads to the reformation for mankind — one through misfortunes of their own, the other through the misfortunes of others; the former is the most unmistakable, the latter the less painful … the knowledge gained from the study of true history is the best of all educations for practical life.”

1. Historial trace-back. Let's do a short historical trace-back: Once upon a time, not so very long ago ......

19 Feb 2010: Gahmen announced Seller's Stamp Duty (SSD) for residential properties sold within one year of purchase and mandated reduction in Loan-to-Value (LTV) limit from 90% to 80%.

25 Feb 2010 (a week later): The Real Estate Developers' Association of Singapore (REDAS) hosted "Lo Hei" celebrations (a Chinese New Year festive meal where "Yu Sheng" raw fish salad (homonymic pun to denote "vitality in abundance") is tossed sky-high to signify the diners' wishes for success in business ventures in the new year). Media coverage showed the guest-of-honour Finance Minister, REDAS President (Mr Simon Cheong) and URA's elegant CEO in merry "Lo Hei" ritual.

During the dinner, by way of REDAS' response to 2010 Budget, Mr Cheong said: “REDAS was hoping for more cash in our ‘ang pows’ (red packets) from you, Minister. But when we opened the ‘ang pow’, we were disappointed there was not much inside for developers, ... Nonetheless, we are happy with your long-term productivity ‘ang pow’, as what is good for Singapore's economy in the long run must also be good for the Singapore property market. It is what REDAS calls a deferred payment ‘ang pow’.”

In covering the "Lo Hei" event, Channel News Asia (25 Feb 2010) reported: "... in the interest of a stable property market, REDAS said its members are committed to a fast-track supply to satisfy demand. This would also minimise excessive speculation in the property market". The Straits Times (25 Feb 2010) went on to elaborate that Mr Cheong also said: "Hopefully when demand is satisfied, there will be less pressure for future anti-speculative measures".

[... Reading the media coverage at the time, I wondered if REDAS members had indigestion pangs even before they stepped into the dining hall given the mild anti-speculation SSD and LTV jabs injected by the Gahmen just a week earlier.]

[... When I read on about REDAS' commitment to fast-track supply, I wondered how the board of directors of public-listed developers would account to shareholders for not maximizing profits but I reckoned that public interest would rightly prevail with shareholders' sacrifice.]

[... I also thought it was inappropriate to apply the not-so-thinly veiled commercial pressure on Gahmen. Worse still, a fortnight later, when Gahmen seemingly capitulated to such pressure based on CNA report (9 Mar 2010): "National Development Minister Mah Bow Tan ... said the government will not be introducing more measures to cool the market for now" although it had the usual qualifications but that ministerial assurance made headline news!]

24 Mar 2010 (a month later): At the launch of Singapore Residential Price Index (SRPI), Mr Simon Cheong said: "If REDAS members who are fighting in the foxhole everyday for the interest of a healthier property market do not speak up, then who will?".

Business Times (25 Mar 2010) reported that Mr Cheong urged the government to "allow the property market here to operate fully as a free market ... also asked if the state should be so concerned with private housing prices when the segment serves only 16.5 per cent of the overall population". To support his claims, Mr Cheong cited two examples of land sales at Ten Mile Junction and Tampines.

[... When I read this, I suppressed my mumbling rumble that indigestion from the "Lo Hei" dinner a month ago must have chocked-up such constipation so badly that diarrhea (verbal or otherwise) would be the only form of relief. I don't know about the "Hei" part of the ascendancy but I was pretty sure that it'd hit the "Lo" or low point of the downward slide - and that came fast and furious in the form of MND's next-day press statement.]

25 Mar 2010 (next day): The Ministry of National Development ("MND") issued a press statement to rebut Mr Cheong's assertions. http://www.mnd.gov.sg/newsroom/newsreleases/2010/news25032010.htm

MND stated that: "The Government's objective is to maintain a steady and healthy property market where price movements are supported by economic fundamentals. This is important as a stable market matters to the well-being of Singaporeans and the economy. ... In carrying out its role, the Government has to take into account the interests of all stakeholders, especially home seekers and owners and the economy at large. ... for the two sites cited by Mr Cheong, the Government was not convinced that the bids represented fair market value rather than opportunistic bids, as there were very few bids for the sites, and the bids were exceptionally low."

2. Foxes and horses. Whoa ... were the foxes outfoxed and that triggered them to cry foul? Who outfoxed the foxes?

The horse perhaps?

Sheesh, how did that come about??? Foxes (characterized by their legendary cunning) have a higher Encephalization Quotient (EQ) of 1.6 compared to the horses' 0.86, as stated in Part A of my 18 Mar 2010 Trilogy at http://singaporeenbloc.blogspot.com/2010/03/trilogy-part-president-said-i-said.html

Now, now, I know ... we live in a polite society and name-calling is not very polite. But who was the first to admit that they were in "fox holes"? Who would live in "fox holes" if not foxes? Please excuse me for I have a simple mind.

3. Simple Simon Says. Talking about my simple mind ... that in turn calls to mind a game that we kids played in the good old days called "Simple Simon Says" (kids these days don't know what they have missed but I reckon Mr Simon Cheong is old enough to have played this game).

In this game, one player (let's refer to this player as the "leader") would stand in front of everybody (ie, the "followers"). The leader would shout "Simple Simon Says" + "Do This" as the leader simultaneously makes a gesture (eg, point at own nose, or stand on left foot, or some silly contortion) and freezes. The followers have to immediately mimic that gesture and similarly freeze until the next call. This would go on with new gestures being made for each call at rapid-fire pace. But when the leader shouts "Simple Simon Says" + "Do That", then the followers must NOT mimic that gesture; otherwise, the slow-wit(s) would have to drop-out from the game. Hence, the last kid left standing at the end of the game is lauded as the quickest wit of them all and gets a lollipop or something. If the last kid left standing is a boy, then as he licks his lollilop, he would bask in the open admiration from all the sweet little girls in their frilly frocks and dainty hair clips. If the last kid left standing is a girl, the boys would probably be tortuously mystified for the rest of the day as to "what the hell went wrong back there"?

Hmmm ... with the swift rebuttal from Gahmen, Simon Cheong may be tortuously mystified as to "what the hell went wrong back there" because all he did was to shout "Simple Simon Says" + "Do This" but the Gahmen "Did That". It is all the more mystifying because the Gahmen are not new to this game as they have played it many times over in the Re-making of Singapore. Wicked, ain't I?

4. Foxy sub-conscience. The fox analogy by no less than the President of REDAS made me wonder if it merely affirms the sub-conscience of cunning and natural predation legendary in the conventional characterization of foxes. Ahhhh ... the sub-conscience runs very deep indeed as proven by the science of hynopsis!

PROPERTY is all about LOCATION and TIMING.

In each en bloc frenzy, developer-buyers went round, snapping up prime/choice sites at so-called "en bloc premium" resulting in purported "en bloc windfalls" for extant owners. However, POST-en bloc, owners would almost invariably face the dire predicament of “double the price; half the size” for a replacement unit in the same site/area (ie, LOCATION) upon collection of en bloc sale proceeds (ie, TIMING).

That just shows how these developer-buyers have so successfully AND successively predated upon en bloc owners and out-foxed us. Most owners are clueless about Residual Land Value and that is how we typically end up underselling the crown jewel in our asset portfolio based on a twisted definition of "windfall". Based on the post-en bloc reality of "double the price, half the size", owners would end up with a sub-prime/half-size asset that would not last them very long if they should need to eventually monetize such sub-prime/half-size asset for daily living expenses and/or healthcare costs in their twilight years.

5. Foxes out-foxed. It was interesting to note REDAS' examples of Government Land Sales (GLS) as they griped that whilst Ten Mile Junction and Tampines bids at $162 and $118 psf ppr failed in Apr and Jun 2008, they were sold by the Gahmen at $437 and $421 psf ppr in Feb and Mar 2010 at 2.7 and 3.6 times higher, respectively.

Was REDAS sore because their developer-members were outfoxed? In other words, they have failed to predate upon Gahmen in the same way that they have been predating on en bloc owners? Insofar as developers are concerned, GLS and en bloc sales both constitute their ONLY sources of land-supply in Singapore.

The Gahmen have at their disposal a whole array of expert resources - unlike clueless en bloc owners. Surely, REDAS didn't think that the Gahmen (especially this PAP Gahmen) would be easy prey and could be as easily out-foxed as en bloc owners? Perhaps, it was a momentary lapse into the "Familiarity Breeds Contempt" mode, as an old Latin proverb goes, eh?

As asserted in Part A of my 18 Mar 2010 Trilogy: How the stats are sliced and diced often result in different kaleidoscopic formations. As Lady Irony would play her hand, Mr Cheong made his spiel about GLS at the launch of SRPI. Hence, it was interesting to read about how SRPI show vastly different trends from URA Property Price Index (PPI). Eg, non-landed private homes up 22.2% Dec 2008-Dec 2009 under SRPI but up 0.5% under PPI for 2009. The huge variance was apparently attributed to lag effect under high-volatility conditions which PPI is not calibrated to reflect as accurately as SRPI.

Hence, if I may humbly extrapolate from the above, the substantive hike in successful bids under GLS affirmed one fact: Gahmen did NOT undersell state land and public coffers took precedence - as they rightly should!

The dark horse came streaking past in the home run! Yeh! I roundly applaud Minister Mah's robust rebuttal of Mr Cheong's examples of the GLS bidding for the two sites. As asserted by Minister Mah, the Gahmen "was not convinced that the bids represented fair market value rather than opportunistic bids ..."

6. Opportunity and opportunism. What's the essential key word in Minister Mah's above assertion, my dear readers?

O-P-P-O-R-T-U-N-I-S-T-I-C

Indeed, "opportunistic" is how the developer-buyers have been mis-behaving at every opportunity throughout each en bloc frenzy.

The developer-buyers' crass opportunism - I continue to maintain - was unfortunately facilitated and given free rein by the force of law by courtesy of the Land Titles (Strata) Act with its underpinning structural flaws, ... with unsuspecting cracks and gaping chasms here and there, ... with startling room for wiggles and wriggles, ... and by the Gahmen's convenient silence and inaction (which could even be perceived as almost connivance at worst or inexplicable amnesia at best - wittingly or unwittingly so)! Whew ... that was a mouthful to spew!

7. The fox has shown its tail. Despite (i) the authorities bending backwards with a slew of accommodations in 2009 Budget and (ii) the provision of a generous S$250mn National Productivity Fund for the construction industry announced not long after 2010 Budget, REDAS wanted even more. To wit: Mr Cheong said at the "Lo Hei" dinner: "... REDAS was hoping for more cash in our ‘ang pows’ (red packets) ...". Greed knows no bounds - what else is new, eh?

[... Just to cite one example of how the Gahmen can do jaw-dropping acrobatic back-flips: Deferred Payment Scheme (DPS) was withdrawn in Oct 2007. Two-and-a-half years later, projects are still being launched in Mar 2010 by developers, brazenly touting the availability of DPS.]

[... Another example of the Gahmen's acrobatic stunts: I don't want to split hairs but this kind of official leg split is stunningly mind-boggling - URA issued a circular on 7 Jul 2008 rescinding Gross Floor Area (GFA) exemption for planters and bay windows with an effective date of Oct 2008 (ie, giving 3 months’ notice to the industry). However, on 22 Sep 2008, URA extended this grace period to 1 Jan 2009 (ie, effectively giving almost 6 months’ notice) where 31 Dec 2008 would be the last cut-off date to make a submission to URA which would result in a Provisional Permission.

Know what? Holy cow!!!  Holy goat!!! If you pop round to the showflats for projects launched in 2010, these features still dominate ... you won't be able to walk into the bedroom if you don't rest one-third of your mattress on the bay window! 2+2=5. Why would a developer make a submission by 31 Dec 2008 and soft-launch the project only in 2010 unless the old rules allow them to be O-so-OPPORTUNISTIC. Ahhh ... but one can't be O-so-OPPORTUNISTIC unless rule enforcement is correspondingly Eeee-so-ELASTIC, eh? Layee-odl-layee-odl-layee-o ... as the goatherd yodels lustily-O!  It takes two hands to clap, eh? At this point, it may be opportune for you to re-read Para 3 above about who has been playing this game of "Simple Simon Says" - that would put things into proper context!!!]

[... The list goes on - Is there a definition as to what constitutes a "room"? What is CASE (Consumer Association of Singapore) doing about all these billboards, full-page newspaper advertisements and sales brochures that feature these skyscraper projects with all-clear 360-degree vista (if you squint hard enough at these ads, you may even make out Batam to the south-facing or Johor Bahru to the north-facing)? Surely CASE President, Mr Yeo Guat Kwang being part of M-I-W (Men-In-White) and an honourable Member of Parliament, reads daily newspapers with such full-page ads? What is "Net Saleable Area"? Is the home-buyer being quietly charged $3000 psf for the air-space where the Egytian-crystal chandelier is dangling over the showflat living/dining room? I only know that your wallet will be much less jangling with that tinkling Egyptian-crystal chandelier (it's not even Swarovski!) - I can get snotty, eh? Although it is a "Showflat", it is NOT Show-and-Tell. If you don't ask, you are simply not told. Nothing irregular, eh? Life goes on.]

Anyway, I digress. Let's get back to the bushy fox tail. The culture, the tone and the flavour of an organization is set by the No 1. But when the organization is an association of industry players, then the No 1 reflects not just that organization's flavour but the entire industry in this instance, eh? Such is the power of magnification under an association umbrella!

Perhaps, now that "the fox has shown its tail" (as one Chinese saying goes), the Gahmen may be better placed to correlate the typical developer-buyers' unseemly opportunism suffered by largely clueless home owners in en bloc sales. Maybe, the Gahmen will finally empathize with our en bloc plight.

Well, we shall cross our fingers (and toes) that the Gahmen won't sit on their hands much longer. Reading the following sentence in MND's press statement, it sure sounds as if the giant has stirred from its deep slumber: "In carrying out its role, the Government has to take into account the interests of all stakeholders, especially home seekers and owners and the economy at large."

Wah Lau, "home seekers"! Wah Piang, "owners"? [For non-Chinese blog readers, I don't know how best to translate these Fujian (Hokkien) dialectic exclamations of "Wah Lau" and "Wah Piang" - it is close enough to "Oh Gosh" - so just think of it as a babble of OshKosh B'Gosh.]

There is Hope yet, eh? Maybe, Gahmen will finally "do right" by en bloc owners and mandate one-for-one (1-4-1) exchange in order to unlock land value for extant home owners (and not these opportunistic developer-buyers). I hope it will be soon as it is long overdue after two orgiastic en bloc frenzies in 1999 and 2006-07!  I can keep my fingers (and toes) crossed for longer than I can hold my breath but - for the next orgy (of en blocs, of course) - you are supposed to get breathless (... I think), and not out of breath (ie, dead)!  

But "Talk is Cheap". At day's end, Action speaks louder than Words. So let's see ... if the piper doesn't change his tune, what do we do with the piper, I wonder? I think Nightclub Owners (sorry, we have gone upmarket these days, Integrated Resort Owners) know the answer to this question.

8. The chief cockerel crows. When I read Mr Cheong's query as to whether Gahmen should be concerned with private housing prices that impact only 16.5% of our population, it pried open a little slit for us "lesser mortals" to get an insight into the "strategic" vision of "helicopter" perspective as one would expect at the level of REDAS presidency who get to play with their food in "Lo Hei" with ministers, CEOs and such like.

Additionally, Business Times (25 Mar 2010) reported: "Mr Cheong also questioned recent government measures designed to keep private housing affordable, such as the introduction of a stamp duty for sellers and the removal of the deferred payment and interest absorption schemes. ... Mr Cheong also said that a certain level of speculative activity in the marketplace can, in theory, improve the liquidity of real estate assets and catalyse the sales of new developments. When demand exceeds supply by a large margin, speculators provide investors with another source of a scarce commodity at a price premium. And encouraged by the higher prices, developers respond by launching more developments for sale and, in so doing, narrow the gap with demand, Mr Cheong added."

As the chopper whirs above with such "strategic vision" and "helicopter perspectives", I would likewise synchronize with my chop-chop-chop (be it karate chop or minced pork chop - anyone for minced-fox patties, perhaps?):

- First, 16.5% population: With such huge price differential between HDB and private housing coupled with the multiplier effects of CPF and private savings long invested in condos, isn't Mr Cheong trivializing the issue out of context by chanting the "16.5%" mantra?

- Second: DPS/IAS and IOLs: Withdrawal of Deferred Payment/Interest Absorption Schemes and Interest-Only-Loans are U-turns of speculation-facilitation, NOT anti-speculation, man! The only anti-speculative measure taken of late is the imposition of Seller’s Stamp Duty (SSD) for disposals within one year of purchase. However, SSD is a mere ant bite as it is disproportionate relative to (i) the legislated 24-month window for en bloc sale and (ii) the typical 30-month construction period for new projects - as stated in Part C, Para 3.6, of my 18 Mar 2010 Trilogy: http://singaporeenbloc.blogspot.com/2010/03/trilogy-part-c-pm-said-i-am-saying.html Perhaps, Mr Cheong is miffed that the Gahmen is no longer "facilitating" speculation in their "masak-masak" (Malay word for children's game of "play-house"), you think?

- Third: Good/bad Speculation: Singapore surpassed Hongkong as most densely populated at 7,022 persons/sq km based on 4.9mn population today versus 6.5mn target in future. In view of such pressures, land supply/demand in Singapore is equivalent to a constant state of drought in an agri-economy. Blog readers may recall what Vietnam, Thailand, India and other rice-producing countries did for their rice exports in Mar-Apr 2008. Under such conditions, property speculation even at minimal level is irresponsible, to say the least. Could it be that Mr Cheong does NOT need to stake his CPF (Central Provident Fund) retirement savings for his residential purchases although such CPF usage is sanctioned by the Gahmen?

Oh dear, I suppose we must be more understanding towards Mr Simon Cheong. (Disclaimer: the clipart caricature depicted here is purely fictional and any resemblance with any real life person is wholly unintended and entirely coincidental ... giggle, giggle ... but quite cutie, ain't he?) Being No 23 in 2009 Forbes' List of Singapore's Top 40 Billionnaires (the poor chap slid down one notch from 2008 Forbes' List), Mr Cheong perhaps is NOT cognizant of the predicament faced by us "lesser mortals". When UHNW clients transact, they just need to make a call and everything is considered "done" (no need to fuss about CPF balances, CPF rules for withdrawal, Loan-To-Value calculations, and such nitty-gritties). Hey, if you have to ask what does UHNW stand for, then obviously you are not in their league lol! High New Worth is so, so, so passé. These days, one has to be Ultra High Net Worth for your words to carry some weight - even then, maybe not, eh? Sigh ... no wonder, the Gahmen is not listening to me as USLNW (Ultra Super Low Net Worth)!

Incidentally, now that you have heard such loud crowing from no less than the President of REDAS, you should note that Mr Simon Cheong is born in 1957, the Year of the Rooster according to the Chinese Zodiac. That sure puts a new spin on Chief Cockerel Talking Cock, eh?  In the realm of cockerels, that's their lingo, yes? Certainly, I am NOT being rude. That's just how everything fits in the Jig-Saw Puzzle of Life, eh???

As in any melodramatic Greek Tragedy of En Bloc Sales, Polybius eventually exits the stage ...

- For those who have already been en bloc'ced: Do remember ... “There are two roads to the reformation for mankind — one through misfortunes of their own, ...[this road] is the most unmistakable … the knowledge gained from the study of true history is the best of all educations for practical life.”

- For those who are facing or may face en bloc in future: Do remember ... “There are two roads to the reformation for mankind — ...the other through the misfortunes of others; ...[this road] the less painful … the knowledge gained from the study of true history is the best of all educations for practical life.”

Let us not forget History, whatever the Chief Cockerel Crows! The Cockerel may be bird-brained. But the Fox is smarter than the Horse. Let us have memories that match the Elephants who are smarter than the Foxes. The Encephalization Quotients (EQs) of Animals are facts of science - they don't lie, unlike statistics!

May Mankind ... and the Cockerels, Foxes, Horses and Elephants ... in the World of Glass-and-Steel Jungles out there be reformed - for the better!