Newer valuation method welcome for selling en bloc

Private residences in Orchard Road.
Private residences in Orchard Road.PHOTO: ST FILE

Singapore property takes centre stage in the world of premium penthouses (6 of 11 'super penthouses' on sale globally are in S'pore, June 20).

Unfortunately, owners of such penthouses in Singapore often find their property valued quite differently when the condominium goes for sale en bloc.

This is after paying a hefty premium price for the penultimate unit of a high-rise condominium (usually in a prime location).

Why is this so?

The inclusion of "share value" as a method of apportionment in the Valuation Guideline provided by the Singapore Institute of Surveyors and Valuers (SISV) is the main problem.

Arguments have been put forward about share value being an inappropriate method for apportionment yet it remains very much in use, even as it distorts and provides unacceptable apportionments.

This is surely because it heavily favours smaller units, owners who often form the majority in any collective sale.

Even the method by "valuation", which should appear most reasonable, is qualified to exclude location, floor level and so on, taking away all but the size or strata area to be considered.

Fortunately, in the current updated Valuation Guideline 5, a provision for an alternative valuation allows not only size, but also orientation, storey/level to be considered. But it requires that the minority owners engage their own valuers to put their case forward against the majority owners in the sale.

First for arbitration to be held at the SISV, and failing an agreement, then at the Strata Titles Board.

Surely adoption of this more recent and equitable method as the primary method of valuation would be preferred, and putting the other outdated and inappropriate methods to rest. This will relieve minority owners of the highly unpopular and arduous task of delaying the whole process in order to protect their rightful interests, especially in cases where they may actually not be against the collective sale.

Hopefully, when the SISV's Valuation Guideline 6 appears, peaceful collective sales can become the norm rather then the exception.

Buyers of the six super penthouses can also proceed with the purchase without any trepidation.

Tan Wee Gee

A version of this article appeared in the print edition of The Straits Times on June 26, 2019, with the headline 'Newer valuation method welcome for selling en bloc'. Print Edition | Subscribe