Craze over collective sales

The good, the bad and the ugly on the way to selling en bloc

Normanton Park was sold for $830.1 million in October, reaching its 80 per cent consensus in just over two months.
Normanton Park was sold for $830.1 million in October, reaching its 80 per cent consensus in just over two months.ST PHOTO: KEVIN LIM

When Mr Mark Yuen became the head of the Farrer Court collective sales committee (CSC) in December 2006, he did not expect to hold the role for two long years.

Though residents reaped a windfall in the end - the former HUDC estate in the Farrer Road-Holland Road area remains the record collective sale at $1.34 billion - it was hard work reviewing multiple proposals and spending weekends giving out flyers.

Now 62, Mr Yuen, a wealth manager at the time, recalls: "We spent a lot of time weeding out members of the committee who didn't know they had fiduciary duties, or were actually 'anti-en blocers' trying to drag out the process."

Jokingly, he compares his journey to that of the 488-unit Normanton Park which, in just over two months, reached its 80 per cent consensus, launched a tender, and sold for $830.1 million in October: "I spent two Christmases on this."

Amid a collective sale frenzy, where residents can become millionaires almost overnight, it is easy to forget that the process can be a long and sometimes ugly one.

But Mr Yuen admits he had it relatively easy: "Some estates try three times and still can't make it."

In fact, residents of the 61-unit freehold Cairnhill Mansions in Newton are trying once more to cash in, a show of patience after their attempts in 2005, 2007, 2011 and 2014 failed due to insufficient support or too-low bids, among other things.

Estates which fail to go through with a sale must wait two years before they can embark on another attempt. If they wish to do so before then, they are subject to a higher threshold requirement of 50 per cent (by way of total number of owners or share value), to trigger a meeting to elect a CSC on their first retry, up from 25 per cent of owners or 20 per cent of share value. For second and subsequent retries, approval from 80 per cent is needed.

 

As if the legal process is not arduous enough, collective sales can be fractious affairs with neighbours in opposing camps pitting themselves against each another.

Laguna Park in Marine Parade is the poster child for ugly confrontations, where name-calling and car vandalism surfaced during its last attempt in 2007. A former chairman of the estate's management committee was also fined for putting glue in his neighbours' locks. The situation so far is much more mellow in the estate's third attempt.

Observers say that such instances of truly nasty behaviour are rare. However anxiety is an undercurrent that plagues both pro-and anti-sale camps.

"On the one hand, the money could really change people's lives. On the other, you are asking them to give up their homes," says veteran real estate consultant and academic Steven Choo.

Cold wars emerge, WhatsApp espionage ensues - and the result is fractured communities.

"It's not a nice feeling, to meet the eyes of someone in the lift or the carpark, and think, 'This is the person standing in my way to a windfall', or 'This is the person throwing me out of my house'," says retired businesswoman Poonam Bhandari, 60. She opposes the collective sale of freehold condo Teresa Ville in Telok Blangah, where she has lived for the last 30 years and which is having another attempt after failing in 2007.

The daily anxieties pile on, she adds, when members of a management committee also sit on the sales committee.

"Sometimes you feel that the management committee is putting decisions on hold till they get a verdict on selling en bloc. But in the meantime, we all live here and things need to get done," she says.

Then, there is also the stress and uncertainty of finding a new home.

As a successful sale looms, many residents face the time pressure of finding a new roof over their heads.

Financing a new place can also be complicated by the fact that the money often arrives only about four to six months after the date of award.

Many may also have to make adjustments to their living arrangements, especially those used to spacious HUDC units. Finding a large replacement apartment in a similar location may require some top-up, which would erode any financial gains; otherwise, they could opt for a Housing Board flat, which may require a change in lifestyle.

But ZACD Group executive director Nicholas Mak notes that many owners will enjoy some sort of collective sale premium, and that it is up to them how they use the money. "En blocs are an emotional affair - there are no two ways about it."

Correction note: This story previously stated that at least 25 per cent of owners or share value is needed to trigger an extraordinary general meeting, when it should be 25 per cent of owners or 20 per cent of share value. We are sorry for the error. 

A version of this article appeared in the print edition of The Sunday Times on November 12, 2017, with the headline 'When things take an ugly turn'. Print Edition | Subscribe