Would your replacement home be anywhere as good as Atria?

We have tried looking around many times. No place can match up to Atria in terms of location, convenience & design.

Property agents will tell you the obvious Atria advantages like Location (yes, we can stroll to the beach, and there are great facilities and schools nearby).

But for those of us already lucky enough to live here, we take for granted the unique advantages of Atria:

1) Exclusive

Where else would you find a single block condo, and only 158 units? New developments have several blocks built close together.

2) Convenience

For drivers:
- bypass any congestion quickly -- escape from the many small roads
- car park is never a problem (unlike most new developments)

For non-drivers:
- many bus (Mountbatten & Fort Road -- you can get to town quickly via ECP or Nicoll Highway
- shuttle buses to Parkway Parade & Leisure Drome
- taxis easily available (unlike on many other roads)

3) Great design

- We never have to wait long for the lifts.
- The internal space is sensible (unlike new fancy and impractical developments).

Why would we sign away such a wonderful place to live?

This is Home, truly.

Do you love Atria? Please drop us a line (or lines) to say why -- does not matter if you are owner or tenant, so long as you love staying here.

What you stand to lose if you sign the current CSA

The real value of your home/asset now - the Residual Land Value

(Applies to both owner/occupier and owner/investor) 

Residual Land Value (RLV) = Gross Development Value (GDV) minus Reasonable Profits (incl. Tax/Fees & Overheads etc.) minus Construction Cost minus Development charges

New Dev. Area of The Atria (DA) = 365949.8sqft @ Plot Ratio 2.8, therefore;

[a] Projected GDV in 3 years' time = $2500psf X (DA)                  = $914.9 mil

[b] Construction Cost = $350 X (DA)                                            = $128.1 mil

[c] Reasonable Profit = 20% X (GDV)                                          = $183.0 mil

[d] Development Charges for The Atria based on current DC rates = $50.3 mil

Hence, RLV of The Atria = $553.5 mil = [a]-[b]-[c]-[d]

Our current CSA Reserve Price = $500 mil. Therefore, we lose $53.5 mil. 

We would also like to point out that, with the excellent state of The Atria and it being a 15year old freehold residential and sea-fronting building, premiums should be added to its Land Value as it can command at least a rental revenue of $10 mil per year, if the developer/buyer decides to Land Bank. This works out to be another $40 mil.

Therefore, $53.5 mil + $40 mil = $93.5 mil which works out to be 18.7% less than what we should receive. 

The current/future potential value of The Atria 

(1) One and only 1.5km long strip of high-rise/high-dense freehold residential in the east, with both sea and city view, in a private residential district with East Coast Park a stone throw away.

(2) Eastern Region Line (MRT) serving from New Downtown to Changi Airport, with locations of the stations to be announced very soon.

(3) Very likely an MRT Station at Katong Park, which is less than 400m away from The Atria. (Recent announcement of stations along DTL3 has caused the values of properties nearby to jump by 20%)

(4) Kallang Sports Hub in construction, completion expected in April 2014.

(5) Planned Kallang Riverside lifestyle precinct, Paya Lebar Commercial Hub and evolving Joo chiat Heritage district all within 2-3km radius.

http://www.iproperty.com.sg/news/1077/Singapore-East-region-development-blueprint

All the above points are huge and solid property value-triggering factors that we believe to push the value of this strip to at least 50% to 80% in 10years' time.

The Atria, being such a young building, with up-to-date condo amenities, good design and excellent building conditions, there are advantages to hold and allow other sites along the Strip to be developed first, than reap the maximum value in 10 years. (From Belvedere to Seafront, to Aalto, each project increased 20% in their average selling price when launched.)

Why should we short-change ourselves by giving away this huge potential gain, which we have invested for, to the developer and en bloc raiders? We firmly believe that it is not the best time to harvest this golden fruit, which is now rightfully ours.

Immature and Unjust current En bloc laws/process 

Even with the recent 2007 and 2010 amendments to the LT(S)A, there are still loopholes in the en bloc process, which can be exploited by speculators, and does not protect the real long-term homes/assets holders.

These can be reflected in the numerous court cases, huge developers' profits and complaints from displaced home- owners of various "successful" collective sales and the inability of getting comparable replacement properties.

Most of the time, these processes translate to Minority Vs Majority, rather than Sellers Vs Buyers, due to the authorities' unclear guidelines, especially in the issue regarding the Methods of Apportionment of Sales Proceeds.

Due to these mismanaged process of en bloc exercises, lack of development knowledge of the CSCs and the conflict of interest of the marketing agents; all owners/sellers, especially Home owners (occupiers who have no other properties)*, are disadvantaged in most incidents.

There are fairer ways this can be explored, for example, in the case of Paterson Lodge en bloc exercise, owners were given the option of 1-for-1 exchanges for their home, requiring no homeowners to be displaced. Further away, in South Korea's Urban Renewal Model (Hapdong Redevelopment), it is legislated in the law, that "en bloc" must only be done in a 1-for-1 manner, to safeguard the homeowners’ interest and to protect the social and cultural capitals of the city.

http://lushhomemedia.wordpress.com/2007/07/19/paterson-lodge%E2%80%99s-answer-to-en-bloc-blues/

* Ordinary homeowners will face financial risk as they will have problem finding a replacement home. They only receive full payment for their units some time after they agree to the sale, given the long drawn out en bloc process. Decisions made by owners about the attractiveness of the sale are invariably based on the cost of comparable replacement properties. But with runaway property prices, they may find their windfall is barely enough to buy a property of similar size and location, leaving little if any profit left over. Furthermore, owners may only block a sale if they can prove financial loss, which is deemed by the Strata Title Board as occurring when the en bloc sale price is lower than the original purchase price, plus stamp duties and legal fees. Owners may not make reference, for example, to the amount of money paid out of their Central Provident Fund accounts towards the purchase of their home, which would include the cost of their home loan. 

Is Atria your only home? Sign the CSA and you only have 2 'No Choice' Options left

You have every right to sell. But, if Atria is the only home for you and your family, what would you have to do between signing the CSA and the final completion?

“No choice” Option 1

Start looking for another home now, and commit to the purchase before you get the en-bloc money.

“No choice” Option 2

You are aware of the above, and choose to wait till the deal is confirmed before committing to another property.

“No choice” Option 1

Start looking for another home now, and commit to the purchase before you get the en-bloc money.

What if the en bloc deal does not go through?

There are real-life examples of this, and genuine home buyers do get caught.

Even if it does, how much would you get?

(No, the projected amount means just that -- projected, that is, not a guarantee).

Again, there are real-life examples.

And, when would you get your money?

In the best case scenario, it could be at least 9 mths. In the worst-case and very realistic scenario, it could be up to 30 mths (ie 2 ½ years or more).

Can you afford the uncertainty, and the wait?

Yes, there is a minimum reserve price. Yes, there would a 3rd-party valuation before the final tender. Yes, the CSC has to call for a meeting to meet all sellers to obtain their approval to lower the Atria sale price, if the valuation or market falls below $500m.

But please note:

a) The minimum reserve price is only a number. The only people to whom this number really matters is you and me, the owners.

“How much” do you think it matters to:

Those hired to work on this, who are paid a percentage of the sale?

The speculators, especially those who may have bought unit(s) specifically to benefit from an en-bloc? (In any en bloc push there are likely to be a few speculators. They choose a “worthwhile to enbloc” unit (or units) carefully, service the mortgage for only a short time, and enjoy the windfall.). Atria is not likely to be a serious home or (only property) for them.

The developer-buyer? Important question. But that would have to be the subject of another post.

b) Valuation is an art, not a science. It is at least partly subjective. And the valuer can be recommended by the agent and appointed by the CSC.

c) If the market or valuation is lower than $500m, and you are already committed to another mortgage, are you really in a position to say “no” a lower reserve price, esp if your new mortgage were based on the $500m “reserve price”?

“No choice” Option 2

You are aware of the above, and choose to wait till the deal is confirmed before committing to another property.

If the market goes up, which means it is more likely that the deal would go through, how much would you have to pay for your replacement home? Even if you were planning to downgrade -- how much would it cost then? how much cash were you counting on in your downgrade sacrifice?

Sent Packing in a hurry?

If the en bloc deal goes through, you have only 7-9 months (Including the 6-month Vacant Possession period) to find somewhere else to live. Time is not on your side-- but finding a property takes time, and having secured it at last, the paperwork would also ake time (not to mention renovations).

And you would not be the only owner displaced by en bloc(s) who is looking, and desperate.

Do you want to be rushed into such an important decision? Once you sign, it is irrevocable and irreversible. Those who have signed will have no rights to raise any objections to STB or High Court. You will have to act on the 2 above “no choice” options and their consequences (except for the 5-day cooling-off period after signing).

Would you let anyone rush you into signing a contract to sell your house without knowing

how much you will get,

and when you will get it?

Do you want to be left with “No choice” and no time, and for the wrong reasons? If you have no time to think through now, when 80% have signed the CSA, you would have even less time.

NOW TIME IS ON YOUR SIDE. YOU STILL HAVE TIME, no matter what anyone tells you.

Please take time to think about these very important and real considerations for you and your family BEFORE you sign. Signing the CSA is irreversible and irrevocable.

The Present Atria En Bloc is flawed

The CSA contains unfair apportionments, which do not reflect market value, especially to the higher and sea-fronting units; the unique location not fully valued (Meyer Golden Strip); the freehold status that will appreciate in value perpetually. Therefore, the present CSA is not a good deal to all.

As such, we recommend the following actions:

1)     Do attend all EOGMs

If you were not present at the last 4 EOGMs, decisions have already been made for you. With the Quorum at just 30%, and the majority needed to pass resolutions is 50.1% of those present, whether in person or by proxy, it means that just 15.1% of owners can decide to sell YOUR home and at price which only benefits them. The present rules acceptable to the though Strata Title Board (STB) is easily exploited by speculators

This applies to all the EOGMs. It is not enough to just ignore the proceedings, especially the ones where the CSA terms are approved.

      2)     Reject the CSA approved at the 4^th EOGM.





Would you sell your home using a contract with terms that are not favorable to you? This is the case now for all penthouse, higher floor and sea-fronting units. This happened because most of the Subsidiary Proprietors of high-level/sea-fronting units were not present at the CSA EOGM. The CSC held approximately 44% of the Shared-Value votes, which includes 19 proxies, during the passing of the Motion.

We will need to commence a thorough review before owners again consider the En Bloc.

3)     Prevent lowering the reserve price.

With the current apportionment, high-floor and sea-fronting owners are already in danger of the inability to get replacement homes. If, because some owners are desperate to sell and the reserve price is lowered, the already short-changed owners will be in for a downgrade! There is every danger of it happening as long as the 80% (who have already signed the CSA) agree.

Unjust Apportionment of the Sale Proceeds

The current apportionment does not take into account the premium of storey levels, facing or penthouse units in such a unique sea-fronting site. All unit prices are calculated based on Strata Area and Share Value only.

Apportionment can definitely be calculated otherwise, the current apportionment is biased against the higher sea-fronting and the penthouse units, resulting in these units incapable of obtaining a replacement property in the adjacent area.

As illustrated in the current Masterplan (Appendix 1), The Atria sits on one of the many high-end freehold sites along Meyer Road, forming a unique belt of single-loaded, high-rise residential properties with both sea and city views, making the location impossible to be duplicated elsewhere in Singapore. Along this unique belt, the older properties (such as Hawaii Tower, Casa Meyford and Meyer Park etc.) should not be considered as choices for replacement properties since their design and environments are inferior to that of The Atria. Furthermore, they may be subjected to en-bloc in the near future.

 

This leaves us with the newer developments such as Aalto, The Seafront at Meyer and The Belvedere. The current sale prices range from $1300psf (for the lower non sea-fronting units to as high as $3500psf (for some of the premium penthouses).

The current sale proceeds apportionment will definitely render the owners of higher-level sea-fronting units, especially the penthouse units, incapable of obtaining a comparable replacement property in the immediate area. Not to mention by the time the Collective Sale completes in 1-2 years, these property prices are bound to rise further. This likely scenario is shared by most past En-bloc exercises.

Process in Passing the Motion for Approval of Apportionment of Sale Proceeds

During the 2nd EOGM, when the Motion for Apportionment of the Sale Proceeds was passed, there were questions raised from the House on the decision for adopting the current Method of Apportionment and even proposals to withdraw the voting on the Motion due to the non-disclosure of details of the discussion on the current Proposal of Apportionment. However, the Sale Committee proceeded to call for a vote on the motion, resulting in the Motion for the Approval of Apportionment at (For: 71.8%; Against: 28.2%), and details of the discussions and objections on this subject were left out in the minutes.

Points to note are; as stated in the attendance list, Mr. John Yeo, one of the 5 CSC members, was assigned the Proxy to 19 units. With the rest of the CSC, they held approximately 44% of the value votes during the passing of the Motion, not forgetting, that most of the Subsidiary Proprietors of high-level/sea-fronting units were not present at the meeting.

What is at Stake now?

With the passing of the various motions at the EOGMs, the Collective Sale Agreement (including the unjust apportionment of sale proceeds) is now in place. The CSC has 12 months from 5 March 2011 to achieve 80% shares to get the en bloc going.

With the current less favorable property market, due to the recent property cooling measures initiated by the Government, many owners are eager to ink on the current CSA. By then, it will be too late to fight for more justice in the apportionment of the sale proceeds. If the sale were to go through with a successful bidder, most of the owners of high-floor/sea-fronting and penthouse units will be incapable of getting replacement properties/homes.

The Atria, a 15-year old property with intrinsic qualities, unique to its location, market conditions, superior design of its public spaces and freehold status, transcends mere monetary considerations. With its prestigious address and exclusiveness, it means so much more to its owners and those who have resided in it from day one.

With plans of an MRT station at Katong Park, and Kallang Sports Hub in construction, this unique, mere 15 year-old freehold property will definitely perpetuate beyond its current value in the near future. Besides, with the new Masterplan in the works to contain a larger population in Singapore, the value of The Atria can only continue to appreciate and the constant reviews on en bloc rules for more equitable system can only further protect the assets of the genuine property owners from the property speculators.