Monthly Archive for February, 2008

Hi Mr Goh

Thank you for your inputs to Tan & Au relating to subject. We noted your opposition to privatize and would like to clarify the following pointers for your further consideration:

1) En Bloc potential:

With the current en bloc fever “over” will there still be an en bloc potential?

Answer:

Enbloc wave usually comes about when the market is rising. The property market has been rather quiet lately due to the impending US recession. However, with the IR, F1 race and the Youth Olympics coming up, the Singapore’s market is expected to continue on an uptrend. The key is to take a pro-active stance and be ready for the next enbloc wave and not start to privatize the estate only when the enbloc fever is on. That means to say the privatization gives us the opportunity to consider the estate for enbloc when the fever comes back. It is a general knowledge in Singapore with population expected to increase and increasing business opportunities thereby increasing foreigners working here, general considerations will point to an increase in property and rental prices. Without privatization, the fever will come and go and the residents of Shunfu can only WATCH only.

2) Perceived increase value

Currently, there are flats going for S$700-S$800K at least. Is there any empirical evidence that the “value” will increase significantly?

Answer: No one can predict price movements but going from Lake View and Braddell view, prices are expected to go above S$950K upon privatization.. These two estates are the closest comparables in terms of location and units of similar size at Braddell View and Lake View are going for more than S$1m. while flats at Shunfu Ville are only transacted at about S$800K plus.

3) Residents who want to stay put.

For those who are contented in staying put, there is no advantage with the increased value – even if there was any. I would prefer a lower gearing, rather than tho refinance and gear up more and related to point 1 above as there are currently no competitive substitutes for our HUDC flats, I suspect that the enbloc will only benefit those intend to downgrade. The previously quoted S$1.15 mn cannot even afford me Braddel View of Lake View, the 2 closeset comparative as at this moment.

Answer: The purpose of an enbloc is to unlock your wealth. Without an enbloc, it is unlikely for the price of a HDB flat to fetch beyond S$1m. With the potential sale proceeds from the enbloc, residents who wish to upgrade can easily afford landed properties within the same vicinity. In another way to look at the situation no one wants to sell and not have a better place to stay than Shunfu. However, looking at the other end of this reasoning, we can review how the residents of Farrer Court must be celebrating with their S$2.5mn windfall. They can now upgrade to a S$1.5m terrace and have S$1m in cash.

4) Cash Flow

In addition to the unfront cash to be paid (which is quite a lot of money), there are added management costs to be borne monthly.

Answer: Once the estate is privatized, owners will not only hold ownership of their respective strata units but also ownership of all the common areas. Owners will become an integral part in the whole decision making process. The privatized estate will offer a host of amenities like guarded parking space, 24 security, clubhouse etc. The management fee contributed by owners is used to maintain such facilities and to ensure that the standards of maintenance and care are constantly addressed and improved. We must also note that without privatization, the residents of Shunfu are not receiving any subsidy from Town Council. We need to note that Town Council is managing our fund using our sinking as well as operations funds for the upgrading projects like rewiring and painting to name few in the estates. We like to emphasize there will not be upfront cash, but cash payable only 18 month (estimated) after 75% residents has cast their votes in favor for privatization.

Mr Goh, we hope that the above pointers would help to clarify any doubts you may have. I must emphasize that HDB authority has made it very clear to us that we need to privatize our estates in order to enhance our HUDC assets. There is no other way if we insist not to privatize and still get the value of our estates to be enhanced. The choice is ours. We need to take a step forward and say “yes” we want to privatize to enhance our Shunfu Ville –HUDC estates.

You can refer to our Shunfu Ville-HUDC web-site for any additional comments you would like to share at: http://xuko.com/shunfu or call the undersigned at 97482102 for any clarification you may need.

Have a good day!!!

Philip

Dear Pro-Tem Committee,

Thank you for your update dated 5 Feb 2008. While I am
in favor of privatization for the purpose of enbloc,
some of us feel that this update did not adequately
address a possible scenario – what if the
privatization is successful but the enbloc does not go
through as planned? These are two separate decisions
now which requires residents’ consent at two different
stages, so this is a plausible scenario. There is also
a chance that market situation may be different 18
months down the road.

Though the letter did inform us some of the benefits
of privatization, it is also clear to us that we the
residents will be left with the burden of managing an
old estate which will continuously require repairs and
upgrades. While we do not need to pay car parking, we
have to pay a maintenance fee which may be higher than
what we pay currently. It is also unclear what
communal facilities we will enjoy other than the new
fitness centre next to Block 319. These are just some
of the questions in our minds.

We hope the Pro-Tem committee will address these
concerns before the mass signing exercise – namely,
what will happen to this estate should it privatize
but not go enbloc.

Thank you
A. Ivan

Hi Au ivan

To clarify this issue let me share some of our thoughts which we have
deliberated. In addition, my fellow colleagues will be able to add if I
have missed out some key points:

1) The fact is clear we have no choice, we need to privatize regardless
whether we want to enbloc or against. The reasons are very clear:

- The HDB intention is to encourage us to privatize – we are the last
batch of HUDC Phase 3 & 4 which has yet to be privatized. Others HUDC
already been privatized and/or enbloc per se.

- The Government intention is very clear to be privatized is an asset
enhancement for the residents. Once the estate is privatized we are
given a free hand to run our own private estates similar to Farrer
Court/Braddell Height/Lake View etc etc….

2) Your concerns are that if we are successful in the privatized but not
enbloc what maintenance fee to pay and what type of facilities we can
have in the estates.

To answer your questions, let me elabourate:

- We can have condominium facilties like having a club-house to run the
estates, fitness centre, swimming pool if feasible can be initiated
depending on the available funds and facilities residents intend to have
in the estates. This is a matter of dollars and cents and affordability.

- As regards to maintenance fee I reckon it would be the same as before
when we privatized. The reason is because Bishan Toa Payoh Town Council
will transfer the balance of the existing sinking and operation funds
BSTC to the newly formed MCST Management Committee once we finalized our
privatization. Basically, our pro-tem committee for privatization will
be dissolved a new MCST Management Committee will be formed and elected
at the AGM to run the newly privatized estates by appointing qualified
managing agent like Emansco(BSTC)/Knight Frank/United Premas etc. This
has proven successful for the other privatized estates like
Braddell/Lakeview/Farrer Court.

- Currently our estates is still considered a HDB controlled area and
run by Bishan Toa Payoh Town Council managing agent is ESMANCO. As what
my colleague Mr Dutt has mentioned in his replied to one his neighbor
presently the standard of maintenance is not really up to the mark and
has room for improvement. Outsiders tend to come and sit at our void
decks and dirty the place. Cleaning work is not able to keep pace with
the problem. Some residents and particularly maids tend to contribute to
the problem(eg dogs urinating etc) Privatization would help to solve
these routine issues happening in our estates and thereafter residents
should review the standard of maintenance we desire and the price that
we are willing to pay for such a service. It will have to be a
collective solution with participation from all residents.

In Summary, our pro-tem committee felt strongly whether the market goes
up or down it does not matter as we already exhausted all the existing
avenues of appeals to get our estates privatized cum collective sales
but fail in our attempt. If we don’t do it to get it privatized and let
it continues to run as it then this will be an estates which will
decline in values and depreciates progressively as our units already
coming to 25 years old by the times we privatized our estates. We will
be at standstill whether the other Privatized estates like Eunos already
received more than 80% voting to be privatized. We are the first few who
initiated the privatization and looks we may be the last one before our
residents will agree to do it.

Now, we all have to do our parts, even the enbloc does not goes through
a privatized estates will be able to fetch a higher value than a
non-privatized estates. Believe us, as once the estates agents in
Singapore knew that we are not successful in our privatization attempts,
the value of the unit (the latest sold at S$850,000) will drop
tremendously to where it is in 2006/2007 value.

So the choice is ours to privatize or not to privatize.

Philip Liau
Pro-Tem Committee