8/08/2007
En bloc wealth, real or illusion?
Lucy Huang wrote to the ST complaining that after benefitting from an en bloc sale, she is having trouble finding a replacement unit of equivalent locations as the prices have gone way way up. If she is to benefit from the sale, then she either has to buy an unit at the fringe of the island or downgrade.
She is now calling for the govt to intervene to bring down the prices of flats nearer to the city areas. Now, can I say 'Did I tell you?'
I think all those who benefitted from en bloc sales should just buy another property, cheaper ones, either smaller or away from the city and enjoy the cash windfall. They can't have the cake and eat it at the same time.
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Another case of greed knowing no bounds. What is she complaining about? Bring down the prices of flats for her to buy so that she can have plenty of money left to buy another private property when prices fall again and make more money from another En bloc sale.
In this example, truth is out:
Sengkapolians ARE stupid.
Greedy.
Selfish.
Weak.
Always fearing.
Not risk-taker.
When profitable en-bloc becomes less available and demand from this category is curtailed as a result, prices may start to dive like the stock market when buyers frentically cash in their profits or cut their positions.
The newbies will then get their turn of the financial nightmares experienced by those in the late 90s.
I'm guessing the poster and commenters forgot the possibility that Lucy Huang did NOT agree to the enbloc (ie a minority owner) and hence has no say whatsoever in the 'wealth' she's getting.
I'm also guessing that everyone here thinks that enbloc sales will result in a windfall. Sure, if you do NOT have to channel your sale proceeds into another home in the same area, same size, and importantly - one that is fairly new that it will not go enbloc for at least 10 years.
Because when you factor these 2, you'll very quickly realise what she's saying is true.
hi dr minority,
welcome to the blog.
from her letter in st forum today, she did not seem to be displeased with the enbloc sale. but what hit her subsequently was when she went house hunting. then the shock came.
from the sum she got, she probably at best could get the same thing or worst. now that was not what she thought coming.
as i have posted earlier, en bloc is good for one time for those who want to cash out and downgrade. if not, not much difference.
i think some of those who jump in and buy up en bloc potential properties at high prices may be hurt if the en bloc deal is called off.
with a squeezed land space, basic housing is a critical component in the cost of living of locals. there must be some management over hdb prices to keep people's feet stuck on the ground and not be swept away by all the frantic speculations. any mistake can wipe out a life time savings and a roof over the head.
I dun dispute Lucy's view and I think that en-bloc sales does not necessarily upgrade the owners quality of life is certainly a no brainer to most of us.
Now here is the juicy part, just before a major development is appraoched for en-bloc discussions, insiders (negotiators, agents) would arrange to form syndicates to purchase the outstanding units that were offered on the market.
For these people, the en-bloc windfall is the reward for their hard work. Their ROI is outstanding.
Are their profits guaranteed? yes. With hordes of potential buyers in hand after the news of en-bloc discussions breaks out, their exit strategy is put in place; so that at the earliest sign of failure, the savvy dudes can offload their stocks fast and way ahead of the bad news. In hk, many self made towkays earned their millions doing these things. Beats many type of businesses.
i need to make a little correction. lucy huang did mentioned that she was forced into an enbloc sale.
now that makes it more painful.
while those who strategise to take advantage of the situation to make a quick buck, it is ok as long as they don't cheat anyone in the process. buy in on the privilege info and sell out for profit. of course they do take some risk as well.
that is fair game.
i think the horizon tower residents are in for big trouble if the rumour that they did not get the 80% vote but misled the buyer into it. shit, they are going to be sued and pay heavily for it.
How do they make sure that there are no hanky panky as far as the votes are concern. Pardon my ignorance.
hi redbean,
yes, one needs to read carefully her forum letter. In both instances, the move was against her will: "forced to" and "obliged". This clearly indicates that she is a minority owner or at the very least someone who did not wish to move.
strategies and syndicates are gray areas - are they akin to insider trading, especially if the people snapping up units within the estate (before going enbloc) are protem sale committee people?
...that they did not get the 80% vote but misled the buyer into it
pardon me beanie, but these things are in black and white.. all the minutes and votes are recorded and filed.. we are not in malaysia you know..
Yes in the financial mkt there are insider trading regulations to protect the public, but in the property mkt, the law of the jungles prevail.
At each launch, the benchmark is set higher by say a special $5,000 psf transaction, which could be a unit with seaview facing that is sold to the developer's girlfriend.
The benchmark for the latest valuations will be set in place after much hyping from selected journalists; A simple maneuver is all it takes to increase the value of the developer's landbank and his fortune.
If a person were to do all these things in the stock mkt, eg. make market, insider trading, fore running etc, he risks facing the full weight of the law. In that sense, property business offers the most lucrative and overwhelming returns for the insiders. Please correct me if my views are wrong.
for the difference in percentage pts, i read it somewhere. if it is true, then it will be a big issue and the poor chaps are going to get whack real hard. this will become the first case of an enbloc losers.
and yes the stockmarket is very well regulated and insider trading is a crime. even fore running and the regulators are watching insider trading like a hawk.
for property trading, it is still possible as the regulators have not caught up with the market speculators yet. and all kinds of tricks are still being used by the big boys to lure in the gullible.
In both instances, the move was against her will: "forced to" and "obliged".
Yes, it cud mean she was the unfortunate minority; or it could mean she was at first "convinced" to go along with the deal by sweet talking intermediaries but on hindsight felt betrayed by the facts used in the sales persuasion as enthusiastic sales agents who call the owners to build their lists often get carried away with their pitches.
it is not normal for an enbloc deal to be transacted below the mkt value, in view of this therefore enbloc sales usually result in a windfall for the sellers.
the sellers however shud do their own due diligence on the market situation before agreeing on the sale price and the time limit for the offer shud be as short as possible in order to mitigate price fluctuations. if the sellers were to wait until prices have run up to look for their subsequent property, it would be thier own error of judgement in speculation.
Most if not all enbloc sales are pure windfall to the sellers in dollar terms.
it will be nice if an en bloc seller could buy a similar property at a fraction of the price he got for his.
life will be so perfect.
No need to work then. If you can sell high you have to buy high. Its all relative. The most ideal is if you have another place to stay.
I cant see why sellers would willingly commit themselves to a proposition that is unattractive in a free market. If the prices are not high enough to vis-a-vis as compared to a similar unit in the neighbourhood, then no right-minded person, be it the majority or minority will sell.
i believe when the deal was struck the price then was good. but unfortunately the market keeps running and prices keep going up.
thus those who have signed up regretted and wanted more, the new market price.
see the salivating?
What if when the deal was struck the price was good but the market keeps dropping and prices keep going down.
Then those who have signed up will rejoice and would not want less, not at the new market price.
See the tongue hanging out?
Someone should smack these people on the head with a changkul.
What do they want? When you live together in a "community" (flat, condo, development) you do not have "title" in the sense of a landed property owner, because no single person outrightly owns the land on which the condo or flats are built.
Therefore you are going to get a "majority-minority" dynamic.
Why are there en bloc sales?
why do things happen in ANY market?
SIMPLE: DEMAND.
There is a demand for more housing due to the influx of people.
Do people get it or are they still asleep? i.e.
SINGAPORE is being RE-MODELED whether you like it or not. The speculation is that 50% more (or so) living spaces are required to keep up with market demand—much of it arising from IMMIGRATION into S'pore.
Wake up people. The city is growing, and soon the pace will be RAPID.
(Mark my words)
i think it is growing. but some sectors of the govt are having second thought as to how many more people we should have before we suffocate each other to death.
we really do not have a hinterland or the countryside to take the out the pressure. it is like a bottle. anything that goes in will add to the squeeze.
And it is not a simple case of letting in more and more. There are immense problems associated with it - housing, needs like water, infrastructure like roads, hospitals, security issues etc. Once started, and the population reached 6.5m it will be permanent, and you cannot reduce it like anything else.
looking at it wholistically many things does seem out of place.
but things are not done wholistically here.
the chap whose department earns the most revenue gets the pat and the big bucks, doesnt give a hoot abt your troubles.
at the end of the day its all abt GST and Tax collections.
as long as the money grows, so and so wud have done a great job.
Singapore will be transformed into one big HDB estate within the next 10 years. There will be many jobs to attract foreigners to come in to contribute GST to our economy.
Foreigners will be extremely happy to swarm and inherit this tiny island for the costs of peanuts.
SHOULD THE PEOPLE
BE FAIRLY COMPENSATED
FOR THE INTRUSION AND
LACK IN BREATHING SPACE?
you people are right. everyone is short term and does not care about the big picture. it is only his own bottom line that he is concerned about. and only when he is there for the next few years.
after he has left, somebody will inherit the shit.
oh, another thing about this horizon towers. it is reported in the media that they are not going to ratify the earlier agreement that was signed.
the prices of en bloc sales have gone up so they want to change the terms.
sounded very familiar. thought singaporeans were incapable of such things. what they signed they must honour it: )
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