HUDC flats: Still in demand

AGAINST a backdrop of cooling measures and caution in the property market, flats in HUDC estates continue to draw interest from buyers who value their expansive size and potential for a collective sale windfall. Resale prices have risen steadily... Straits Times: Thu, Jan 12 AGAINST a backdrop of cooling measures and caution in the property market, flats in HUDC estates continue to draw interest from buyers who value their expansive size and potential for a collective sale windfall. Resale prices have risen steadily and could soar higher if an estate is privatised, said experts. A fresh record was set for a 1,668 sq ft unit last month at an HUDC estate in Shunfu. It sold for $1.22 million or $730 per sq ft (psf). The previous record in the estate, which is undergoing privatisation, was set two years ago at $1.1 million. A check with HDB showed that nine units in Shunfu changed hands last year, with none sold for less than $1 million. Said property agent Sherry Tang: 'The high prices are boosted by the opening of the Marymount Circle Line station and impending privatisation.' PropNex chief executive Mohamed Ismail said privatisation can boost prices by as much as 20 per cent since owners no longer have to abide by rules, such as those on subletting. For a privatised HUDC unit, Chancery Court holds the bragging rights, with a 2,270 sq ft unit sold in December 2010 at about $2.3 million or $1,013 psf. A payout of more than $1 million is what residents in an HUDC estate in Potong Pasir Avenue 1 could be looking at too, now that the estate is moving closer to privatisation. Property agents say current asking prices already hover around the million-dollar mark. The estate began its plans for privatisation in July 2010, but the momentum picked up after Mr Sitoh Yih Pin won the single-seat ward in last May's General Election, ending 27 years of the ward being in opposition territory under Mr Chiam See Tong. The People's Action Party MP held meetings with the owners and, earlier this week, noted that about 85 per cent of the residents had pledged to support a privatisation process - above the 75 per cent minimum set by the Government. 'Generally, prices for all HUDC units have been going up. It's a niche market that has gained popularity ever since the en bloc fever kicked in,' said Ms Tang, referring to the Farrer Court estate that was sold for $1.34 billion in 2007. Each of the owners at the 618-unit estate pocketed about $2.1 million on average. According to ERA key executive officer Eugene Lim, the median psf price for HUDC flats in the 1980s was $93. It now ranges from $520 to $950 psf. There are 18 HUDC, or Housing and Urban Development Company, estates in areas such as Pine Grove, Hougang, Jurong East, Tampines and Bishan. They were introduced in the 1970s to cater to middle-income households priced out of private property. HUDC was phased out in 1987 when more housing choices were introduced. Demand for HUDC units persists because of their generally good locations, proximity to amenities, limited stock and collective sale potential. 'It's a good deal if buyers are looking to stay. Prices per square foot are reasonable, but the trade-off is that the estate is older and has fewer facilities,' said SLP International research head Nicholas Mak. Other plus points, said ERA's Mr Lim, are ample carpark spaces and large-sized units. But buying a unit, at least for now, carries some risks, especially for those who hope to flip it for a quick buck or land a collective sale windfall. The spate of government policies to cool the property market has affected buying sentiment for some HUDC properties. Would-be buyers, who in some cases have to stump out more than $1 million for an HUDC unit, are becoming wary of an expected economic downturn. Those with an existing property loan now have to fork out 40 per cent of the cost as down payment, against only 15 per cent previously, Another drawback, said PropNex's Mr Mohamed, is that buyers are not entitled to HDB's concessionary loans. 'Hence, they may be more costly compared to direct HDB flats.' Mr Mak said that though resale prices of HUDC units have risen, the number of transactions has faltered, largely due to the cooling measures. The number of transactions for privatised HUDC units, for example, was 171 in 2010 but only 63 last year. 'What hits the buyer hardest, for those looking to flip or go for an en bloc sale, is the higher seller stamp duty that kicked in at the start of last year,' he noted. Since January last year, the stamp duty a seller has to pay if he sells a property within a year is 16 per cent, up from 3 per cent in the past. And while the prospect of collective sales may seem inviting and continue to keep prices up, there are big hurdles to cross. So far, residents in only five estates - Amberville, Waterfront View, Minton Rise, Gillman Heights and Farrer Court - have cashed out from a collective sale. Pine Grove, which made news for its $1.7 billion reserve price, failed to garner any successful bid last year. Another curve ball, this time for developers, comes in the form of an additional buyer stamp duty (ABSD) implemented last month. Mr Mak noted that a developer now needs to complete a project and sell all the units within five years from the date of land acquisition, or else pay the ABSD of 10 per cent with interest based on the full purchase price of the land. 'This means larger estates will have more difficulty finding buyers,' he said. [e-mail] $1.22 million A 1,668 sq ft unit at an HUDC estate in Shunfu (not yet privatised) sold for a record $1.22 million or $730 psf last month. $2.3 million Chancery Court holds the record for the most expensive privatised HUDC unit. A 2,270 sq ft unit sold in 2010 for about $2.3 million or $1,013 psf. Source: The Straits Times A tale of two estates  Straits Times: Thu, Jan 12

Straits Times: Thu, Jan 12

TWO HUDC estates - one in Potong Pasir and the other in Tampines - welcomed residents in 1987 and the estate in Tampines took the privatisation route in 2002. Apparently, that has made a world of difference for residents of Tampines Court. While residents in the Potong Pasir estate said they have had to put up with spalling concrete and lifts that occasionally broke down, those living in Tampines Court said they could exercise more control over how to manage their estate. Tampines Court resident Francis How believes that is the biggest perk privatisation holds for HUDC estates. 'Some of us wanted a swimming pool and a gym but that was voted down. The most important thing, however, was that we had a choice,' said the 55-year-old insurance agent. Choice could also come to the residents of the 175-unit Potong Pasir estate which recently made the news for giving a privatisation move more than 85 per cent approval. Once an HUDC estate goes private, residents take over the common areas, including upkeep of lifts, walkways and the surrounding greenery. School football coach Brian Batchelor said the biggest change for him is that the 560-unit Tampines Court is now a gated community with round-the-clock security. 'The security is an improvement, and when you manage things yourselves, the community grows closer as a result,' said the 58-year-old. The changes have also boosted resale prices. While he bought his 1,700 sq ft unit in 1988 for $200,000, a unit of similar size was sold last month for about $1 million. The lowest price that a unit went for last year was $850,000. Asked if he would sell, Mr Batchelor said he might 'if the price is right'. 'The estate is getting old so it's harder to maintain,' he said, noting that he has to pay $130 a month for the upkeep. He is in favour of a collective sale too. 'We are getting older too. So if an en bloc happens, and we are offered more than $1.5 million, why not?' Indeed, work to put Tampines Court up for a collective sale is under way. This is the second attempt after a failed one in 2008. Mr How, who is also chairman of the sales committee, is cautiously optimistic this time round. 'Since our first attempt, things have become more expensive for a developer who will want to top up the lease. But a collective sale is possible, if they see the size of this estate and recognise its value,' he said. But he has his work cut out for him as not all Tampines Court residents favour selling their homes. Ms Sangeetha Pari, 32, who bought her unit in 2008 for about $600,000, recently rejected an offer of $1.2 million. 'We moved from a standard HDB flat and it's such a world of difference. It's a good estate to bring up my children so why would I want to sell?' she said. Over at Potong Pasir, residents are taking the first steps in a long journey ahead but already, the buzz on the ground has been growing. Mr Sukhmindar Singh, who heads the HUDC privatisation pro tem committee, emphasised that a collective sale is not on the cards for now. 'It's still in the early stages and we don't want to put the cart before the horse. Residents signing now love the place and want more autonomy to run it ourselves,' he said. He added that the incentive from the Government, was also attractive - the cost of privatisation is capped at $30,000 per flat, with the Government absorbing the difference if it exceeds this sum. Retired developer Danny Sim initially did not want to sign on the dotted line. 'Lifts break down about three times a year but I can live with that,' he said. The 54-year-old changed his mind when he saw his fellow residents taking to it in droves. Still, he has some reservations. 'If managed badly, things can get more expensive when we go private. And if people are half-hearted going in, it will get even worse,' he said. Financial consultant Linda Ng, 40, however, believes that privatisation is the only way to go. 'The buildings are falling apart and carparks and lifts are in a bad state. Hopefully, the estate will look better and have more security and privacy,' she said. DARYL CHIN FIRST STEPS 'It's still in the early stages and we don't want to put the cart before the horse. Residents signing now love the place and want more autonomy to run it ourselves.' Mr Sukhmindar Singh (above), head of the HUDC privatisation pro tem committee for the Potong Pasir estate, on an en bloc sale Source: The Straits Times The story began in the 1970s Straits Times: Thu, Jan 12 HUDC units were introduced in the 1970s to cater to middle-income households. At that time, prices of private properties were high and there were few HDB flats for sale in the open market. There were 18 HUDC projects - with 99-year leases - in all, comprising 7,731 units and built in four phases. The Housing and Urban Development Company, incorporated in 1974, developed six Phase I/II estates as private apartments. In 1982, the Housing Board took over the reins. After the transfer to HDB, HUDC owners were required to manage their flats and common property in their estates. HDB constructed 12 HUDC estates under Phase III/IV. These flats were sold with sales and ownership conditions similar to that of HDB flats. Like other public housing, the common property within these estates was managed and maintained by the town councils. In 1985, as prices of private properties fell within the range of middle-income earners, demand for HUDC flats dwindled. Eventually, with more housing choices coming on-stream, HDB stopped rolling out such units in 1987. Privatisation for HUDC estates was announced in 1995 to enable owners to have more control over their estates. The process of privatisation is by way of public announcement and designation in the Government Gazette. If at least 75 per cent of residents supported it, the leases could be converted to strata titles, in effect making them private property. The process of legally transferring the title from HDB to flat owners takes about 21/2 years. Of the 18 estates, 12 have been legally privatised while five have obtained the required 75 per cent mandate for privatisation. Braddell View, developed under Phase I/II, is the only estate that has not been privatised as it was developed in two phases, with each being issued a separate state lease with a different expiry date. All other Phase I/II HUDC estates have been privatised. They are Farrer Court, Amberville, Lakeview, Chancery Court and Laguna Park. Under Phase III/IV, the following developments have been privatised: Gillman Heights Condominium, Pine Grove Condominium, Ivory Heights Condominium, Minton Rise Condominium, Waterfront View Estate, Tampines Court and Eunosville. The rest are currently pending legal privatisation. They are Bishan (Shunfu), Serangoon North, Hougang North N3, Hougang North N7 and Potong Pasir. Five of the privatised estates have gone en bloc - Amberville, Waterfront View Estate, Minton Rise, Gillman Heights and Farrer Court. DARYL CHIN Source: The Straits Times