Pine Grove condominium tries for en bloc sale again with a reserve price of $1.86 billion.
Launched on Feb 26, the 660-unit condominium in the Holland Road cluster’s reserve price translates to a land rate of $1,307 per square foot per plot ratio (psf ppr), after factoring in differential and lease upgrade premiums.
Pine Grove has 893,219 sq ft with a gross plot ratio of 2.1, said its sole marketing agent C&H Group.
C&H Group said that the site can be redeveloped into a residential estate of up to 24 storeys and no more than 2,050 units at an average size of 85 sq m. This cited build-up requires planning approval.
In the past year, Pine Grove raised the reserve price twice. At the end of 2017, the reserve price was set at about $1.63 billion. In March last year, it was raised to $1.72 billion to win the support of more homeowners.
Pine Grove raised the reserve price for the third time to $1.86 billion in a bid to secure a majority nod from owners.
This is the third time that Pine Grove is being launched in the collective sale market – the last two being in the years 2007 and 2011. Built in the 1980s, Pine Grove is adjacent to the Holland Village and Clementi MRT Station.
The marketing agent noted that at present, 80% of homeowners in Pine Grove support the collective sale. The tender for Pine Grove closes at 3pm on April 23.
Mr Paul Ho, the chief mortgage officer at iCompareLoan said, “the successful sale of Pine Grove may give some encouragement to other en bloc efforts of larger ageing estates such Mandarin Gardens.” With the site being so big, there is a chance that the ‘big boys’ may put in a joint bid for the site to share the risk,” he added.
Whatever decisions owners facing en bloc sale make, it is better to make it fast so that the sale (or non-sale) can be concluded with minimal delay and maximum benefit to the owners. One way is to conduct a Collective Sales Agreement (CSA) as well as concurrently collect a “Non Collective Sales Agreement (NCSA)”, so that once a NCSA reaches 20%, the collective sale process is called off. There is really no point to drag on.
As collective sale process takes 20 to 30 months to complete, during this time, the owners typically do not have sufficient funds for down-payment and their CPF OA funds are tied up in the property, hence they cannot buy a new condominium early.
By the time the transaction is completed in 20 to 30 months later, the property prices would have already moved up 10 to 20 per cent. This is already evidenced by sellers of older estate asking higher prices. Hence if the process takes 20 months to 30 months, owners may need to consider the cost of a replacement unit by that time, else they may want to hold up a higher selling price.
Mr Ho pointed out that the rules for en bloc sale are quite onerous and stringent and is governed by the Land Titles (Strata) Act – section 84A. Over the years, additions and amendments by the Ministry of Law to the en bloc law have made the collective sale rules even tighter.
He said that many of the home owners who refinanced their home loans to fixed rate home loans or those with 2 years locked-in or 3 years locked-in period will incur full home loan redemption penalty. This penalty is usually 1.5% of the loan amount. This tends to affect those who have bought their properties in recent years as their loan size tends to be bigger and their corresponding home loan redemption penalty higher.
Mr Ho suggested that if one’s home is at risk of en bloc, the owner could consider a home loan where there is no locked-in penalty, but instead entails a higher housing interest rate cost. The next best option is to look for packages with a waiver of locked-in penalty due to sale of property. Such owners may contact a mortgage broker to assist them to find such packages with waiver of locked-in penalty.
In order to understand how and whether to go into an En Bloc sales and sign on the Collective Sales Agreement (CSA), the owners will need to know how long it will take you to complete the En Bloc sales in case it is successful.The maximum and minimum duration of the en bloc sales process as indicated in the cumulative timeline in the table is roughly between 18.5 months to 38.5 months. The earliest any home owners can receive any en bloc sales proceeds could be around 13.5 months and the latest will be 32.5 months.
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