 Three
Shares Diminished
The owners dialogue session was broken into three separate groups,
for three shares, four shares and five to eight shares.
This is what we heard in the three share value meeting. All the
meetings were held at different times.
Knight Frank and the CSC seem to be backing hybrid model two over
hybrid model one. (square footage-share value ratios of 75-25 over
49 -51) on the basis that it gave a more even distribution of
percentage gains over the 45 types of apartments.
However, there was opposition from the small-share value home owners
to hybrid model two’s dilution of share value in the calculation of
returns for a potential en bloc.
Some argued that this goes against the express understanding reached
in previous Collective Sales attempts where the smaller apartment
owners only agreed to support a collective sale on the basis of a
60-40 apportionment. Furthermore, a 75-25 split does not favour the
smaller apartments. The smaller apartment owners said that hybrid
one was fairer, given the proportionally larger maintenance payments
they have been paying for the past twenty years and the voting
rights they have (compared to their square footage), due to their
share value.
None of these concerns were really addressed.
Furthermore, Knight Frank and the CSC were repeatedly asked for the
justification for a 75-25 or even 49 -51 apportionment, instead of
‘just pulling the number out of a hat’ yet no explanation was given.
Instead, the view of members of the CSC was that it does not matter
what the apportionment method is or whether it is fair, emphasizing
instead that everyone benefits, as all make some percentage profit.
At this point, someone from the audience asked what size units the
CSC owned.
But the ultimate question of whether anyone is indeed benefiting was
also unresolved. Knight Frank said to buy back Clementi Park would
cost at least $1772 psf. With estimated sale proceeds between $1490
and $1900 psf, which do not take into account legal fees etc for the
new purchase, there is no real benefit in en bloc to the resident
seller.
Moreover, the figures used by Knight Frank to compare the gains of
collective sale versus replacement cost were woefully undervalued.
All the figures were based on sales made within the past few months,
when Singapore’s housing market has been depressed by the American
housing bubble-burst, the sub-prime mortgage crisis, credit crunch
crisis and before the casinos have been completed which is expected
to impact the property market substantially in the medium term.
Replacement cost is almost certain to be far more than Knight Frank
showed.
And to compare current replacement cost instead of when the sale
will actually be completed and we will have the funds to buy a new
property - at least 24 – 36 months later, is also unrealistic.
All the more reason for small apartment owners to get their fair
share of the sales proceeds, with greater weight placed on share
value, which better reflects their contributions to the estate and
voting power.
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