Ravi Chandran
Katong Plaza en bloc sale has been relaunched with an asking price of $188 million or $1,968 psf per plot ratio, announced Huttons Asia. The Katong Plaza en bloc sale site includes a development charge of $13 million.
The Katong Plaza en bloc sale site was relaunched after its earlier attempt at collective sale in July 2018 proved unfruitful despite extending their tender closing dates in the light of property cooling measures.
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Katong Plaza is zoned for commercial and residential use, and has obtained approval from URA for hotel use, at a gross plot ratio of 3.0. It occupies a site of 34,044 sq ft, and has a maximum gross floor area of 102,133 sq ft, which can yield up to 300 hotel rooms, each at a size of 215 sq ft.
Huttons Asia deputy head of investment sales Angela Lim said at the earlier launch of the Katong Plaza en bloc sale site: “The commercial sector now looks relatively more appealing to developers and investors since it is unaffected by the new ABSD cooling measures, which affects mainly residential properties. Furthermore, foreigners and overseas investors would not be subject to ABSD on commercial properties, and the loan-to-value limits also remain unchanged.”
She added: “A mixed-use project like Katong Plaza allows developers to diversify their risk – the developer could choose to retain a portion of the commercial space for an anchor tenant, while selling the remaining strata commercial units to retail investors. There is also very low risk for the residential portion of the new development, as it can yield approximately 80 units based on an average unit size of 70 sq m.”
The Katong Plaza en bloc sale site is a 999-year Leasehold commercial property located at 1, Brooke Road, 429979 in District 15. The site is close to Eunos MRT Station, Paya Lebar MRT Station and Dakota MRT Station. It is near to several bus stops located at Roxy Square and Parkway Parade. Katong Plaza is accessible via East Coast Road, Brooke Road and Marine Parade Road.
The tender for the Katong Plaza en bloc sale site closes on April 9 at 3pm.
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.
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.
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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.
If one’s home is at risk of en bloc, the owner should 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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