The government is committed to keeping public housing affordable for Singaporeans, said Prime Minister Lee Hsien Loong yesterday.

He was speaking at a gala dinner for the International Housing Conference, organised by the Housing and Development Board (HDB) to mark its 50th anniversary this year.

The message came on the back of recent HDB data, showing resale flat prices reaching a new high in Q4 2009. Cash premiums for resale flats also jumped.

Mr Lee noted that HDB prices its new flats so that the vast majority of Singaporeans would be able to purchase them. The agency will also build enough flats to meet demand from a growing population.

‘However, the government has less control over housing prices in the resale market,’ he said. These prices are reached on a willing buyer, willing seller basis, and are affected by other factors in the economy, including those in the private property market.

As a result, resale flat prices will fluctuate, Mr Lee said. ‘But over the long term, the value of HDB flats depends on the strength of the Singapore economy. Provided Singapore continues to do well, our flats will maintain their value, and Singaporeans can enjoy an appreciating asset.’

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Demand for resale flats was strong for most of 2009. HDB said last Friday that its resale price index hit 150.8 points in Q4, up 8.2 per cent from the previous year.

The median cash premium for all resale transactions doubled to $24,000 in Q4 from Q3. It has since dipped to $22,000 for the first half of this month. With a robust housing market, HDB will be launching 12,000 new build-to-order flats this year.

Today, more than eight in 10 Singaporeans live in HDB flats and nine out of 10 HDB households own their flats. The situation is markedly different from that in 1959, when less than 10 per cent of the population of 1.6 million owned a home.

There are now more than 900,000 flats across the island and HDB will be building the one millionth this year.

Mr Lee believes that HDB still has a role to play. While private housing has become more readily available, it caters mostly to higher-income groups – HDB still needs to provide good-quality public housing to most Singaporeans.

But he also recognised that Singaporeans’ aspirations have risen sharply, and a flat acts not just as a shelter, but also as a key investment asset. Home seekers now have many considerations in choosing a flat.

‘HDB is committed to providing Singaporeans with high quality public housing, even though I hope Singaporeans can understand that it cannot accommodate every preference and meet every expectation,’ he said.

Some 800 guests, including delegates and speakers attending the conference, former national development ministers and former HDB executives were at the dinner.

Source : Business Times – 27 Jan 2010

Says he was not a key player in en bloc deal sales committee

The newest instalment of the Horizon Towers saga has taken a fresh turn, with one of the parties being sued now applying for the lawsuits against him and another to be struck out.

Tan Kah Gee, a member of the original sales committee being sued by a group of minority owners, yesterday applied to the High Court for the suit to be struck out – saying the action was ’scandalous, frivolous (and) vexatious’.

He also filed his defence against the claims made against him, saying he was not a key player in the sales committee which brokered the en bloc sale of the development.

Mr Tan – and former sales committee chairman Arjun Samtani – are being sued by three sets of minority owners, who are looking to reclaim close to $1 million in legal and administrative costs which they say they incurred during the lengthy fight to keep their homes.

The minorities say they were made to defend their homes against an en bloc process actuated by a lack of good faith on the part of the sales committee, and had to spend much for their effort.

The collective sale of Horizon Towers was an affair which spanned more than two years and involved two Strata Titles Board (STB) hearings and two High Court hearings before finally being decided in the Court of Appeal.

The Court of Appeal ruled against the sale of the development in April last year, saying the sales committee failed to get the best price possible for Horizon Towers. It awarded costs for the second High Court hearing, the second STB hearing and the Court of Appeal hearing to the minority owners who had objected to the sale.

But the minority owners are now suing Mr Tan and Mr Samtani to claim sums which they said they had spent in excess of what the Court of Appeal has awarded them. The three sets of owners are seeking between $117,000 and $370,000 in costs – making for a total of more than $800,000.

But Mr Tan – through his lawyers Senior Counsel Tan Cheng Han and Ian Lim of TSMP Law Corporation – has moved to strike out their claim. He says the entire remedy sought by the minorities was already dealt with by the Court of Appeal last April, when it decided on how it would award costs to the various parties. He said their claim ‘does not form a legitimate item of damage in a separate cause of action’, neither does it ‘flow from a different and additional wrong’ from the Court of Appeal judgment.

Mr Tan also responded to allegations made by the minorities that he was one of the ‘key players in the process leading up to the commencement, facilitation, management and finalisation of the collective sale process’.

In his defence, he claimed he was ‘not a key player’ and cited various correspondence and minutes of sales committee meetings which he said showed that he did not play a major role in the various aspects of the collective sale.

He also responded to the minorities’ claim that he and Mr Samtani ‘pushed for a quick sale of the property for their personal benefit’ because both had bought additional units in Horizon Towers, at the start of the collective sale process, and were keen to profit from that.

Mr Tan’s defence was that he bought a second unit because the location and price were very attractive, and that he had acted in good faith at all times. He said he disclosed his purchase of a second unit to the rest of the sales committee, as well as to one of the minority owners now suing him. He claims he also disclosed the purchase to the sales committee’s legal advisers and was told that he did not have to disclose the purchase of this unit.

The minorities had also claimed, in their suit, that the sales committee had failed to follow up on alternative offers for Horizon Towers, including a higher offer from a Vineyard Holdings. They cited the Court of Appeal judgment, which ruled that the sales committee had failed ‘to proactively follow up on the Vineyard offer and other expressions of interest’.

Mr Tan said Vineyard’s and other expressions of interest ‘never substantively materialised’ and that the sales committee had ‘questioned the credibility of the expression of interest from Vineyard and their level of seriousness given that Vineyard was a Hong Kong company that was not well known and its lawyers were not from a Singaporean firm, but from a small Malaysian law firm’.

He claims he suggested waiting for a higher offer, but that the majority of the sales committee did not agree. He said the sales committee genuinely felt they would not get a better offer than the one by Hotel Properties Ltd (HPL), and that they had been advised by their lawyers to accept the offer.

The minorities will have 14 days to respond to Mr Tan’s defence – and 14 days to respond to Mr Samtani’s defence, which was filed last Wednesday. The court will also convene a date for the hearing of Mr Tan’s striking-out summons.

The minority owners are represented by Kannan Ramesh of Tan Kok Quan Partnership. Mr Samtani is represented by N Sreenivasan from Straits Law Practice.

Source : Business Times – 27 Jan 2010

LAST week, the blockbuster Avatar was pulled from China’s cinemas after topping the box office for three weeks. It was getting too popular.

The movie had struck a chord with viewers all too familiar with residents being forced out of their homes by unscrupulous developers in cahoots with corrupt officials. Skyrocketing housing prices in China have led to much unhappiness.

But yanking a film is the easy part. To manage the inflated real estate prices in China is far trickier. The government must deal with the nub of the problem: the incestuous relationship between property developers and officials who exploit the government’s monopoly over land supply.

In some cases, the relationship is as sleazy as the affairs that a beautiful Qingdao real estate tycoon had with three top officials – Qingdao mayor Du Shicheng, former finance minister Jin Renqing and state-owned oil giant Sinopec’s former chairman Chen Tonghai – to clinch lucrative land deals at below-market prices. Hauled in by investigators last year, the mistress ratted on the three officials.

But most times, the collusion between developers and officials is not so easy to stamp out as it is embedded in the land reserve system. Local governments have the power to determine how much land can be acquired forcibly from residents or how much reserve land can be released and sold to private developers in a competitive bidding system.

Chinese developers tend to hold the land they buy until it rises in value before they build. But as Beijing itself has acknowledged over the past two years, many developers are actually hoarding land to limit supply of housing, thus driving up prices of existing property and creating panic among home-buyers.

According to Beijing-based Soho China’s chairman Pan Shiyi, about one-third of developers reap most of their profits from holding onto land until it rises in value before selling the land for a profit or building properties that they can then sell for a much higher price.

Until this year, the authorities also closed one eye to developers who had long flouted the rule of paying a 20 per cent fee on the transaction price of land left idle for more than one year.

Beijing knows only too well that housing woes – cited by the Chinese as one of their top ’sources of pressure’ this year in a recent nationwide poll – present a key threat to social stability. It is finally getting tough on this longstanding problem of land hoarding.

This year, with some 10,000ha of land approved by the government for real estate development still unused, Beijing said it will enforce the 20 per cent rule. Land plots left idle for more than two years will also be reclaimed by the government, it declared earlier this month.

Local analysts have called this a big step in reining in China’s runaway housing prices, which shot up in December by 7.8 per cent across the country – its most frenetic pace in 18 months.

But this affects only the private developers. For officials in local governments – the other partner in the collusion that keeps property prices high – the incentive to collude with developers is not affected.

After all, they rely heavily on revenues derived from real estate. Local governments reap about 40 per cent of their total revenue from the sale of land and property development taxes, some local economists estimate.

For example, for Hangzhou’s local governments, income from land sales may even be twice their tax revenues last year, reported 21st Century Business Herald.

Beijing has tried to control how local officials sell land with a new rule requiring them to apply annually to the central government for land allocation with a proposal on land use. Once approved, the local officials distribute the land for different purposes, such as housing, commercial and industrial uses.

But there are loopholes. Local officials can claim that the land is meant for, say, a business park or public sports centre, but auction the land off for a package deal with a lucrative residential component.

As prominent Chinese economist Zhou Tianyong pointed out, the only way to cut the costs of building affordable homes for ordinary Chinese is to ‘cut out the root of the problem’ – the government’s lucrative land monopoly.

One way is to liberalise the land supply market, he said. Allow individuals or groups of land owners to sell the land themselves rather than surrendering it to local officials. This may close the loophole for unscrupulous officials to forcibly evict residents.

But this would mean an overhaul of China’s property rights laws, which could take years.

And the coffers of local governments, already burdened with a big bill for last year’s stimulus measures to spur an economic recovery, would also be hit if land sales cease to be a major source of income.

So Beijing would also have to look at ways to help local governments further diversify their funding, using more instruments like bonds. But can the masses of Chinese saddled by housing woes wait this long for a solution?

Not that long, if Avatar’s popularity and its depiction of an uprising that booted out the powers-that-be is any indication. The Chinese government knows that it has to act – fast.

Source : Straits Times – 27 Jan 2010

WHILE the Government will keep the prices of new Housing Board flats in check, it has less control over prices in the resale market.

This state of affairs was highlighted by Prime Minister Lee Hsien Loong last night when he commented for the first time on what has been one of the hottest topics of discussion.

Speaking at a gala dinner to mark the HDB’s 50th anniversary, Mr Lee stressed the Government was committed to keeping HDB flats affordable and that its new flats are priced within the means of the vast majority of Singaporeans.

On top of that, it would also build enough new flats to cater to demand as the population grows. In fact, to cap its 50th year, the HDB will build its one millionth flat this year.

However, the Government does not have control over the prices of resale flats, he said.

His explanation: ‘These resale prices are set by individual households who transact flats on a willing buyer, willing seller basis, and are affected by movements and sentiments in the wider economy, including the private property market.

‘Hence, resale prices of HDB flats will fluctuate from year to year.’

Despite these short-term fluctuations, Mr Lee said these flats would still hold their value in the long run.

‘Over the long term, the value of HDB flats depends on the strength of the Singapore economy. Provided Singapore continues to do well, our flats will maintain their value, and Singaporeans can enjoy an appreciating asset,’ he said.

The affordability of resale HDB flats has been in the spotlight, following a slew of reports showing a surge in prices.

Latest HDB data show resale prices rising 3.9 per cent in the final three months of last year to hit a fresh record, bringing the full-year increase to 8.2 per cent.

Similarly, the median Cash-over-Valuation (COV) paid for HDB flats in that period was $24,000 – double the $12,000 median in the third quarter last year. COV refers to the cash a buyer pays over and above a flat’s valuation.

Price discussions aside, Mr Lee, in his address, looked back at the 50-year history of the HDB, starting from 1960 when it was formed to tackle Singapore’s housing crisis to the present day when it is the provider of quality housing to most Singaporeans.

As he reflected on its successes, he threw up an interesting poser: Given that the entire population is housed, and the HDB has fulfilled its original mission, does it still have a role to play?

His reply: ‘I have no doubt the answer is ‘yes’.’

He explained that the HDB would remain relevant because it performs a crucial dual role: a housing and a social role.

‘It is both a matter of capability – who can build, plan and manage these estates – and also a matter of social policy.

‘Nobody else but the Government can build houses not just to achieve a housing objective, but to achieve a social goal – racial integration, community bonding, establishing and upgrading and maintaining a high quality living environment for the whole community,’ he said.

But the environment the HDB is working in now has changed, as with the expectations of the people, he said.

‘Singaporeans’ aspirations have risen sharply. Finding a roof over our heads is no longer the pressing requirement. The HDB flat is not just a shelter, but also a key investment asset,’ he noted.

So, when people look for a flat now, many more considerations are involved, he said: ‘They want the right flat, in the right locality, at the right time and at the right price. Such high expectations are understandable, since buying a flat is a major commitment for a young couple setting up a home together.’

He stressed the HDB is committed to providing Singaporeans with high quality public housing, although it cannot accommodate every preference and meet every expectation.

The gala dinner also launched the International Housing Conference, which will run till Friday. Some 500 local and foreign delegates, as well as housing experts, are here to discuss such housing issues as urban planning and environmental sustainability.

Source : Straits Times – 27 Jan 2010