Does the $$ Maths work?

Here's a letter from a Brookvale Stayer, Mrs Tan dated 1.1.11:

The Maths for my en bloc does not work

My condo is trying to en bloc again at Brookvale. Despite many attempts to en bloc Brookvale,which have all failed, they are trying again. I am sure they will not get the sufficient numbers but here's what's happening.

The Agents are trying to persuade us that there is "a premium of some $936,000" if one sells a 1615 sq ft apartment in the enbloc. (see the attached circular dated Dec 2010).

However, their reasoning is actually based on DOWN SIZING. They say if we sell our 1615 sq ft apartment and downsize to a neighbouring condo's 1345 sq ft apartment, we will make a "premium" of $936,000. Why should one en bloc to downsize?

They also chose the lower transacted sale of a 2 bedroom at 25 year old Clementi Park - $905 psf, when the 3 bedrooms at Clementi Park have already hit $1,113 psf - figures listed in their very own circular.

So not only must we downsize from our 3 bedrooms to 2 bedrooms, the figures the Agents give are on the lower end of the scale: and therefore misleading.

So here's the real question: If one en blocs, is there really a profit? Why go through all the rigmarole and stress and uprooting, to discover it's not all it's cracked up to be?

Bear in mind, it takes about 2 1/2 years to get one's money from an en bloc. By that time, the market is higher and a new purchase will eat into the "premium".

But is there a premium to begin with?

If the point to en bloc is to buy a NEW apartment, the prices of the new apartments have already hit $1,400 (Cascadia) - $1,800 psf (Jardin). So for a 1,615 sq ft apartment that's as much as $2.9m in the present market. This means sell at $2.181m and suffer a LOSS of $719k.

And that's before legal and agent's fees!