Pine Grove gets 80% vote for en bloc

Pine Grove just got its 81% to start the en bloc process to look for a buyer. It is third time unlucky for Pine Grove estate along Ulu Pandan Road with 2 previous tries failing to get owner consent to a sale. The 99 year project was formerly a HUDC estate and was privatised by its residents in 1996.

Built in 1984, this was the condominium's third attempt at an en bloc sale received the necessary 80 per cent majority approval last week. In 2009, owners of a 1750 sq ft unit were offered $1.9m for their units, today it is $2.1m approximately. Is it enough? Have the owners done their Maths?

The reserve price is set at S$1.7 billion, setting the stage for the 893,000 sq ft estate to become Singapore's largest residential collective sale, outdoing the 2007 record for Farrer Court. Many remember that Farrer Court thought they achieved a good price at the time, only to find upon receiving their sale proceeds, that the market had moved and they could not find equivalent sized accommodation for the same price.

The next stage of the en bloc attempt is the preparation of tender documents, with the votes having to be audited by the appointed law firm Lee & Lee. 

There will be the mandatory cooling off period where residents who had signed can withdraw their consent to sell within a week.

Jones Lang LaSalle the marketing agent, is unlikely to launch a sale this year, and will likely wait for more favourable market conditions. Under the rules they have a year to find a buyer. This of course is very unsettling for owners as it would mean a two year wait just to see if the sale would go through.

In the past two years, most en bloc sales have been less than S$100 million as developers are now more cautious and due to government stepping up land sales to meet demand. So there is a chance that Pine Grove could fail to meet the expected reserve price of $1.7m. 

Signatures for the sale have been collected from Pine Grove owners over various sessions since 15 November 2009. Banners were placed outside the condo announcing the signing sessions and perhaps for many, the prospect of an en bloc seemed inevitable. It is of course the psychology of the en bloc which is the most interesting phenomenom in our local context. Many strategies are engaged in the months leading up to the deadline and these add to the drama of the endgame.

At the end of the day, one wonders if one has been wise in accepting the carrots dangled for giving up one's home.

Is a 30% premium on one's home really enough to unsettle relocate and destroy a community? Some will down grade and move to a HDB. Some will have to pay out of pocket to sustain the size of housing and the convenience of the location.

The reserve price of S$1.7 billion could work out to between S$2.1 million and S$2.75 million per unit, depending on the size of the apartment and the development charge. This works out to about 30% over the current market value, which means that if the market moves up, many sellers will find themselves out of pocket to buy like-for-like housing.

Like Farrer Court,  also a former HUDC estate which was sold in 2007 for S$1.34 billion, Pine Grove could pay a development charge of about S$500 million.

But one wonders: if one were to take out a pocket calculator and add up the profit to a developer from taking a 17 storey estate to a 28 storey one, with increased density on such a choice D10 location - was the 30% premium short changed to the en blocked owners?