Flat Hopper

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Understanding En-blocs And What Gets Paid

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The Interlace - The Leasehold Giant Children's Playground

The Shore Residences left me thinking, who exactly gets paid for an en-bloc? The happily displaced owners of the en bloc for sure. The government or one of its statutory boards definitely, but for what? And what’s the difference betwen land that is freehold and leasehold when it comes to en-bloc? This post will try to explain some of the factors that make an en-bloc worth considering to developer using The Interlace (Formerly Gillman Heights) as a case study.

When would a developer purchase a property for en-bloc?
For a leasehold or freehold property to be worth purchasing, the land must have potential to be redeveloped profitably. Factors that affect the en-bloc potential of a property are:

  • Location affects the capital appreciation of the redeveloped property and determines its positioning. It is easier for a developer to market a luxury condominium in Orchard Rd than in Pasir Ris.
  • Plot Ratio is determined by land size, max floor height and the built-up area of the property. Properties with large land area and small built-up are ideal for redevelopment to maximize their plot ratio.
  • Asking Price is the value that the developer pays the collective owners for the site. Developers have to weigh the project’s age, condition, bank loans and possible legal battles in the price negotiation.
  • Development Charge is the levy that paid by the developer to the state for redevelopment to a more valuable i.e. higher plot ratio. This is imposed regardless whether the land is freehold or leasehold.
  • Lease Top-up (For Leasehold) depends on the age of the project and the land valuation. This also depends on the land owner whether the lease top-up is approved and the length of the new lease.

What is the difference between freehold and leasehold en-blocs?
Leasehold sites here refer to 99-year properties where the land is state owned. The difference is the type of levy (development charge or differential premium) imposed to enhance the value of the land:

  • For Freehold – Development charge
  • For Leasehold – Differential Premium + Lease top-up

For converted freeholds like The Shore Residences, any redevelopment would still incur a development charge, but lease top-up and differential premium if any, will be probably depend on the strata title owner i.e. Far East Organisation.

What is Development Charge (DC)?
According to Ministry of National Development, the principle of DC is to allow the land value of a site to be enhanced due to rezoning the site to a higher value use i.e. industrial to residential or increasing the plot ratio. The DC system, where a part of the enhancement in land value is taxed, allows the State to have a share of the gains from the value enhancement arising from its grant of planning approval. The DC rates is pegged to a percentage (%) of the land enhancement value.

DC calculated is based on the published Table of Development Charge (DC) rates which states the DC rate (per square metre) of GFA for each location group in Singapore. The Table of DC is reviewed every six months, in March and September of each year. The most significant change to the DC rates has been revision of the pegged rate with effect from 18 July 2007 from 50% of enhancement value to 70%. This is a huge 40% increase in land enhancement levy for the developer and a blow to en-bloc sales.

What is Differential Premium (DP)?
The DP system is a modification of the DC system to better account for leasehold redevelopment. It is still based on the Table of DC rates and therefore also affected by the July 2007 revision of the pegged rate. For DP, the DC rates will be adjusted to reflect the age of the leasehold land, using a table of leasehold values as a percentage (%) of freehold value. This is similar to PARF and COE value of your car when you want to scrap it. If you scrap your car early you can still get a most of it back, but this value decreases significantly after a certain age.

Leasehold Table – Depreciating much like your car

The Leasehold Table is also used to calculate the Lease Top-up back to 99-years based on the valuation of the land.  You can see this more clearly in the case study.

Case Study: The Interlace (Formerly Gillman Heights)

Feb 2007, Capitaland announced that is acquired Gillman Heights Condominium though an en-bloc. Capitaland paid S$548 million inclusive of a differential premium of S$90 million to top up the lease to 99 years and to increase the plot ratio to 2.1. In its place, The Interlace. A giant’s playground of Lego blocks spread over the 8 hectare site. I think the architecture is gorgeous and courtesy of the firm who was also responsible for this monstrosity in China.

CCTV Headquarters - We are watching you or ... was it you are watching us?

I will tabulate the fact sheet for easy reference,

Gillman Heights The Interlace
Completed 1985 2015
No of Units 607 1040
No of Blocks 10 31 (Literally)
Highest Floor 20 24
Plot Ratio 1.8 2.1
Est. Psf Sold (Owner) $500 psf $1,000 psf

Most of the information above along with the total land area of 836,432 sq ft  (77,707 m²) can be found in this Capitaland press release. We can now use that and what we learnt to estimate the Differential Premium and Top-up Value.

Firstly, Capitaland made the press release in Feb 2007. We are going to assume that the latest Table of Development Charge before the date was used – Sept 2006. Note that Capitaland seemed to have just missed the July 2007 deadline for the revision of DC rates. Phew!

From the map and the DC table, the Gillman Heights site is at Sector 83 and is classified B2 for non-landed residential use. Also from the Leasehold Table, Gillman Heights at 22 years old is valued at 90% of a freehold property. Below is the calculations I followed from SLA documents.

Base Value
User Group: B2
DC Rate: $1,500
Base GFA:  139,873 m² (77,707 m² x 1.8)
Base Amount:
$188,828,550 (137,873 m² x $1,500 x 90%)

Proposed Value
User Group: B2
DC Rate: $1,500
Proposed GFA:  163,185 m² (77,707 m² x 2.1)
Proposed Amou
nt:  $220,299,750 (163,185 m² x $1,500 x 90%)

Differential Premium = $31,471,200 (Proposed Amount – Base Amount)
Lease Top-up Amount = $58,528,800 ($90 million – Differential Premium)

Basically, the developers got out lucky on this one in terms of value, they paid only $363 psf per plot ratio which is very low by present standards. They also missed being hit by the change in DC rates, which would have cost them another $12.6 million. And because the project will only be 24 floors high, construction costs aren’t likely to be exorbitant.

If you take construction costs to be conservatively $300 psf and say 80% of the total GFA can be sold to future residents, profits for the sale of The Interlace could be in the low hundreds of millions. That’s pretty impressive for a leasehold site.


Written by L

January 19, 2010 at 1:16 pm

The Shore Residences and Converted Freeholds (Part 2)

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Continuing from Part 1, I will discuss about the 2nd point on whether the price gap between freehold and leasehold properties which may disappear during good times, but will appear as property ages is indeed true.

The statement makes sense. Buyers would naturally value a freehold property over a leasehold one, specifically a 99-year leasehold (999-year leasehold properties are as good as freehold in my book), since you get to keep it forever. However empirical evidence is needed to show how price gaps change over time. Due to insufficient data and time (Singapore is only 45), we can only really test the 1st part.

Firstly, The Shore Residences is not the first freehold conversion. Is there another freehold project that was converted to a 99-year leasehold? What other freehold-leasehold pairs are there with enough data to compare with? And lastly the sales data must go through 2006 – 2007 which is the period of Singapore’s recent property bubble or the good times.

1. District 10 – Jervois Jade (Converted freehold to 99-year leasehold vs Valley Park (999-year leasehold)
2. District 21 – Pine Grove (99-year leasehold) vs Pandan Valley (Freehold)

Round 1: Jervois Jade vs Valley Park

Jervois Jade and Valley Park are located in River Valley at the point where Jervois Rd, Delta Rd and River Valley Rd meet. Jervois Jade is on a freehold site but the property was converted to a 99-year leasehold. It is the apartment awkwardly shaped like a thin slice of cheese. I’m not 100% certain about the freehold conversion so do leave your comments. Valley Park on the other hand can be prominently seen from the main road by looking for the only Starbucks in the area.

Valley Park was constructed in 1997 while Jervois Jade was only completed in 2000, so our comparison goes back just 9 years. Clearly we are not comparing like for like here. Jervois Jade is a smallish 45 unit apartment while Valley Park is a 728 unit condo with full facilities and even a shopping centre, but the sales data over the years shows a remarkable similarity.

Jervois Jade vs Valley Park

The sales data have been smoothened for clarity and the price gap is the $ psf difference between Valley Park and Jervois Jade. As you can see from the stability of the price gap, there is a baseline level at $200 psf where I drew in a trendline so it can be seen better.

According to the article, The price gap between freehold and leasehold properties which may disappear during good times.

As such, one would expect the price gap to dip below the trend line and approach $0. The results show this is to be untrue! In fact the gap had widened during the property boom from $200 to as much as $500 psf during the property boom. As that bubble burst, the price gap then reverted back to the baseline level before widening again with the new rising trend. It seems that property buyers still prefer freehold over leasehold properties during the good times.

Round 2: Pine Grove vs Pandan Valley

Pine Grove and Pandan Valley are located along Ulu Pandan Rd. Pine Grove, once a HUDC now a privatised condominium and waiting for en-bloc. Pandan Valley, built in 1979 and older than me, is a full facilities freehold condominium. Both have over 600 units and over 25 years of history, so we have a nice set of data to work with.

Pine Grove vs Pandan Valley

Firstly, we can draw in a trend line at $140 psf where prices had found support. What is different from the Jervois Jade chart is that there were 2 significant dips in ’06 and ’08 where the price gap broke the trend line and came as low as $40 psf. The dips also corresponded first with the property boom and then with price decline in ’08. Unlike Jervois Jade, the price gap did return back to the trend line level.

This is significant as even in declining property prices, the price gap had also decreased. Being leasehold we expect Pine Grove to fall in line with Pandan Valley, perhaps falling even more as its demand is less inelastic. Another factor is at work here to keep prices supported at $600 psf – En-bloc speculation. Pine Grove much like Gillman Heights is sitting on a huge and lucrative morsel of land, which can be profitably redeveloped.

En-blocs are directly correlated to economy strength, i.e. the good times. The link is that en-blocs require a lot of capital, in the hundreds of millions. For a project like Pine Grove  if say every owner gets paid $2 million, the developer would have to pay out $1.32 billion. Such credit can be loaned from the banks more easily at low rates during economic expansion than in crisis. As we recently seen in ’09, tightening of bank lending meant there was only 2 en-blocs the whole year.

So en-bloc speculation might explain the difference between the 2 charts, but there are similarities as well. You can see that after the dip in ’06, the price gap again spiked to $400 psf and then declined, much like Jervois Jade above it still follows the economic cycle. So buyers still seem to prefer freehold over leasehold properties during good times, unless there is en-bloc potential.


As the results show, during the good times of property boom, the price gap actually widened significantly instead of disappearing. For the gap to decrease, as the price of the freehold property increases, the price of the leasehold must increase even more. The charts showed that both leasehold properties increased less than their freehold counterparts, apart from dips which might be explained by the en-bloc potential of the leasehold property.

I feel that owners of Pine Grove should note when these dips occur where Pine Grove and Pandan Valley prices are almost par. Sell your property then and buy a freehold unit. Returning to The Shore Residences, there is uncertain en-bloc potential for the site, so that is a loss of capital appreciation potential by purchasing a converted freehold, on top of the high valuation Far East has attached to the project.

Do your own research. If you own a leasehold property with similar freehold properties in the area, you might find that they have sales data with the same characteristics as the properties above. That might give you an edge in timing the sale of your property and getting a freehold unit that lets you fully participate in a property market boom.

Written by L

January 11, 2010 at 6:17 pm

The Shore Residences and Converted Freeholds (Part 1)

with 2 comments

Back for the new year, I noted a Straits Times article on 3 Jan, “Freehold better than Leasehold?”  where Joyce Teo talked about the emerging trend of buyers preferring leasehold to freehold properties with The Shore Residences as a case in point.

Originally a freehold plot, Far East Organisation repackaged the former Rose Garden site as a 103-year leasehold property. This means that the property returns to them at the end of the lease or at such point when Far East wishes to collectively repurchase it from the owners.

In the article, Joyce mentions 2 points that are rather interesting.

  1. The developer cannot yet get the full value for the property. (The 10-15% premium that freehold properties have over similar leasehold properties)
  2. There is a price gap between freehold and leasehold properties which may disappear during good times, but will appear as property ages.

For brevity, in Part 1, I will talk about the property’s full value and Part 2 will be more data-centred on the above price gap.

The Shore Residences at the preview in early December was priced at about $1,200 psf, so according to the article,  full value can be considered $1,380 ($1,200 * 115%) psf. Using that as the basis of comparison, lets look at the freehold and leasehold properties in the area to see if Far East indeed did not yet realised the value of the property.

Nearby projects,

  • Silversea (Far East Organisation, 99-Year): Tower 3 & 4 units are priced as a staggering $1,500 psf. However it is positioned as a luxury project with a magnificent sea view to boot.
  • One Amber (Brendale, Freehold): Highest sales by psf in December and November were $1,150 and $1,250 respectively, and for high storey units (20+).
  • The Esta (Richdeal, Freehold): The Esta sold between $1,050 and $1,200 psf during the last months of the year. It did peak at $1,334 psf during August.
  • The Sea View (Wheelock Properties, Freehold): Sold in December and November at $1,350 to $1,400 psf. It is arguably the most luxurious of the new projects along Amber Road.
  • Cote D’Azur (Fraser Centrepoint Homes, 99-Year): Its sale price hovers about the $1,000 psf mark. And being leasehold, it is the closest condo to The Shore Residences.

First off, Far East Organisation agents would surely tell you that compared to Silversea, The Shore Residences is some 20% cheaper. It may not have a view to East Coast beach, but comes with a man-made private beach built-in. Unfortunately because of slight but significant location difference, Silversea is not an ideal comparison. However, the fact that Silversea has sold out Towers 1 & 2, The Shore Residences could be worth more than the $1,200 might suggest.

Next the Amber Rd projects of One Amber, The Esta and The Sea View. It is clear that The Shore Residences is practically priced the same as both One Amber and The Esta. Having not seen the showflat, I cannot comment about their build and features similarity. But using full value as $1,380, then Shore Residences is considered by Far East to be closest to The Sea View levels. Realistically, I think that buyers would compare it to One Amber and The Esta, its closest neighbours.

Lastly we have Cote D’Azur, a 99-Year condo just a few blocks away at Marine Parade Rd. At $1,000 psf if we add the 15% premium put forth by the article, a freehold Cote D’Azur could be valued at $1,150. And that is just about right. One Amber and The Esta both averaged $1,150 during the last 2 months of the year. The Shore Residences, at 104-Year is remarkably priced closer to $1,200 and will likely be priced higher still once sales are open to the general public.


I dare say that The Shore Residences is already fully valued at freehold levels when released. Market buoyancy and economic optimism is doing its part to keep the leasehold and freehold price differential at a minimum. Far East Organisation has not only cleverly sold the project as “Buy 99 years and get 4 years free” while getting freehold value, the lease allows them to keep the land as an asset in their balance sheets and also participate in its future development.

The Almost Hidden Door

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Saw this on freshome, an aluminium minimalist door by Giuseppe Bavuso. The 2nd picture totally brought me back to my old Hardy Boys and Secret Seven days.

It uses magnets to keep the door shut. Geek!

One man's minimalist door is another man's secret entrance

Written by L

December 23, 2009 at 9:15 am

Posted in Interior Decoration

Tagged with ,

Review: Miro

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Need To Know
1 Lincoln Road
District 11
Land Tenure Freehold
Units 128 in 32 Storeys
Expected TOP Dec 31, 2014
Developers Far East Organization
Facilities Lap Pool, Spa & Massage, Indoor / Outdoor Gym, BBQ Deck, Landscaped Sky Terraces

Unit Types
1 Bedroom Lofts min 990 sqft
2 Bedroom Lofts
min 1,173 sqft
3 Bedroom Lofts min 1,614 sqft
4 Bedroom Lofts min 2,852 sqft
Penthouse 1 unit, min 5,877 sqft

Sales Info
Sales Open Aug 2008
Average PSF $1,650 @ Dec 1, 2009

With the launch of the first HDB lofts at Dawson (and hopefully more to come), I thought this should be the time to finally review Miro by Far East Organisation – One of my all-time favourite showflats.

Miro, Spanish for ‘To Look At‘ is a unique project in that all its units are lofts. You can expect 6 m high ceilings in the loft area, all glass from floor to ceiling and a layout that really maximises the space. I know I totally went gaga. The 2 and 3 bedroom showflats were gorgeous and while I don’t often agree with marketing speak, they did remind me of amazing Spanish apartments I had seen on Apartment Therapy.

I don’t have all the details of the units at the Miro. I walked in for the first time this August, a year after Miro was first previewed, by then most of the units up to the 20th floor have already been sold and Far East are hoarding the rest till TOP in 2014. And I don’t really want to go into that anyway, not when the lofts are just so impressive.

The Loft.

The 2 bedroom units are about 1,170 sqft with the 2nd bedroom on the lower loft and the master bedroom suite on the 2nd floor with a view overlooking the living and dining areas. The showflat featured neutral colours and a classy interior with a particularly clever touch: side lighting on the TV partition wall. I thought the partition that secludes the entrance to the master is really cool, and just gives this air of privacy to the upstairs living quarters. In one of the showflats, the door was made to look the same as the wallpaper, so it looked like the hidden entrance you I always wanted as a kid.

View From Above

The upstairs is all for you. And that’s a really nice idea. The upper floor is a little apartment of its own complete with walk-in closet and a balcony. And it is a good thing that it is private, because in an effort to make the space seem larger, the bath area is completely glass. This is a somewhat common feature of new Far East condos but is better laid out in Miro where the sunken shower is tucked in the corner of the master rather than awkwardly in the middle.

A Pity You Can’t See The Daring Bathroom

The Lowdown
I think the Miro lofts are fabulous and I am a big fan. But if you are looking to buy a loft here’s the most important thing you should know:

You PAY for the double volume space, i.e. the 2nd floor loft area above the living and dining room. In a 2 bedroom apartment, that is almost 12.5% of the overall floor area. Inclusive of the balconies and planters, that’s a loss of about 23% of the internal floor area. To put that space in perspective, at $1,650 psf, that comes up to $445,500 or almost the price of a 4 bedroom loft at the SkyTerrace @ Dawson.

A Very Sobering Thought

Considering the costs, lofts are designed for personal stays and not really wise investments. Developers building loft units have to cut down on non-usable space to make the unit more affordable to buyers, and I believe Far East has done a good job with this one. Also because it is priced at $1,650 psf, Miro is relatively cheaper than its neighbours in the Newton area. Unfortunately most of the units have already been sold. However I think you can get similar units at Cyan along Bukit Timah Road where the layout would be similar.

If you are dreaming of a loft and can only afford a HDB, well good news to you! The SkyTerrace @ Dawson offers 65 loft units but the sheer number of applications means that the odds are stacked against you. As Han Solo says, “Never tell me the odds” so apply by 28th December at HDB and may the Force be with you. 

Written by L

December 21, 2009 at 9:04 pm

Be Your Own Architect

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Floor Planner Demo

I saw this in the Renotalk forums.

Floorplanner.com is an awesome site which lets you create your dream house or play around with how you want to renovate your home online. Admittedly the controls take a bit getting used to but you don’t have to redesign your home’s layout from scratch. If you have the floor plans, you can upload it directly and add the structural parts from there.

I even did up my own dream place,

My Dream Home

Though I doubt I would live very long after suggesting it.

Written by L

December 15, 2009 at 12:39 pm

Posted in Renovation

Tagged with ,

Understanding Bay Windows and Planter Boxes

with 3 comments

This post is the first of a series of learning articles about the property market in Singapore that we as discerning homeowners should all know. In this article I will try to explain what the terms “bay window” and “planter” are in a unit layout and how they relate to the gross floor area of property .

What is a Bay Window (BW)?
A bay window refers to the projection from a room that holds a set of windows. The projection is often in the form of a rectangular ledge or alcove. We commonly call it a window seat.

Updated Bay Window - Thanks H88.com.sg!

What is a Planter (PL)?
A planter refers to the sunken area outside a room or balcony that is meant to house potted or unpotted plants. Otherwise known as a hole.

A Planter Box - Courtesy of http://www.expatchoice.com

What is Gross Floor Area (GFA) ?
According to URA, Gross Floor Area with respect to a residential unit is the total area of the covered floor space measured between from the centre of the walls (not the edge of the walls), excluding exempted areas.

Before 1 Jan 2009, the exempted areas were:

  • Bay Windows
  • Planter Boxes
  • Air-con Ledges

On 7 July 2009, URA announced changes to the GFA guidelines for bay windows and planter boxes. The ruling effectively removed Bay Windows and Planter Boxes from the exempted list which took effect from 1 Jan 2009.

Background on the URA ruling
Bay windows were originally exempted from the GFA as they were seen as raised window ledges rather than part of the floor space.

Planter boxes too were intended for residents to add greenery and relief to their homes and as such were exempted from the GFA.

For property developers these loopholes meant that they could incorporate bay windows and planter boxes to their projects at no additional development charge and could in fact charge you the home buyer for the space. As such there has been a proliferation of projects whose architecture is specifically designed around bay windows and planter boxes.

An Example of Developer Taking Advantage of the GFA Loophole

The above example of a 2 bedroom apartment shows that an outstanding 23.6% of the unit GFA is made up of bay windows and planters (even the kitchen has it)! If we include the air-con ledge into the calculations, the owner pays for 100% of the unit but only effectively get 73.4% of the usable space.

However this is an extreme example. On average, bay windows and planters take up only about 10% of a residential unit GFA. Regulations on bay windows have been relaxed such that the minimum height of the ledge is now lowered to 0.5m, which makes the ledge more usable. Some owners have also decked up the planter boxes thereby extending the space of their balconies or living rooms, however this is considered a breach of the GFA.

A Decked Up Planter Box

Why did URA change the GFA guidelines?
Basically there are 3 reasons,

  • Developers abusing the GFA and specifically designing properties around bay windows and planter boxes.
  • Homeowners decking up the planters, thereby defeating the purpose of the GFA exemption, which was to add to the greenery.
  • Extensive use of bay windows leads to higher heat transfer into buildings and increase the need for air-conditioning to cool the building. i.e. making the building less green.

How does URA’s new ruling affect me as a home owner?
By closing up the loophole, developers who have submitted their development plans after 1 Jan 2009 will have to pay development charges for bay windows and planters. In other words, they have less incentive to include these features as part of the design, which is to your benefit.

Do note that for some properties launched even now, the old GFA regulations may still apply as the developers might have submitted and got their Provisional Permit (PP) before the deadline.

So can I deck up my planter box or breakdown my bay window ledge?
I can safely say that for new properties (submitted after 1 Jan 2009), bay windows and planter boxes are part of the GFA, which means since you (and the developer) paid for it you can do whatever you want with it. You may deck up the planter boxes or breakdown the bay window ledge if its possible (there might be hidden piping or cabling). Do check with a reputable contractor or renovator what options you have available.

For approved developments with bay windows and planters exempted from the GFA, URA states that ‘these approved spaces will remain as GFA exempted until the buildings are redeveloped’.

In other words you do so at your own risk. I know for a fact that HDB Renovation Guidelines prevents changing the use of the planter box. So if you are planning to go ahead with them, please double check with your management office and renovator whether these works are allowed.

Written by L

December 12, 2009 at 8:48 am