Swiss Club's 'useless' strip of land brightens a tycoon's plot

[mr funny]

http://www.businesstimes.com.sg/sub/...44740,00.html?

Published September 25, 2010

Swiss Club's 'useless' strip of land brightens a tycoon's plot

By VEN SREENIVASAN


IF you are looking for a bargain on a piece of land in the Bukit Tinggi area, off Bukit Timah, perhaps you should contact The Swiss Club.

In its August newsletter, the club - which owns vast tracts of land in the tranquil high-end Bukit Tinggi area - informed members of plans to sell its Lot 1945 for $150,000. The property in question is a thin slice of land, measuring some 374 square metres (4,026 square feet).

The proposed selling price of $150,000 works out to just over $37 per sq ft (psf). The land is being sold to one LS Kwee, against whose property it sits. LS Kwee is also the same Kwee Liong Seen listed as a member of the Swiss Club.

Kwee Liong Seen is also the name of one of the four brothers of the Pontiac Land empire, whose properties include the Ritz-Carlton, the Regent, Conrad Centennial, the Capella in Singapore, and others.

The property in question used to be part of the main Swiss Club premises until it was separated by a road, Swiss Club Link, built some two decades ago. It now runs adjacent the perimeter of Mr Kwee's good-class bungalow plot (MK15-215V), measuring some 126,254 sq ft.

The deal has run into opposition from some club members.

The main bone of contention, not surprisingly, is the fact that the selling price of $150,000 or $37 psf represents a big discount to the prevailing price of around $800-1,000 psf in the vicinity.

But the club says the land - which is barely wide enough for a footpath - is priced to reflect the fact that it is of no real economic value to the club. And the committee of the Swiss Club, led by president Martin Silberstein, has called for an AGM to explain the sale to members next Monday.

This is how Mr Silberstein explained the deal in the August issue of the club's monthly magazine: 'Until about 20 years ago, Lot 1945 adjoined the Club and was part of the main property. However, since the government took over the Swiss Club Link, Lot 1945 has no longer been connected with the Club's main property. In the opinion of Mr John Carter, a former property consultant for the club, Lot 1945 became 'incapable of independent development' - or, in other words, useless.'

BT was unable to contact Mr Silberstein or club officials for further comment.

Though Mr Silberstein is correct about the club being unable to ever use the land, not everyone agrees with his determination of its value.

'The argument that this land is worthless is false,' said one member. 'It has huge economic value to the Kwee family. If you take a conservative value of $800 psf, this means the owner stands to make a profit of over $3 million. If it means that much of value to the Kwees, surely it should fetch a much higher price for the club?'

Dissenting members point out that the strip of land gives the Kwees' MK15-215V plot direct access from Swiss Club Link. This significantly raises the development potential and value of the plot. They argue that the purchase of the thin strip of Lot 1945 would enable the Kwees to build over eight good class bungalows of some 15,000 sq ft each with easy access from three roads - Jalan Kampung Chantek, Swiss Club Link and Swiss Club Road.

Currently, the plot is only adjacent to Jalan Kampung Chantek and Swiss Club Road.

Members also note that while the club is in good financial health (having some $5.06 million in accumulated funds and operating revenue of $7.14 million annually) and is not in desperate need of cash, a healthy return from the land would enable it to further enhance its physical facilities.

[focus]

The member have explained the justification of higher sale price convincingly, at least to me.

The price is not determine by whether the piece of land is of economic value to the seller, it is more determined by what is the economic value to the buyer.

[proud owner]

The member have explained the justification of higher sale price convincingly, at least to me.

The price is not determine by whether the piece of land is of economic value to the seller, it is more determined by what is the economic value to the buyer.

so can the owners of the row of terraces ..kana bought over by govt ..to build commercial/residential condo demand higehr price ?

[Komo]

Best is open bid! I offer $150,001! Sell to me better

[2824]

think they shd have included a clause to say that if the buyer, sell the land including this strip, they should be entitled to a proportionate share of the profits.

[focus]

so can the owners of the row of terraces ..kana bought over by govt ..to build commercial/residential condo demand higehr price ?

Nope. They cannot. Because the buyer is a different entity with Authoritative Power and Legislative Power (National Development act or something like that) over you.

It is the goodwill of the govt to compensate you on prevailing market rates.

[proud owner]

Nope. They cannot. Because the buyer is a different entity with Authoritative Power and Legislative Power (National Development act or something like that) over you.

It is the goodwill of the govt to compensate you on prevailing market rates.

precisely

becos govt can do that ... so can the buyer of the strip of land

trying bringing him to court
his lawyer just need to site the terraces as example ... where the govt did not compensate them on the new owner's potential gain/value ..then no case leow

[august]

so can the owners of the row of terraces ..kana bought over by govt ..to build commercial/residential condo demand higehr price ?

govt will compensate based on mkt price

in swiss club case, this strip of land also have a mkt price
e.g. kwee wishes to pay $150k, Komo wishes to pay $150,001, and so on ~

[proud owner]

govt will compensate based on mkt price

in swiss club case, this strip of land also have a mkt price
e.g. kwee wishes to pay $150k, Komo wishes to pay $150,001, and so on ~

correct i agree


just that some argue that the selling price should reflect WHAT THE NEW OWNER STANDS TO GAIN

no case lah ...

[august]

so can the owners of the row of terraces ..kana bought over by govt ..to build commercial/residential condo demand higehr price ?

this will involve considerations such as any increase in plot ratio? change of use to higher intensity? etc

so nowadays when govt acquire is to build public infrastructures and facilities which generally will not attract private sector interest ... bcos if able to build commercial/residential etc govt will leave it to private developers to handle who will then pay govt development charge.. easier for govt not to compete with pte sector and just collect betterment tax aka development charge. So govt will not compete to build pte or commercial, they may leave it to their GLCs though

e.g. acquire a row of terraces to build public hospital, school, bus interchange etc. This is a change of use usually to lower intensity and the developments are of little commercial value, meaning compensation to the terrace owners being acquired will be based on residential and not the future swimming pool, bus interchange value. So the compensation will be a fair one. However a small catch is once the public amenities are finished the value of residential around may go up in future. Then the terrace owners who were acquired may in future kpkb hahaha.. so once they r acquired they shld faster go buy a terrace around that is not acquired hehe

[focus]

precisely

becos govt can do that ... so can the buyer of the strip of land

trying bringing him to court
his lawyer just need to site the terraces as example ... where the govt did not compensate them on the new owner's potential gain/value ..then no case leow

I agree with you the club has no legal recourse after selling at that type of price.

However, that is putting the cart before the horse. In the first place, the deal should not have gone thru' using that price(if they had priced it at a price that reflects an adequate marginal utility for the buyer - could be 200psf or 150psft).

I am not saying that seller must squeeze every last inch of profit from the buyer. However, as explained by the opposing party, the increase in 4000sqft of land to the buyer will equate to around $2.4mil of profit(if the buyer sells his bungalow land at 600psf). Surely, even a compromise of 300psf selling price for the strip is a good enough deal for the buyer to consider.

Ok, if the buyer refused to pay that price and the strip is unsold, would it even make a dent on the swiss club's finance? $150K? Call me selfish but if I have a strip of land that I cannot use and is worth only $150k, I would rather have it rot than sell it to someone who can immediately increase his house value by another $2.4mil (not that he needs it). If he wants it, he will come to me to buy at half the price and i will still be willing to sell to him.

Even people who are involved in enbloc demanded more for their land as they know the developer can extract more from their land. They don't squeeze the developer till the last drop but they just want to compensate enough to reflect the potential of the land.