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Condo's buyers list litany of complaints

Funds that bought 53 Grange Infinite units in bulk purchase file suit

Published on Aug 19, 2011

By Esther Teo, Property Reporter


INVESTORS who bought 53 units at the upmarket condo Grange Infinite in the Orchard Road area have launched a High Court action claiming they are not as luxurious, stylish or elegant as promised.

In a litany of complaints, the buyers - a group of investment funds which spent $388 million in all - also say the fittings in the units are not 'exceptionally superior' as advertised.

In a rarely seen showdown, the funds - managed by ARA Asset Management - issued a writ of summons last month against Grange Properties, an associated firm of listed developer Chip Eng Seng.

Investors who buy apartments in bulk might attempt to sell the units individually to secure higher prices or offload them en bloc as prices head north.

The funds allege breaches of some terms in the sales and purchase agreement and misrepresentations in relation to the bulk sale in March 2008.

While disputes between owners and developers are not uncommon, the escalation of such disputes to legal action is rare, as developers are usually keen to protect their reputations, experts say.

For example, in February, City Developments was sued by residents of Emery Point, who had accused it of being negligent over defects there. The case was ultimately resolved amicably out of court.

ARA claims marketing for the 68-unit Grange Infinite said it would be of 'exceptionally high standard of luxury, style and elegance' and have exceptionally superior furnishings. Australian architecture firm Hassell was also to have played a significant part in the project, the writ said.

However, these claims were untrue and the representations were made either fraudulently or negligently, the statement added. Hassell did not have a significant role in the construction and the project had numerous design flaws, it said.

These included the lack of a smoke extraction system at the outdoor cooking area and a spa pool located right next to it, resulting in a lack of privacy for groups using both facilities concurrently.

The writ also said the project was neither safe nor fit for human habitation at the time of notice of vacant possession, as stainless steel handrails and studs supporting balcony glass barriers and elsewhere were incompletely welded.

This posed a danger to residents, it claimed, as the barriers could dislodge and fall from the balconies. Any rectification was also carried out in a sloppy and slipshod manner with no regard to aesthetics, it said.

The funds carried out improvement works on some of the units to make them more saleable - and intends to do so for the rest of the unsold units as well.

Losses and expenses will be incurred as a result of missing out on potential buyers and hiring experts to look at the defects, among other things, they say.

ARA made the bulk purchase at a discounted price of about $2,600 per sq ft (psf) even as some units were individually sold for about $3,200 psf then.

Twelve of their units were sold before the project was completed, leaving 41 units that are now the subject of the suit. Three were sold after improvement works, leaving 38 units still in the funds' possession.

In its defence issued on Monday via its lawyers, however, Chip Eng Seng denied all allegations, emphasising that the plaintiffs are sophisticated and experienced property investors.

It maintained that the development has attained 'an exceptionally high standard of luxury' and that the funds had entered into the bulk purchase partly due to the discounted price.

Each unit, for example, is served by a private lift and equipped with fittings from high-end brands such as Gaggenau for its kitchen appliances.

On the incomplete welding of the stainless steel handrails, Chip Eng Seng said it took immediate steps and the issue has been - or is nearly - resolved. Hassell is also the architect that designed the project, the firm maintained.

The 36-storey upmarket condo is on the former Grange Tower site, next to the Indian High Commission. It was jointly developed by Chip Eng Seng and Citadel and completed this year.

Chesterton Suntec International research head Colin Tan said that the potential loss for ARA might have been huge for them to resort to legal action for a project that they are trying to sell.

'It could be because the luxury market is not moving and prices have not recovered. This is compounded by the fact that the development is already completed.'

Just this month, Chip Eng Seng granted an option to purchase the remaining 2,368 sq ft unit at Grange Infinite for $6.6 million - or $2,808 psf.

Luxury non-landed home prices are still about 6 per cent below their 2008 peak, despite the property boom that has seen all other segments surpass their historical highs.

In fact, some high-end projects are still struggling to find buyers despite already being completed, as sales volumes and interest remain relatively muted.

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Chip Eng Seng denies all allegations, emphasising that:

* Plaintiffs are sophisticated and experienced property investors.

* 'An exceptionally high standard of luxury' was attained for the development.

* The funds had entered into the bulk purchase partly due to the discounted price.