Red House to return in 2016 as commercial-residential project

[reporter2]

http://www.businesstimes.com.sg/arch...oject-20130622

Published June 22, 2013

Red House to return in 2016 as commercial-residential project

99-year leasehold development set to unlock market value

By ong chor hao

[email protected]


THE rebirth of the Red House in Katong and its five adjacent shophouses as an integrated commercial and residential project made further progress yesterday, following its launch.

The new 99-year leasehold development is managed by Warees Investments, the property arm of the Islamic Religious Council of Singapore (Muis), and the various components will be collectively known as the Red House.

There will be a new five-storey residential block with 42 units of between 441 and 1,206 sq ft, priced from $1,499 psf.

The ground floor units at the six conserved shophouses, one of which used to house the former Katong Bakery and Confectionary, commonly referred to as Red House Bakery, will form the commercial component for the new development. In a nod to its heritage, one of the units will be set aside for use as a bakery.

Total gross floor area will be 35,710 sq ft after redevelopment and conservation. Works will start in the third quarter and the project is expected to be completed by the second quarter of 2016.

The six shophouses are wakaf properties managed by Muis. A wakaf is an endowment made with cash or property used to support charitable programmes in perpetuity. In the Red House's case, rental income from the shops will be used to provide free health care for the needy.

Haider Sithawalla, chairman of Warees, said at the launch yesterday that Muis, Warees and the trustees of the wakaf have spent much time and effort over the past few years to find ways to improve returns from the properties, as "time has taken its toll" on the six shophouses.

The eventual decision to redevelop Red House was unanimous.

"Judiciously carving out the 99-year leasehold enables the freehold nature of the wakaf to be preserved while at the same time unlocking its current market value for the benefit of the beneficiaries under the wakaf and the community at large," said Mr Sithawalla.

The Red House is the first project under Warees' Wakaf Revitalisation Scheme, which aims to unlock wakaf property value, sustain current wakaf development and support conservation efforts. Warees will announce other projects under the plan towards the end of the year.

[august]

freehold sell as 99LH again?

[DKSG]

freehold sell as 99LH again?

The MUIS need the money. Hopefully, they shed better light how land owners are going to handle such sites.

I mentioned many times that land owners just want to get paid every 20 years as the PC gets enbloc. Contrary to what some vicious ppl here say the land owners will never want to approve any enbloc so as to take back the land.

So LH on FH is the same as government LH land - they will top up the lease.

DKSG

[leesg123]

The MUIS need the money. Hopefully, they shed better light how land owners are going to handle such sites.

I mentioned many times that land owners just want to get paid every 20 years as the PC gets enbloc. Contrary to what some vicious ppl here say the land owners will never want to approve any enbloc so as to take back the land.

So LH on FH is the same as government LH land - they will top up the lease.

DKSG

LH on FH land whose title is held by a pte entity is very much different from LH on FH land whose title is held by SLA. The former can forget about enbloc, it is purely rental for 99 years.

[tkc2263]

We were invited to for the launch and valet parking was provided as well, agent asked for our car no. plate.

In the end , due to the haze, we decided not to go ahead. This was Saturday.

By late afternoon, agent smsed wife and said 9 units sold.

[bargain hunter]

8 sold in June at 1641psf median.

[leesg123]

8 sold in June at 1641psf median.

I hope they know what they are in for. renting for 95yrs. (5yrs gone to construction). no chance enbloc, pure tenant.

[DKSG]

I hope they know what they are in for. renting for 95yrs. (5yrs gone to construction). no chance enbloc, pure tenant.

There is a misconception. This idea is wrong.
I had the honour to speak to some MUIS related persons close to this.

This is their thinking. They sell the 99LH and hopefully 20 years down the road, the current owners will try to enbloc. They will then depend on the owners to get the best value for the land. Thru the enbloc, what they will do is to get paid for topping up the lease.

In this way, the land owners get paid every 20 yrs without any effort !

That is certainly the smarter way than to wait 99 years because by then, everyone all died already!

Hope this shed some light to forumers on the thinking of these rich land owners.

DKSG

[leesg123]

There is a misconception. This idea is wrong.
I had the honour to speak to some MUIS related persons close to this.

This is their thinking. They sell the 99LH and hopefully 20 years down the road, the current owners will try to enbloc. They will then depend on the owners to get the best value for the land. Thru the enbloc, what they will do is to get paid for topping up the lease.

In this way, the land owners get paid every 20 yrs without any effort !

That is certainly the smarter way than to wait 99 years because by then, everyone all died already!

Hope this shed some light to forumers on the thinking of these rich land owners.

DKSG

dont understand.

say I buy a unit there for $1m. 20yrs later, say can enbloc for $2m. I will pocket the entire $2m.

Q1. Which developer will buy a land that has 80yrs lease left from another developer whom owns the freehold land? furthermore this new developer has to top up the lease to 99yrs again, at what price? suka suka set by the land owner? current topup to 99yrs lease on gov land Is done quite cheaply.
I
Q2. Does the owner whom sold the unit enbloc at $2m, gets to keep the $2m or split with the landlord?

operationally, too much risk on the buyers, while the landlord has too much control and advantage.

[wirehtc]

dont understand.

say I buy a unit there for $1m. 20yrs later, say can enbloc for $2m. I will pocket the entire $2m.

Q1. Which developer will buy a land that has 80yrs lease left from another developer whom owns the freehold land? furthermore this new developer has to top up the lease to 99yrs again, at what price? suka suka set by the land owner? current topup to 99yrs lease on gov land Is done quite cheaply.
I
Q2. Does the owner whom sold the unit enbloc at $2m, gets to keep the $2m or split with the landlord?

operationally, too much risk on the buyers, while the landlord has too much control and advantage.

I agree. There is only one buyer, who sets the price.

[Wild Falcon]

It's such an eyesore now. A narrow shophouse and behind some MM condos. So freaking cramped.

[leesg123]

It's such an eyesore now. A narrow shophouse and behind some MM condos. So freaking cramped.

Left and right are eateries. be prepared for many many cockroaches to visit at night!

[eng81157]

dont understand.

say I buy a unit there for $1m. 20yrs later, say can enbloc for $2m. I will pocket the entire $2m.

Q1. Which developer will buy a land that has 80yrs lease left from another developer whom owns the freehold land? furthermore this new developer has to top up the lease to 99yrs again, at what price? suka suka set by the land owner? current topup to 99yrs lease on gov land Is done quite cheaply.
I
Q2. Does the owner whom sold the unit enbloc at $2m, gets to keep the $2m or split with the landlord?

operationally, too much risk on the buyers, while the landlord has too much control and advantage.

but FEO seems to get away with it and no buyer bats an eyelid when purchasing some of their 'con' developments

[DKSG]

dont understand.

say I buy a unit there for $1m. 20yrs later, say can enbloc for $2m. I will pocket the entire $2m.

Q1. Which developer will buy a land that has 80yrs lease left from another developer whom owns the freehold land? furthermore this new developer has to top up the lease to 99yrs again, at what price? suka suka set by the land owner? current topup to 99yrs lease on gov land Is done quite cheaply.
I
Q2. Does the owner whom sold the unit enbloc at $2m, gets to keep the $2m or split with the landlord?

operationally, too much risk on the buyers, while the landlord has too much control and advantage.

Eeermmm ... not sure you know how the Government land lease top up works.

This is how it works ... Complimentary from Office Boy ...

You buy unit at $ 1mil, in 20 years time, you find that the land cost is now $3 mil on a 99 LH basis. You go for enbloc and find a buyer willing to pay $3mil for 99 LH.

So buyer pays $3mil, and very likely and technically, you get $2.4 mil, and the other $600 is paid to the land owner to issue a fresh 99 year lease.

In this case, the land owner does nothing but sit back and collect $600 every 20 years.

DKSG

[wirehtc]

Eeermmm ... not sure you know how the Government land lease top up works.

This is how it works ... Complimentary from Office Boy ...

You buy unit at $ 1mil, in 20 years time, you find that the land cost is now $3 mil on a 99 LH basis. You go for enbloc and find a buyer willing to pay $3mil for 99 LH.

So buyer pays $3mil, and very likely and technically, you get $2.4 mil, and the other $600 is paid to the land owner to issue a fresh 99 year lease.

In this case, the land owner does nothing but sit back and collect $600 every 20 years.

DKSG

That is for government to appear fair and transparent. No such rule for others.

[DKSG]

That is for government to appear fair and transparent. No such rule for others.

With the owners fighting for the best enbloc price, land owners will certainly take this highest bid the unit owners found.

Anyway, I hear the same thing from FEO.

Just sharing what an Office Boy hears.

DKSG

[leesg123]

Eeermmm ... not sure you know how the Government land lease top up works.

This is how it works ... Complimentary from Office Boy ...

You buy unit at $ 1mil, in 20 years time, you find that the land cost is now $3 mil on a 99 LH basis. You go for enbloc and find a buyer willing to pay $3mil for 99 LH.

So buyer pays $3mil, and very likely and technically, you get $2.4 mil, and the other $600 is paid to the land owner to issue a fresh 99 year lease.

In this case, the land owner does nothing but sit back and collect $600 every 20 years.

DKSG

Sounds legit. But who determines unit owner gets $2.4m, land owner gets $0.6m? The land lord has the final say. As the year goes by, the power of the unit holde gets erroded as it is lease hold depreciating. Landlord can hold the unit holder ransom, where landlord will agree to enbloc if they get $2m, unit owner gets $1m. or maybe even worst, ultimately unit owner suck thumb like a small boy.

[leesg123]

With the owners fighting for the best enbloc price, land owners will certainly take this highest bid the unit owners found.

Anyway, I hear the same thing from FEO.

Just sharing what an Office Boy hears.

DKSG

Thanks for sharing. Those are just marketing gimmicks to trick those who can't think beyond 3 steps and fall for it. my 3

[august]

Sounds legit. But who determines unit owner gets $2.4m, land owner gets $0.6m? The land lord has the final say. As the year goes by, the power of the unit holde gets erroded as it is lease hold depreciating. Landlord can hold the unit holder ransom, where landlord will agree to enbloc if they get $2m, unit owner gets $1m. or maybe even worst, ultimately unit owner suck thumb like a small boy.

Land owner gains nothing by holding ransom. I feel as long as enbloc happens, landlord will benefit, just a matter of more or less. But it is still better than no enbloc, where land owner wait until lease runs out but gets nothing in all that time. For a sought after location at the right price, buyers will bite, end of day it has to be a win-win situation for everyone.

[leesg123]

Land owner gains nothing by holding ransom. I feel as long as enbloc happens, landlord will benefit, just a matter of more or less. But it is still better than no enbloc, where land owner wait until lease runs out but gets nothing in all that time. For a sought after location at the right price, buyers will bite, end of day it has to be a win-win situation for everyone.

Pls dont forget that the land is FREEHOLD and the land owner has nothing to lose for the lease to expire.

True, Win-Win is possible. But how is the win going to be split. A cake got 10 slices. Landlord takes 9 slices, tenant take 1 slice. also win-win. albeit BIG WIN vs small win.

Hence, with all these uncertainty and ODDS stacking against the buyers (aka tenants), my advice is to avoid at all cost. I would rather buy a leasehold condo whose land is own by government.

[august]

Pls dont forget that the land is FREEHOLD and the land owner has nothing to lose for the lease to expire.

True, Win-Win is possible. But how is the win going to be split. A cake got 10 slices. Landlord takes 9 slices, tenant take 1 slice. also win-win. albeit BIG WIN vs small win.

Hence, with all these uncertainty and ODDS stacking against the buyers (aka tenants), my advice is to avoid at all cost. I would rather buy a leasehold condo whose land is own by government.

what good is it if the land owner is not able to monetise the land (bcos no enbloc), or he waits until 99 yrs later to take back the land but is unable to develop it (bcos no money) and then sells it (in which case he gets money but loses ownership). my point is there is little reason for the land owner to be against any enbloc as there is money to be made. and computation of development charge can be fairly obtained through the usual market valuation.

[wirehtc]

Land owner gains nothing by holding ransom. I feel as long as enbloc happens, landlord will benefit, just a matter of more or less. But it is still better than no enbloc, where land owner wait until lease runs out but gets nothing in all that time. For a sought after location at the right price, buyers will bite, end of day it has to be a win-win situation for everyone.

Land owner has already made a big money at first sale. Very few buildings can last >30 years with all the cost cutting materials and dubious labour quality now. Owners will blink first. Land owner can just squeeze harder.

[leesg123]

Land owner has already made a big money at first sale. Very few buildings can last >30 years with all the cost cutting materials and dubious labour quality now. Owners will blink first. Land owner can just squeeze harder.

precisely, landlord vs tenant. landlord is always the banker and has an upper hand.

[DKSG]

what good is it if the land owner is not able to monetise the land (bcos no enbloc), or he waits until 99 yrs later to take back the land but is unable to develop it (bcos no money) and then sells it (in which case he gets money but loses ownership). my point is there is little reason for the land owner to be against any enbloc as there is money to be made. and computation of development charge can be fairly obtained through the usual market valuation.

Actually, put it from the view of land owners. If you are the son of the land owner, and someone comes up and offer u the same lease top up as what would be paid to the government to top up the lease, would you choose to wait another 70 years (ie after you die) or take the top up amount now?

The land owners want to operate the same way as the government. We dont see government wanting to take back the land. In fact, government has signalled very clearly that they will top up the lease.

It is bad to spread rumours that land owners will squeeze out the PC owners. Who knows when government introduces the 60LH properties, the current owners dont even need to top up the lease ?! They just enbloc and sell at 60LH !

DKSG

[wirehtc]

Actually, put it from the view of land owners. If you are the son of the land owner, and someone comes up and offer u the same lease top up as what would be paid to the government to top up the lease, would you choose to wait another 70 years (ie after you die) or take the top up amount now?

The land owners want to operate the same way as the government. We dont see government wanting to take back the land. In fact, government has signalled very clearly that they will top up the lease.

It is bad to spread rumours that land owners will squeeze out the PC owners. Who knows when government introduces the 60LH properties, the current owners dont even need to top up the lease ?! They just enbloc and sell at 60LH !

DKSG

Definitely the freehold land owner will allow lease top up. However the condo owners have only one buyer, so they are not in a good position to negotiate the price. If the owners refuse lease top up, the land owner just has to wait for 99 years for the land and the building on top to be returned. There is no loss to the land owner at all.

[Amber Woods]

The private landlord of the freehold land may want to redevelop the site itself and hence will only allow the site to "en bloc" provided the site is sold to them at their price.

There is nothing to stop the landlord from not granting the lease extension with the view to force "owners" to sell their remaining lease collectively at their price.

The landlord could also take its time to buy up each and individual unit (for smaller development) and redevelop the site at a later stage.

The point is there is so much unknown and everything is at the mercy of the landlord. Their interests may not be as clear as they are stating now

[wirehtc]

The private landlord of the freehold land may want to redevelop the site itself and hence will only allow the site to "en bloc" provided the site is sold to them at their price.

There is nothing to stop the landlord from not granting the lease extension with the view to force "owners" to sell their remaining lease collectively at their price.

The landlord could also take its time to buy up each and individual unit (for smaller development) and redevelop the site at a later stage.

The point is there is so much unknown and everything is at the mercy of the landlord. Their interests may not be as clear as they are stating now

This opens up another possibility that the land owner slowly buys up individual units and forces the land sale below market price once enough units are gathered.

[august]

Actually, put it from the view of land owners. If you are the son of the land owner, and someone comes up and offer u the same lease top up as what would be paid to the government to top up the lease, would you choose to wait another 70 years (ie after you die) or take the top up amount now?

The land owners want to operate the same way as the government. We dont see government wanting to take back the land. In fact, government has signalled very clearly that they will top up the lease.


DKSG

Precisely. You get my point.

[august]

Definitely the freehold land owner will allow lease top up. However the condo owners have only one buyer, so they are not in a good position to negotiate the price. If the owners refuse lease top up, the land owner just has to wait for 99 years for the land and the building on top to be returned. There is no loss to the land owner at all.

If the location is a sought after one or prime, there will never be a lack of interested buyers.

[wirehtc]

If the location is a sought after one or prime, there will never be a lack of interested buyers.

U mixed up e landowner.