The ongoing dispute over the collective sale could drag on for months and cost the owners up to $400,000 in legal fees. (Photo: JLL)
The sale of Shunfu Ville, the largest en bloc deal since 2007, has hit a brick wall. This week, several newspapers reported that five households at the 358-unit residential development in the Bishan-Thomson area are opposing the sale for a number of reasons, including the expectation of a bigger payout from the buyer Qingjian Realty.
The Chinese developer paid $638 million for the massive 408,927 sq ft site back in May, which works out to a land cost of $747 psf per plot ratio. However, Lianhe Zaobao reported that the minority owners filed an objection with the Strata Titles Board in July, but mediation talks failed, so the case is now going to the High Court.
Making the situation more complicated, plans to build a new project of up to 36 storeys high were thwarted, after the Urban Redevelopment Authority (URA) instructed Qingjian to limit the maximum height to 23 storeys to preserve the view from the nearby MacRitchie Reservoir Park.
When contacted, Li Jun, Qingjian’s Managing Director, said: “We will await the final outcome of the collective purchase, and will definitely want to maximise the plot ratio (of 2.8) within the scope of the URA guidelines when it is time to embark on the design.”
But this could take a while due to the ongoing dispute. “This could drag the entire deal for another six months or more, and add to the costs of the sales,” said an analyst who declined to be named. Media reports stated that the owners may have to fork out as much as $400,000 in legal fees.
It’s definitely a setback for the over 80 percent of owners who consented to the sale. Each household stood to gain an average payout of about $1.78 million from a successful sale.
Despite this, the analyst isn’t surprised that the deal stalled. “Unfortunately, going to the High Court is almost a norm for a collective sale, and I am sure the majority owners and the buyer have factored all these contingencies into their agreement.”
Gilstead Court in Newton and the Thomson View Condominium along Upper Thomson Road are just two examples of previous en bloc deals which turned sour due to ongoing disputes involving some of the owners, with no resolution in sight.
Despite the uncertainties and risks, the analyst believes Qingjian will proceed with the Shunfu Ville sale “because it appears they have bagged a fantastic plot for a reasonable price”.
Developed in the late 1980s by the former Housing & Urban Development Company (HUDC), Shunfu Ville has about 70 years left on its lease. Qingjian had revealed plans to build more than 1,000 homes on the site.
Meanwhile, property consultancy firm JLL, which brokered the Shunfu Ville sale, declined to comment when contacted by PropertyGuru.
In a statement last week, Karamjit Singh, International Director and Head of Residential at JLL, expressed optimism that the market was slowly turning a corner with three en bloc sales so far this year, up from just one last year and none in 2014. “This brings the total value of successful en bloc sales to $1 billion,” he said.
JLL also brokered the most recent collective sale involving Raintree Gardens in Potong Pasir. The 175-unit development was sold to a joint venture company of UOL and UIC for $334.2 million, or $797 psf per plot ratio.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
