REHDA INSTITUTE CEO SERIES 2016 “REINVENTING GREATER KL’S OLD STRATA DEVELOPMENT THROUGH EN-BLOC ACQUISITION AND TRANSFORMING THEM INTO NEW DEMAND DEVELOPMENT SPACE FOO GEE JEN MANAGING DIRECTOR – CBRE | WTW 18 AUGUST 2016
WHAT IS EN BLOC SALE
WHAT IS EN BLOC SALE • En bloc is a French word which means " as a whole“ • En bloc often refers to bulk purchase of real estate in a particular property development or Collective Sale of an apartment block mostly for redevelopment. • Typically, an En Bloc Sale takes at least one year after the Collective Sale process has commenced and up to another six months before the completion of the Sale. • A collective sale (or commonly termed en-bloc sale), is a combined sale by the owners of 2 or more property units to a common purchaser. The most common en-bloc sale is the sale of all the units in a strata or flatted development to a purchaser. The sale proceeds are then divided amongst all the unit owners. Other variations of en-bloc sales include the sale of all units in a development together with an adjoining development or landed properties. - “ Strata Titles Boards, Singapore” CBRE | WTW 3 REHDA | INSTITUTE CEO SERIES 2016
WHAT IS EN BLOC SALE • Common characteristics of En Bloc properties – Old building >10 years – Poor in conditions – In popular and demand location • Only allowable after a minimum number of owners have agreed to the sale • Achievable in three ways – By consensual agreement – Approach a group of residents – Company acting as a middleman in a sale, negotiate with the owners and sold to a third party CBRE | WTW 4 REHDA | INSTITUTE CEO SERIES 2016
RATIONALE OF EN BLOC SALE
WHY DO WE NEED EN BLOC SALE? RAPID URBANIZATION • As at 2014, World Urbanization Prospects states 54% of world’s population resides in urban areas and projected to increase to 66% by 2050. (cf. 1950: 30%) • Africa and Asia urbanizing faster than other regions and projected to reach 56% and 64% by 2050. (cf. 2014: 40% and 48%) SHORTAGE OF LAND IN URBAN AREAS • Land is a scarce and diminishing recourses therefore sustainable usage requires to be judiciously made for common good CBRE | WTW 6 REHDA | INSTITUTE CEO SERIES 2016
WHY DO WE NEED EN BLOC SALE? EXTENSION OF INFRASTRUCTURE • Promote local economy by improving access to and quality of public infrastructure, enhance tourism development and improve people’s welfare URBAN DEVELOPMENT • Rapid growth of population and increasing of new housing needs leads urban renewal to play an important role in the policy towards sustainable development of citites • Allow plots of land to realize their full development potential and to allow rejuvenation of urban development EXPANDING THE CITY BOUNDARY IS NOT THE SOLUTION! CBRE | WTW 7 REHDA | INSTITUTE CEO SERIES 2016
WHY EN BLOC SALE IS IMPORTANT
WHY EN BLOC SALE IS IMPORTANT? The Nail House of Chongqing, China, 2008 CBRE | WTW 9 REHDA | INSTITUTE CEO SERIES 2016
WHY EN BLOC SALE IS IMPORTANT? The Nail House of Wenling, Zhenjiang province, China CBRE | WTW 10 REHDA | INSTITUTE CEO SERIES 2016
WHY EN BLOC SALE IS IMPORTANT? Seattle Up House, USA CBRE | WTW 11 REHDA | INSTITUTE CEO SERIES 2016
WHY EN BLOC SALE IS IMPORTANT? “Million - Dollar Corner” – 34 th Street, Broadway, New York CBRE | WTW 12 REHDA | INSTITUTE CEO SERIES 2016
WHY EN BLOC SALE IS IMPORTANT? Farmhouse at Narita Airport, Tokyo CBRE | WTW 13 REHDA | INSTITUTE CEO SERIES 2016
ANY LEGISLATION GOVERNS EN BLOC SALE IN MALAYSIA?
ANY LEGISLATION GOVERNS EN BLOC STRATA ACQUISITION? • National Land Code 1965 • Strata Titles Act 1985 / Strata Management Act 2013 • Land Acquisition Act 1960 WHAT IS THE CURRENT ISSUE? 100% Blocks can only be sold if all owners agree • • A single owner can stop a sale • Relevant rights highlighted in Article 13 of the Federal Constitution – No person shall be deprived of the property save in accordance with law – No law shall provide for the compulsory acquisition or use of property without adequate compensation CBRE | WTW 15 REHDA | INSTITUTE CEO SERIES 2016
METHODOLOGY & APPROACHES PRACTICES BY OTHER CITIES
DO WE NEED EN BLOC SALE? COMPARISON WITH MAJOR CITIES Countries Area (km2) Population Density Singapore 719 5.618 mil (2015) 8,226 km2 Hong Kong 1,106 7.313 mil (2015) 6,654 km2 Tel Aviv, Israel (Urban only) 228 1.765 mil (2014) 7,743 km2 Penang Island 293 765,000 (2015) 2,611 km2 KL (Urban only) 243 1.768 mil (2015) 7,276 km2 CBRE | WTW 17 REHDA | INSTITUTE CEO SERIES 2016
METHODOLOGY & APPROACHES SINGAPORE • Rated as globally third most densely populated city nation • Introduced in 1999 in juncture with the rapid economic growth. • Thresholds set aim to prevent minority unit owners from stopping the sale / redevelopment • If building is <10 years, 90% consent • If building is >10 years, 80% consent • A General Meeting of Owners to determine whether the requisite consensus is met • Maximum 3 owners must then be appointed to form a sale committee to handle sale progress • Guide for valuation guidelines on collective sales • For Public Housing,”Selective En- Bloc Redevelopment Scheme” (SERS) is introduced to rejuvenate old estates and redevelop them – Usually in good location – For higher economic value for moving HDB flats out and rezoning them CBRE | WTW 18 REHDA | INSTITUTE CEO SERIES 2016
METHODOLOGY & APPROACHES HONG KONG • Rated as globally 4 th most densely populated city nation • Introduced in 1990s • At least 90% consent • At least 80% must agree, if – Building more than 50 years old – Each unit makes up more than 10% of the undivided shares in the lot • Land Tribunal must be satisfied that redevelopment is justified due to age or state of repair of property • Majority owners have taken reasonable steps to acquire the minority lots • On approval by the Land Tribunal, a trustee is appointed to conduct the sale • Property to be sold by public auction unless all parties agree to another method of sale CBRE | WTW 19 REHDA | INSTITUTE CEO SERIES 2016
METHODOLOGY & APPROACHES ISRAEL • Urban areas mainly consist of 3 -4 storey condo buildings constructed as far back in 1930s • An “ en- bloc” type law known as “ Pinui-Binui ” was introduced in 2006 – Also known as “Evacuation and Construction” – One of government initiative to promote urban renewal projects – A process that permits the replacement of old housing complexes and outdated infrastructures by a large number of new apartment buildings – Contractor pays all costs for demolition, construction, relocating apartment owners and renting their temporary homes during construction – Requiring just 75% of original owners to agree – Guarantee ownership to the original owner • Consist two options for evacuating the residents – Evacuate and allocate occupants to rental apartments in close vicinity to their existing homes – First build a new structure near the buildings slated for removal, then evacuate to new building and later relocate to the initial building, and so on. (this is subject to authorities approval) CBRE | WTW 20 REHDA | INSTITUTE CEO SERIES 2016
WHAT ABOUT OTHER MAJOR CITIES? REQUISITE MAJORITY CONSENT FROM PROPERTY OWNERS FOR COMPULSORY SALES IN SELECTED CITIES City Requisition New York and Washington 80% New Zealand 75% Alberta, Canada 75% Tokyo 66.7% Seoul 66.7% Guangzhou and Shanghai 66.7% of the property owners owning a total of 66.7% of the total building floor area • Taipei Expedited urban renewal areas: 50% of the property owners owning 50% of the total land and building floor area • Priority urban renewal areas: 60% of the property owners owning 66.7% of the total land and building floor area • Other non-designated area: 66.7% of the property owners owning 75% of the total land and building floor area CBRE | WTW 21 REHDA | INSTITUTE CEO SERIES 2016
EN BLOC SALE PROCESSES
EN BLOC SALE PROCESSES (SINGAPORE) Step 1: Step 4: Work Step 2: Set up Step 3: Determine out the pre- a pro-temp Engage the eligibility of the sale committee professionals building for considerations En-Bloc sale • Time Required: • Time Required: • Time Required: 2-4weeks 2-4weeks 1-2 months Step 7: Final Step 8: Step 5: Step 6: Sale Preparations Preparing for Getting the by way of for the Completion requisite tender Application to and Handover STB of Property • Time Required: • Time Required: • Time Required: 1-6 months 6-8 months 3-6 months CBRE | WTW 23 REHDA | INSTITUTE CEO SERIES 2016
COMMON APPORTIONMENT METHODS • Share Value – When units are of the same or similar strata / floor areas with same or similar share values • Strata / Floor Area – When units are of the same or similar strata / floor areas or the unit value rates are similar for various sizes • Average Strata Area & Share Value – When there are wide difference in the share value and / or strata / floor area among the various unit • Valuation – When the general attributes of the property are to be considered CBRE | WTW 24 REHDA | INSTITUTE CEO SERIES 2016
MALAYSIA EXPERIENCE
Recommend
More recommend
