N FOCUS: Is there an environmental cost from Singapore’s love affair with en bloc sales?
Channel News Asia, 29 May 2021, Sun
By Cheryl Lin
In 2002, Olivio, a 36-unit condominium in Novena was completed and welcomed its new residents. But just four years later, it was sold en bloc and torn down.
To this day, it remains one of the youngest condominiums to have undergone a successful collective sale – which is when owners band together to sell their project to a developer.
Since the 1990s, a few en bloc cycles have come and gone, with the most recent lasting from 2017 to 2018, before cooling measures put the brakes on.
Analysts expected the trend to bud again this year, as developers seek to replenish their land banks, amid a property market that has defied the economic gloom of the pandemic.
Four collective sales have taken place since January, compared to four in the whole of 2020, while more projects have been taking another stab at a collective sale.
The phenomenon owes its longevity to several practical reasons, such as allowing urban renewal and, often, a handsome windfall for those selling their units.
But some believe Singapore’s love affair with en bloc sales is becoming increasingly problematic, in light of its recent pledges to sustainability.
In particular, the country has crafted a Green Building Masterplan to reduce the carbon footprint of the built environment sector, which accounts for 20 per cent of the country’s emissions.
The issue is that the process of tearing down and re-building is highly carbon-intensive, and especially wasteful when developments in good condition are demolished, said experts CNA spoke to.
“IT’S NOT THE BUILDING’S FAULT IT HAS TO DIE”
Buildings in Singapore have shorter average lifespans than in other cities, said Professor Thomas Schroepfer, who teaches architecture and sustainable design at the Singapore University of Technology and Design.
“When buildings are torn down, it’s not necessarily because one cannot live there, but often it’s economic drivers.
"It’s not the building’s fault it has to die ... Particularly, because of a lack of development land, the pressure is really high to build bigger, denser, modern buildings," he said.
Theoretically, structures can last a long time, with the world’s largest unreinforced concrete dome, the Pantheon in Rome, still in “brilliant condition” after some 1,900 years, said Ms Alexis Chua, Course Chair of the School of Design & Environment at Ngee Ann Polytechnic.
Signs of wear and tear can start showing as early as within five years, but Singapore’s building guidelines also generally ensure developments can last many decades, she noted.
Dr Lee Nai Jia, Deputy Director of the Institute of Real Estate Studies at the National University of Singapore added that buildings are usually built to last for the tenure of the land.
He added: “While it makes sense to redevelop if the buildings become structurally unsafe, there were a number of developments sold en bloc that were less than 20 years old.”
Data he compiled shows that since 1995, at least 51 developments that have been sold en bloc were less than 20 years old.
He added that there are no specific laws dictating the age at which buildings can be demolished.
ENVIRONMENTAL PRICE OF CONSTRUCTION
Cycling through buildings before their time is up creates environmental problems, said Prof Schroepfer.
“You have to take care of the debris from tearing down, there’s steel, concrete, glass - all materials that have high (embodied carbon), meaning it was very energy-intensive to bring them into life in the first place.
Some of these are then recycled, but “it’s not like other industries where the recycling rate is much higher”, he said.
Producing new materials, transporting them and starting construction kicks off the cycle all over again.
“So in terms of life cycle analysis, the tearing down and rebuilding is very energy hungry, and therefore not good for environment,” he said.
For context, about 40 per cent of global carbon emissions are already from building and construction, according to the World Green Building Council. Operational emissions form 28 per cent of this, while embodied carbon emissions account for 11 per cent.
In Singapore, where the lifespan of buildings is shorter due to urban renewal, embodied carbon emissions could go up to 40 per cent, the council’s Chair, Lisa Bates, told Eco-Business.
WHY DO EN BLOCS SALES EXIST AT ALL?
The main goal of the collective sales framework is to give owners a choice on whether to go for redevelopment – which could allow for rejuvenation and land use optimisation, the National Development Ministry told CNA.
For instance: “Pipes start to leak, or you get analogue lifts and you can’t get spare parts for these anymore, because people have moved on to digital lifts,” said Ms Ong Choon Fah, the chairperson of the Urban Land Institute.
“Even technicians may not know how to service these lifts anymore, so you need to keep these buildings maintainable.”
In addition, when master plans raised plot ratios for certain areas in the past, en bloc redevelopment made sense, as they allowed developers to intensify land use.
“Now we are talking about 20-minute towns, and with COVID-19 … the role of offices have changed. These collective sales and urban renewal helps us move on with planning intents,” said Ms Ong, who is also the CEO of Edmund Tie & Company.
On top of that, as Singapore’s ageing population grows while household sizes dwindle, older developments with larger units may not be “as relevant”, said Mr Wong Xian Yang, who heads research at Cushman & Wakefield Singapore.
In fact, collective sales can even contribute to sustainability by refreshing outdated infrastructure with eco-friendly features, said Mr Wong.
This includes incorporating more energy-efficient ventilation systems, air-conditioning systems, household appliances, and introducing more greenery in the development.
To boot, it is often a way for older residents to cash out on their property as they prepare for retirement, Ms Ong said.
En bloc sales are also a way for developers to get freehold property. The only other way to acquire land is through the Government Land Sales programme, but these are leasehold plots.
CULTURAL LOSS AND SOCIAL DISPLACEMENT
Though the collective sale process has its merits, critics have also cited disadvantages beyond the environmental damage.
Prof Schroepfer said: “Remodeling of the city over and over would come at cultural cost. Even within a lifetime, the city – you can’t recognise it anymore. The places you grew up with are no longer there.”
Ms Ong cited how certain iconic post-independence buildings such as Pearl Bank Apartments have been cleared as part of the en bloc process.
Such sales also often lead to the displacement of communities – especially for older residents who may want to age-in-place.
As for the argument about making better use of land, Mr Nicholas Mak, who heads research and consultancy at ERA Realty, said that plot ratios for most areas have not increased in many years.
“(Many of these buildings) are built to the maximum allowable plot ratio already.
"This means that for (more recent) en bloc sales, it is not because there is plot ratio to be increased, but because there is money to be made.”
Read more at: https://www.channelnewsasia.com/news/singapore/in-focus-singapore-enbloc-property-sales-environmental-cost-14856214
Eligible SMEs, non-profit organisations in commercial properties to get rental relief
The Straits Times, 28 May 2021, Sat
By Calvin Yang
Eligible retail shops, supermarkets, gyms, restaurants, cinemas, tuition centres and clinics will get more help with their rental costs, amid tighter restrictions to curb the spread of Covid-19 in the community.
Rental relief will be offered to small and medium-sized enterprises as well as non-profit organisations with an annual revenue of not more than $100 million that are tenants of qualifying commercial properties, the Ministry of Finance (MOF) said on Friday (May 28).
These commercial properties include shops, private schools, theatres, childcare centres, sports and recreational buildings, premises of tourist attractions and meetings, incentives, conventions and exhibitions venues.
Read more at: https://www.straitstimes.com/singapore/eligible-smes-non-profit-organisations-in-commercial-properties-to-get-rental-relief
Rental rebates to be passed directly to tenants in privately owned commercial properties
The Straits Times, 28 May 2021, Sat
By Anjali Raguraman
Small and medium-sized enterprises as well as non-profit organisations who are tenants in privately owned commercial properties can expect to get cash payouts directly from the Inland Revenue Authority of Singapore (Iras).
The rebates were previously given to landlords to pass down to tenants.
Eligible tenants will qualify for a direct, half-month rental relief cash payout under a new rental support scheme announced by Finance Minister Lawrence Wong on Friday (May 28)
Read more at: https://www.straitstimes.com/singapore/rental-rebates-to-be-passed-directly-to-tenants-in-privately-owned-commercial-properties
The super rich are choosing Singapore as the world's safest haven
The Business Times, 29 May 2021, Sun
By David Ramli & Lulu Chen
WHEN Singaporean car dealer Keith Oh first read the Facebook message, he was not sure if it was real. A Chinese client ordered a S$1.1 million Bentley - sight unseen - over the social network.
"They just asked for the price and when we could do the delivery, that's all," he said. "It's a million dollars to us, but it's probably nothing to them."
The quick sale was the latest sign of a wider trend: Money is sloshing around Singapore like never before. As the coronavirus pandemic hammers South-east Asia and political turmoil threatens Hong Kong, the city has become a safe harbour for some of the region's wealthiest tycoons and their families.
For rich people "who can decide where they want to live and settle down, Singapore is a place of choice now", said Stephan Repkow, who founded Wealth Management Alliance in 2015 after four years at Union Bancaire Privee. He said two of his foreign clients had become residents in the past 12 months and more are on the way.
Singapore has long been a draw for wealthy Chinese, Indonesians and Malaysians who would come for short trips to shop, play baccarat at the casino or get medical check-ups at world-class clinics. Mount Elizabeth Hospital Orchard, just steps from the flagship stores of Gucci and Rolex, features a UOB Privilege Banking Centre in the lobby.
The pandemic has changed all that, prompting many tycoons and their families to stay for months - in some cases seeking residency to ride out the storm. On a per-capita basis, the mortality rates in Malaysia and Indonesia are more than 10 and 30 times higher than in Singapore, showed data collected by Johns Hopkins University.
The number of single-family offices in the city-state has doubled since the end of 2019 to about 400, including firms recently set up by Google co-founder Sergey Brin and Shu Ping, the billionaire behind Chinese hotpot empire Haidilao International Holding Ltd. Demand for private golf club memberships is soaring, real estate prices have jumped the most since 2018 and, until the recent clampdown, Michelin-star restaurants were packed. Meanwhile, global banks such as UBS Group are expanding in the city to manage the massive influx of assets.
A spike in virus cases that has led to stricter border measures and the cancellation of upcoming events such as the World Economic Forum meeting may pause some of the rich migration to Singapore, but it is likely to be short-lived.
While cases have jumped to a few dozen a day, it is a far cry from the several hundred daily infections in New York City alone. Singapore is also charging ahead with vaccines: It has given enough jabs for 30 per cent of the population, almost twice the rate in China and even further ahead of neighbouring Malaysia and Indonesia.
It is a delicate balance for Singapore, which relies more on trade and open borders than just about any other Asian nation. Locking down and restricting travel for too long would make it unattractive to global investment and talent, while failing to control the virus risks a political backlash and its reputation as a safe regional hub.
"Our recent spike of (Covid-19 cases) is very unfortunate, but we will eventually go through this phase again," Mr Repkow said. "Singapore is resilient and able to manage crisis in a very pro-active and efficient manner."
Seletar Airport, the hub for private jets, has seen demand for hangar space soar during the pandemic, said Alan Chan, head of business development at the 67 Pall Mall wine club, who until November was an executive at Go-Jets.
One private jet pilot who declined to be identified said it is still extremely difficult to snare a spot. While the recent strict travel rules have extended to people with their own aircraft, he added that most expect them to ease in line with commercial flights after a few weeks.
Singapore does not divulge many details on its super-rich migrant residents, but private bankers, multi-family offices and other service providers say the new arrivals are helping their businesses in a city famous as the setting for the Crazy Rich Asians film.
One top banker who declined to be identified said Chinese clients ranked first among new account openings, followed by those from India and Indonesia. Another said that client meetings - once a tortuous process of flying to Jakarta and fighting traffic - had become much easier because many of his Indonesian customers were staying in the same luxury condominium in Singapore.
Harish Bahl, founder of Smile Group, a family office that focuses on tech investment, said he has never met this many super rich in the city. He has been working in the tech space for more than two decades.
"Since the pandemic, billionaires from all over the world have been staying on longer in Singapore, including those from China, Indonesia, India and the US," he said, citing incentives for setting up family offices.
One Indonesian businessman who continues to live and work in his home country said his parents have spent more than a year sheltering from Covid-19 in the city-state. While they previously knew about five other Indonesian families living in Singapore before the pandemic, the number has since mushroomed to about 25.
Some of the elders spend their days in leisure, meeting friends and exploring the city. The more restless have kept active by running their businesses remotely, and many have established family offices - in part to ease the process for gaining residency, he said.
Singapore makes it relatively easy for the super rich to settle. Through its Global Investors Programme, it grants a fast-track to permanent residency to qualified business owners or families if they invest S$2.5 million in a local business, certain funds or a family office with at least S$200 million in assets. "This has enabled us to strengthen the quality of investors we attract, and is in line with our efforts to strengthen Singapore's status as a key Asian node for high-growth tech companies and investment activities, grow existing and new industries, and create jobs for Singaporeans," Matthew Lee, senior vice-president of Singapore's Economic Development Board, wrote in an e-mail.
Perks related to permanent residency include ease of travel, long-term stay permits for parents, cheaper, easier business loans, reduced stamp duties on real estate and a path to full citizenship.
The government also introduced a new investment vehicle last year, known as the Variable Capital Company (VCC), making it more attractive for family offices, hedge funds and private equity firms to set up shop. Over 260 VCCs have been established since then, said the Monetary Authority of Singapore.
All this has increased demand for high-end luxury products and services. Odette - a Michelin three-star restaurant considered one of Asia's best, where a tasting menu for two with wine and cheese can top S$1,000 - was booked solid for months until dining in was paused. "We have a lot of Indonesians, for example, over the past few months trying to come in every two to three weeks," said general manager and operations director Steven Mason, speaking before the fresh curbs limited business to takeout only.
Wealthy locals who are unable to travel are also contributing to the spending spree. "Eating is the new travel - I think that's why restaurants are doing so well," said Odette's Mr Mason.
On the 27th floor of the Shaw Centre near the Orchard Road shopping strip, construction is almost under way at 67 Pall Mall, the first international outpost of its London namesake. Despite having little more than an empty shell to show potential clients, the wine club is on track to open by November with 3,500 clients. A life membership goes for S$200,000.
"Singapore during the virus is a great place to be" compared to other cities, said chief operations officer Niels Sherry. "Not many clubs open with a sold-out member base."
The wealth effect is also pushing up prices at golf clubs. The cost to join the Sentosa Golf Club has soared to S$500,000 for foreigners, up 40 per cent from pre-pandemic levels. Some of these golfers have permanent residency, while others are recent arrivals who see it as a good investment, said broker Lee Lee Langdale.
Once tycoons land in Singapore for an extended stay, they need a car. Sales of premium vehicles to foreigners since mid-2020 have jumped about 50-60 per cent compared with a year earlier, said Vincent Tan, founder of luxury car dealer Vincar.
"The majority are Chinese" and most pay in cash, he said. "The Rolls Royces, Bentleys, Porches and high-end Mercedes are the models that move quite well."
Statistics released by the Land Transport Authority show that the number of Bentleys and Rolls Royces on Singapore's roads leaped to more than 1,300 in 2020, the biggest jump since 2013.
That trend is continuing, with another 70 of these cars registered in the first four months of 2021, in a nation of just 5.7 million people.
Global banks are gearing up to serve the super rich. JPMorgan Chase & Co plans to double the number of private bankers in the city over the next two years, while HSBC Holdings is offering ultra-rich clients in Hong Kong and Singapore direct access to its investment bankers.
UBS' Asia Pacific president Edmund Koh told The Business Times that Singapore was attracting as much of the new assets in the region as Hong Kong. That compares with a 75-25 per cent split in Hong Kong's favour five years ago, said Mr Koh, who recently opened a new Singapore office for 3,000 staff.
Brendan Carney, chief executive officer (CEO) of Citibank Singapore, said the city's fundamental attractiveness remains strong despite the latest virus clampdown.
"We are confident that long-term industry prospects will not be dampened by the recent Covid restrictions," he said. The New York-based bank plans to hire more than 330 relationship managers for its wealth business by 2025.
The influx of foreigners is helping to fuel the property market, with the strongest growth in the luxury sector. It has also made Singapore an outlier in the rental market, with rates rising even as they fall in New York, Hong Kong and London.
All this visible display of wealth can cause resentment, said Toby Carroll, who lectures on political economy at the City University of Hong Kong and previously worked at the National University of Singapore.
"The negative impact for the majority of people facing increased costs of living - including of housing - declining social mobility and rising inequality bodes poorly for social cohesion," he said in an e-mail. "The link between rising inequality and social instability is very real."
In the meantime, Singapore's merchants, like car dealer Mr Oh, are making hay.
"Post-Covid, we'll probably emerge stronger and this will be a better place to stay so a lot of new citizens may call Singapore home," he said.
Lianhe Zaobao, 30 May 2021, Sun 5:00AM
Read more at: https://www.zaobao.com.sg/finance/singapore/story20210530-1150365