Chuan Park En Bloc Sale High Court Result 2023 - Sale Order Granted!

Chuan Park En Bloc Sale High Court Result 2023 – Sale Order Granted!

Chuan Park Owners Will Be Rejoiced with the Latest News: Their En Bloc Sale Process Now Moves To The Next Stage

Development Baseline and Plot Ratio Were Some of the Issues Brought Up During the High Court Sessions

On Friday, May 26, the High Court issued a sale order for Chuan Park’s S$890 million collective sale, with the court stating that there is no proof that the transaction was not reached in good faith by the CSC.

According to Justice Kwek Mean Luck, the six minority owners who had presented reasons for complaint to the High Court had failed to provide justification for why Chuan Park’s gross floor area (GFA) should be more than the plot ratio of 2.1.

Some Chuan Park owners complained to the Strata Titles Board (STB) in August and September 2022, claiming that the condominium’s CSC and marketing agency, ERA Realty, had omitted to disclose crucial information about a higher development baseline for the development.

When the 99-year leasehold condo was sold by private treaty for S$890 million on July 5, 2022, to purchasers connected to developers Kingsford Group and MCC Singapore, the minority owners claimed this resulted in a “deep discount” for the buyers.

The sales price was S$5.1 million (5.1%) less than the reserve price.

Nevertheless, they assert that this information was utilized when marketing the location to prospective buyers because the buyer had specified in its offer to purchase that the agreement was contingent upon obtaining outline planning permission for developing the land “with a minimum gross floor area of 89,824 sq m for development baseline as reflected in the reply dated August 30, 2017, from the Urban Redevelopment Authority (URA)”.

After three rounds of mediation between the different parties in December of last year, STB issued a stop order for the collective sale of Chuan Park.

The sales price was determined using GB Global’s Yick E-Ling’s valuation report, which was based on a GFA of 78,152.76 square meters (sq m) and a plot ratio of 2.1. The dissident owners, for their part, turned to OrangeTee valuer Stella Seow.

The minority owners previously revealed to the media that a letter from URA in August 2017 indicated that a development fee for the property would apply for development exceeding the maximum gross floor area of 89,824 square meters. According to this, the plot ratio would be 2.4.

The minority owners had previously said that a higher baseline ratio—as opposed to Chuan Park’s gross plot ratio of 2.1, which was utilized in the assessment—would imply the buyer could create an extra 11,671 sq m of built-up space. The property may have been sold for a higher price as a consequence.

When deciding whether to approve the sale for S$890 million, the owners of Chuan Park “would have been material,” they said.

There is No Evidence That URA Approved the Higher Development Baseline For The Chuan Park Site

On Friday, Justice Kwek issued a written decision in which he stated: “However, it is clear from the URA Letter 2017 and URA-ERA e-mails in 2021 that it was incorrect for Ms. Seow to assume and apply a GFA of 89,824 sq m based on a 2.41 GPR to come to her valuation.”

The 89,824 sq m number was stated in the URA letter to be used in calculating a development fee and not to represent the site’s authorized development potential.

Additionally, it was made clear in the email from URA to ERA that the development baseline “had no bearing on the permissible development intensity”.

Therefore, according to Justice Kwek, the value of the sale price should not be based on a “speculative” assessment of a property’s potential.

GFA Verification Issue

The S$890 million price was allegedly not determined in good faith, according to the minority owners, since the CSC did not confirm Chuan Park’s GFA.

They said that the committee had permitted ERA to omit the verification of the GFA of the development and the development baseline from the scope of its services.

Justice Kwek said that he found “no merit” in the defendants’ argument that the committee was “not conscientious or prudent” after noting that ERA had performed such checks as shown by email correspondence between the real estate firm and URA in 2021.

As a result, the claimants—three authorized committee representatives—will get payment for the court fees.

Get the Sale Order by July 5

The majority sellers must acquire the order for sale to proceed by July 5 in order to meet the contractual date; otherwise, the developers may back out of the deal, according to Mr. Norman Ho, senior partner, corporate real estate at Rajah & Tann.

Chuan Park sellers should be happy because the en bloc market will become more difficult as en bloc premiums (the difference between the en bloc sale price and the open market resale price) have decreased to as little as 30% while the cost of the replacement property has increased, according to Mr. Ho.

The gross proceeds for the 444 owners will range between S$1.16 million for a 710 sq ft unit and S$2.53 million for a 2,045 sq ft unit. The 474-square-feet commercial unit will receive S$1.09 million, while the 1,238-square-feet unit will receive S$2 million.