ST : HUDC privatisation not a done deal

Oct 9, 2010

HUDC privatisation not a done deal

Hougang Ave 7 on track, but residents at two other estates still holding out

By Cheryl Ong

THE privatisation of three Housing and Urban Development Company (HUDC) estates in Hougang and Potong Pasir is not looking to be an open-and-shut case, despite a recent report that an HUDC flat set to be privatised by the year end was sold for $1.1 million.

Only a cluster of 286 units at Hougang Avenue 7 is at an advanced stage, with the pro tem committee overseeing the process garnering 88 per cent approval from residents. Residents at the other two HUDC estates are more tentative.

At Hougang Avenue 2, a pro tem committee has been formed, but only 70 per cent of residents are in favour of privatising - below the 75 per cent needed.

At Potong Pasir, such a committee has not even been formed, as residents continue to weigh the pros and cons.

In July, the Ministry of National Development announced that 797 HUDC apartments and maisonettes in Hougang avenues 2 and 7 and Potong Pasir were slated for privatisation.

For an HUDC estate to be privatised, 75 per cent of residents need to support the proposal. Consent must also be obtained from the Housing Board.

If the vote goes through before Aug 1, 2013, the Government will cap the cost of privatising the homes at $30,000 per unit.

The Government started building HUDC flats from the 1970s to satisfy the needs of middle-income earners who could neither afford private properties nor qualify for HDB flats.

Although having 99-year leases like HDB flats, HUDC flats typically had larger built-in areas. Some were gated stand-alone estates that accorded residents extra privacy and exclusivity.

The HUDC programme was stopped in 1987, and in 1995, the Government announced that HUDC estates would gradually be allowed to go private.

The key benefits of privatising these estates are that home owners will be able to manage their estates and build facilities typically found in condominiums, like swimming pools or fitness corners. Property value usually increases as well because of fewer restrictions on locals or foreigners buying private apartments.

But some residents interviewed by The Straits Times said they were not sure if further price rises would materialise. As a result, some are unsure if it would really be worth their while paying the privatisation cost.

One resident, Mr Jason Tan, 50, said: 'I bought my resale flat 19 years ago at $212,000, but it's worth some $700,000 now. The value of HDB flats today is already at an all-time high, and I don't think it's possible it will rise by much after we privatise.'

Industry observers believe the $1.1 million sale at Shunfu, an HUDC estate in the process of being privatised, is a one-off that is unlikely to be repeated.

'Shunfu is quite a unique case because of its proximity to the Circle Line,' said Mr Colin Tan, Chesterton Suntec International's research and consultancy director. 'Although it's not impossible for the HUDC flats to fetch high prices, considering they are now worth $700,000, it's quite a tall order to hope they can close the gap and fetch a million too.'

Other residents said they feared that privatisation could kick off a chain of events that could force them to move.

'If my home is privatised, there's a chance of a collective sale after that. But I don't want to move out,' said Mrs Tang, 50, a Hougang resident. 'I don't think I can find an HDB flat as big as my home, and it will mean I have to downgrade.'

Hougang resident Vinod Thigarajah, 29, worries that there will be fewer parking spaces. 'Right now, we share the parking spaces with the HDB estate next door, but if we become privatised, there may be insufficient parking spaces.'

But Potong Pasir resident Ruth Yap, 72, felt privatisation could improve the estate. 'It could mean more amenities for us,' she said. 'But I don't think we have room for other things like swimming pools or gyms.'

National University of Singapore real estate department head Yu Shi-Ming said the trade-offs will make it a difficult decision for residents to make.

'With privatisation, owners have to decide if the additional cost is worth the premium as a private apartment.'

Hougang Avenue 7's pro tem committee chairman Winston Chong said he hopes residents will take a long-term perspective and vote to support the process.

'However, we don't want the residents to feel as if their voices are not heard. We will go with whatever the majority want.'

ongyiern@sph.com.sg