If a collective sale is not an option, are there alternatives for ageing 99-year leasehold buildings past their prime? Can the lease top-up scheme be considered for buildings with no redevelopment potential?

Award-winning landscape and architecture photographer Darren Soh spent a year taking pictures of the 50 buildings in JLL’s book entitled 50 Stories to commemorate Singapore’s Jubilee year. The 39-year-old’s concern is that buildings such as Golden Mile Complex, People’s Park Complex and Pearl Bank Apartment may one day disappear from Singapore’s skyline.

“There’s a large, vocal group of people who think these buildings should be demolished because they are not efficient, and that they are ugly,” says Soh. “As the buildings get older, there’s no guarantee that their 99-year leases will be reset. Collective sales don’t help. If these buildings are demolished, we won’t have any more buildings from the 1970s era.”

That is one of the challenges Singapore faces today, acknowledges Chris Fossick, JLL’s managing director for Singapore and Southeast Asia. While conservation is important, there are many economic drivers for knocking down these old buildings and putting up new, more appropriate ones. “However, that will mean a city with no history and no heritage,” he adds. “There has to be a balance between conservation and economic progress. The selection of buildings to be conserved has to reflect a moment in time, an architectural style that looks good and is meaningful.”

The 38-storey Pearl Bank Apartment was the first high-rise apartment block in Singapore when it was completed in 1976. It was the tallest tower then and its horseshoe shape made it a landmark in the Outram area. After three failed collective sale attempts in 2007, 2008 and 2011, however, the management council at Pearl Bank Apartment applied to URA for conservation status in May. The building’s management council has also requested for the building’s gross floor area (GFA) to be maximised at 593,118 sq ft, or a plot ratio of 7.2. If approved, this will allow the five-storey car-park building to be redeveloped into a 27-storey residential block of about 161,460 sq ft. The management council has also applied to the Singapore Land Authority (SLA) to have its 99-year lease extended.

The management council of Pearl Bank, Singapore's first high-rise private apartment tower, has applied for conservation status for the building

Is voluntary conservation the answer?
As it is a voluntary conservation, all the owners of Pearl Bank Apartment will have to agree to it, says a URA spokeswoman. And it is only when all the owners agree for the building to be conserved that URA will approve the additional GFA, and SLA consider a fresh 99-year lease for the building.

Will the voluntary conservation of Pearl Bank Apartment cause other ageing 99-year leasehold condominium projects to follow suit? “There’s a grey area here,” says JLL’s Fossick. The Arcadia is an example of a private condominium project that considered topping up its 99-year lease without going through a collective sale. The 164-unit private condo was completed in 1983 with a 99-year lease with effect from 1979.

In 2011, the management committee for The Arcadia had applied for the private condo’s lease to be topped up after receiving full consensus from all owners. However, the application was rejected. “The government will allow lease extensions, if it results, for example, in land-use intensification and mitigation of property decay,” SLA had responded at the time.

Whether all the owners of The Arcadia will now consider a voluntary conservation is another matter. “For some individual owners, it could mean a potential loss, as there will be no option for a collective sale in the future if the property is conserved,” says Fossick. “So, it is a tough decision.”

Most owners of commercial buildings are reluctant to have their properties gazetted for conservation, as they would no longer have redevelopment potential, thus affecting the value of the property. “In places such as the UK with a more fluid planning system, owners or developers whose buildings are listed as a heritage building will be able to transfer the unused plot ratio elsewhere,” says Fossick. “The individual building owner will therefore not suffer commercially, and society will gain another conserved building.”

Tiong Bahru has no immunity to ageing, depleting lease
Twelve years ago, URA gazetted 20 blocks of pre-war flats and 36 shophouses in Tiong Bahru for conservation. These pre-war flats were among the first public housing flats developed by the Singapore Improvement Trust (SIT), which was a government organisation set up during the British colonial era in 1927 and the predecessor of today’s HDB. These units in Tiong Bahru were sold to the residents in 1965 to 1967 under the Singapore government’s pilot home ownership scheme.

Twelve years ago, URA gazetted 20 blocks of pre-war flats and 36 shophouses in Tiong Bahru for conservation

There are also post-war flats (built from 1948 to 1951) in blocks 17 to 50 that were also built by SIT. These flats have been under the management of HDB since 1973. As the govern ment has no plans to redevelop the area, “it is thus not critical to make a decision on whether to conserve them at this stage”, according to URA.

There is a difference, however, in the unit types within the conserved and non-conserved blocks in Tiong Bahru, says Alvin Yeo, a realtor who specialises in the sale and leasing of units in the neighbourhood and who also lives there. Public housing units in the conserved blocks typically measure 900 to 1,000 sq ft, but there are larger corner units on the ground floor measuring 1,600 to 1,700 sq ft. Yeo even brokered the sale of a 1,600 sq ft recently for $1.7 million. There was a recent transaction at $900 psf, which he considers “an anomaly”, as most of the units have been sold in the $1,000- to-$1,100 psf range over the last few months.

Prices of flats in the conserved blocks are almost on a par with private freehold apartments in Tiong Bahru, such as the 10-year-old Eng Hoon Mansions on Eng Hoon Street, where a 1,334 sq ft unit changed hands in June for $1.22 million ($914 psf). This is because there are no restrictions when it comes to buying or renting those units, explains Yeo. Foreigners are eligible to purchase, and investors can also buy the units and lease them out for rental income. The units in these blocks have been increasingly sought after and prices have spiked since they were gazetted for conservation in 2003.

The flats in the non-conserved post-war era located in blocks Nos 17 to 50, which are still controlled by HDB, are still governed by HDB rules, says Yeo. For instance, buyers have to be Singapore citizens and form a family nucleus, and there is a minimum occupation period of five years, like most housing units purchased from HDB. Most of the units in these blocks are also three-room flats and the buyers are predominantly owner-occupiers, he adds. Owing to the restrictions, the average prices of these units are $650 to $700 psf, or about 30% below those in the conserved quarter, estimates Yeo. In terms of absolute prices, the units are still selling at $620,000 to $700,000 today.

The flats at Tiong Bahru face the same issue as all other ageing 99-year leasehold private and public housing, though: a depleting lease. Many of the flats in Tiong Bahru have tenors starting from 1965 to 1967, which means they have about 50 years left on their lease. Typically, local banks are willing to finance old properties as long as the remaining lease at the end of the loan tenor is more than 30 years, says Eugene Huang, director of Red Brick Mortgage Advisory. The banks will be willing to provide a mortgage as long as owners can use their Central Provident Fund to purchase units.

While conservation status means the original architecture of the buildings will be preserved, the units and the buildings will still return to the state at the end of the 99-year lease, says Chua Yang Liang, head of research for Southeast Asia at JLL. “At present, lease top-ups are allowed only on a case-by-case basis for redevelopment projects. Should we extend the lease top-up scheme to sites without redevelopment plans to arrest urban decay and advance conservation efforts all at once?”

There is still a lot of interest in Tiong Bahru flats, notes Yeo. “There are still many requests for viewings, but potential buyers are slower to commit, with the property cooling measures still in place.” Still, prices in Tiong Bahru have continued to hold up, as it has become a desirable enclave to live in, with traditional trades replaced by cafés and lifestyle shops.

Some of the residents are also hoping that Tiong Bahru will be designated the next Unesco World Heritage Site in Singapore, after the Botanic Gardens, says JLL’s Chua.

Challenges of conservation
Conservation has its challenges, admits Tan Tiong Cheng, executive chairman of Knight Frank. “You can leave it to the individual building owners, but different people have different ideas, so it’s always better for a whole precinct to be conserved by the government so they can develop a master plan for it.” At the end of the 99-year lease, the government could take back the properties in Tiong Bahru and turn it into something completely different with a new master plan, he reckons.

“In land-scarce Singapore, lease extensions can be considered on a case-by-case basis if the proposed use and tenure are aligned with the government’s planning intention and have the support of the relevant agencies,” says an SLA spokeswoman in response to queries.

Recent examples include the conserved shophouses at Beach Road, which were granted fresh 99-year leases in June 2014 when their original 99-year leases expired. City Gate (formerly Keypoint, a commercial building), which was granted a fresh 99-year lease in April 2014, and will be redeveloped into a mixed-use development with 60% residential (311 units) and 40% commercial (188 units). City Gate is a joint venture between Fragrance Group and World Class Land. It is clear, however, that the government has been making an effort to conserve and preserve Singapore’s heritage. In 1989, there were 10 conservation areas, including Chinatown, Little India and the Singapore River, with a total of 3,200 buildings, according to JLL Research. By 2014, the number of conserved areas had jumped to 100, comprising more than 7,000 buildings, 69 monuments and 99 historic sites under the Reservation Monuments Act, cites JLL.

Photographer Soh agrees. “We have come a long way in the last 20 to 25 years, especially with conservation,” he remarks. “And some people will say we have started too late because we have already lost many of the buildings.”

This article appeared in the City & Country of Issue 690 (Aug 17) of The Edge Singapore.