In future, it can just be ‘redeveloping’ instead of only building new

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I have stayed in high-rise units ever since I bought my first high-rise unit way back in 2002. It’s not going to change soon. I would like to stay I like the facilities, the security and the lifestyle that comes with it but perhaps it’s also because I could not really afford an awesome landed home which is also gated and guarded, comes with a proper clubhouse and one which is a semi-detached corner unit. 🙂  Assuming I have stayed in the same high-rise for 50 years and it’s now in need of a total makeover. I do not have much choices today because even the banks may not want to lend to the next buyer who wants to buy my place. In comes a ‘white knight.’ A developer which is able offer everyone a new unit in a redevelopment of my 50-year old high-rise development. On top of the new unit, we may get some cash too. The new unit would be similar sized but when completed, we will own totally new units and totally new facilities, maybe even more facilities than today! Would I take it? Of course I would. However, the legal aspects would need some tweaking so that this developer is not stopped simply because a few people in the whole development does NOT want to accept such a deal.

In Singapore, there’s a similar concept called The Selective En bloc Redevelopment Scheme (SERS). Read about it here. In brief, old units are redeveloped by the authority and owners of these old units would be offered compensations as well as a choice to own a new unit in some designated sites. Singapore is not that big and it’s very well connected. So, this scheme is loved by many as per the surveys done. In fact, this is so popular that its National Development Minister Lawrence Wong had to warn buyers NOT to buy old flats in anticipation of SERS. He said, “just 4 per cent of HDB flats have been identified to undergo SERS since it was launched in 1995.” The issue with older flats is that it may be close to the expiry of its lease. Once the lease expires, the flats would be returned to the HDB and HDB would return them to the government. The buyers gets nothing in this scenario. Anyway, the lease is 99 years and there are NO flats which are nearing the expiry yet. Thus far however, the SERS has usually been applied to flats older than 30 years.

What do you think? There are locations within the city centre that has old flats. Should these be redeveloped so that more supply of homes could be made available within the city centre? I would think the number of units could easily be more than double due to the technology today. Build higher. Perhaps the number one thing is to have the legal side sorted out. Else, the potential returns may be lower than the work needed. If this is the case, then the only choice for developers would be to build ever smaller (just like in Hong Kong) to maintain affordability. Else, everyone better be prepared to stay further away because only land parcels further away are affordable. Remember, high land price is always accompanied with high selling price. Unless of course the developer is a not-for-profit organisation. Seriously, this is also another consideration beyond just the usual affordable initiatives such as PR1MA, RUMAWIP and Rumah Selangorku. Happy waiting.

written on 11 July 2017

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