HUDC and the story of housing windfalls

A chapter is coming to a close with last HUDC estate bound for privatisation
By Janice Heng, The Straits Times, 30 Jan 2014

FIRST built as affordable homes for the sandwiched middle class, they were a ticket to a windfall three decades later. With the last HUDC estate heading towards privatisation - Braddell View - that chapter in Singapore's housing story is drawing to a close.

It began with little fanfare in the Budget debate of 1974.

MPs wanted middle-income earners to be able to buy private property with Central Provident Fund savings.

Then Minister of State for Labour Sia Kah Hui turned them down, but signalled: the Government would be building, "in the very near future", flats for this exact middle-income group.

Three days later, then Minister for Law and National Development E.W. Barker gave details.

The aim: to provide homes for the sandwiched class of young professionals and executives, who earned too much for a Housing Board flat but too little to afford private housing.

This, as Housing and Urban Development Company manager Lim Poh Guan put it in a 1976 interview, was "so that they could have a stake in the country".

The five estates of the pioneer batch were an ambitious alternative to condominium living.

Some, such as Braddell View - which the Ministry of National Development on Tuesday announced has been designated for privatisation - and Farrer Court, were conceptualised as green, sprawling spaces. The 618 units in Farrer Court estate, for instance, had 838,488 sq ft of land to themselves - about 21/2 times the size of the Padang.

Others commanded views of parkland, such as Lakeview estate in Upper Thomson Road, or the sea, like Laguna Park and Amberville in the east. They featured landscaped grounds, playing fields and covered carparks. And the three-bedroom flats they contained, which came in two sizes, were larger than any before.

The smaller ones, at 139 sq m, are more than twice the size of a new three-room flat today.

And the larger ones, at 158 sq m or 1,700 sq ft, remain among the biggest public flats ever.

Who lived in them? Four in five buyers were aged below 35, said the HUDC in 1976. They were doctors, teachers and engineers; architects, accountants and assistant managers.

The smaller, cheaper units proved more popular with these young professionals. In 1977, balloting began for the second phase of HUDC estates, and a waiting list began to build.

Going upmarket

BUT in 1979, things took a sharp, upmarket turn. Phase II units in Chancery Court, Amberville and the second part of Braddell View cost up to 20 per cent more than their predecessors.

And the HUDC added that it was going to focus on higher-priced, better-quality units.

The reason? A new option had emerged for middle-income buyers: HDB executive apartments, which would also be cheaper.

For the same reason, smaller HUDC units would no longer be built. Phase II flats were an intermediate size, at 155 sq m.

And the HUDC introduced grander options, such as 178 sq m maisonettes in Chancery Court.

In 1980, the income ceiling for HUDC buyers was also raised, to a maximum combined family income of $6,000, up from $4,000.

Coming down to earth

TILL then, HUDC estates might have been seen as exclusive preserves of the middle class, ensconced in leafy surrounds.

But that was an image that then Prime Minister Lee Kuan Yew, for one, did not want.

In 1981, at a New Year party in his Tanjong Pagar ward, Mr Lee urged the middle-income to live and mix with their less well-to-do neighbours. He also exhorted them to take leadership in their communities, for instance in residents' committees.

Later, then National Development Minister Teh Cheang Wan followed up with the announcement that more HUDC flats would be built in HDB estates, for a balanced mix of residents.

"They will become an integral part of public housing," he said.

Phase III thus included HUDC flats in Bedok North, Hougang and Jurong East, alongside Gillman Heights and Pine Grove developments.

Yet even as the scheme aimed to put the middle-income in touch with the ground, it was losing steam. Private property prices were falling at the upper end; executive and resale HDB flats provided alternatives at the other.

In 1984, one in five of the 2,142 Phase III units on offer was rejected. Phase IV faced a similarly lukewarm response. In 1987, there were 704 HUDC flats completed but lying empty.

And so, that year, the HUDC scheme came to an end. It eventually had 18 estates and 7,731 units to its name.

Going private, going en bloc

BUT the story was far from over for existing HUDC estates.

In 1995, the HDB announced that it would start privatising them, letting home owners have control of their estate.

This was not entirely out of the blue. In 1982, the HDB took over the estates from the original HUDC, and faced complaints about bad service. It decided to let the Phase I and II estates run themselves - while still remaining public housing - from 1986.

In 1996, however, it was the Phase III estates which first took the leap. Between then and 2001, Gillman Heights, Pine Grove, Ivory Heights in Jurong East and Minton Rise in Hougang went private.

In 2002, they were joined by Waterfront View and the newer Tampines Court - as well as their predecessors. From 2002 to 2004, four of the first six HUDC estates privatised.

At first, residents focused more on upgrading plans and the higher prices which their units now commanded.

But privatisation opened the door to an enticing prospect: a collective sale of the entire estate to private developers.The greatest obstacle was securing the approval of 80 per cent of all residents.

But in 2005, amid a feverish property market, one estate after another started to gain this approval and go on the market.

And in January 2006, the first HUDC estate went en bloc: the 168-unit Amberville estate, which sold for $183 million.

This works out to $1.09 million per unit, which was said to be at least 85 per cent over the market value then - and also quite a windfall, considering that a three-bedroom flat there originally went for under $100,000.

The next year-and-a-half saw a flurry of en bloc deals for Waterfront View, Minton Rise and Gillman Heights. In June 2007, the 618-unit Farrer Court went for $1.34 billion, in the largest ever collective sale of a residential site.

But that was to be the last collective sale for years.

The rest of 2007 saw failed en bloc attempts by Pine Grove, Lakeview and Chancery Court.

In the years since then, some have tried again, while others have tried and failed. Meanwhile, latecomers were finally getting on the road to privatisation.

Eunosville went private in 2011, and Shunfu last year. Four more estates have garnered enough votes from residents to begin the legal process.

Now, the last remaining HUDC estate has started its journey.

On Tuesday, it was announced that Braddell View was designated for privatisation. Its management committee says it is close to securing the required mandate of 75 per cent from its residents.

"Symbolically, the designation marks the end of the HUDC era," said Minister for National Development Khaw Boon Wan.

But though the historical chapter may have closed, the story will keep unfolding.

For one thing, Braddell View's privatisation will take about another year and a half, and four other estates are still in the process.

For another, as long as the possibility to go en bloc remains open, some may chase it. Eunosville, for one, launched its second en bloc attempt just last month.

And any such pursuit could be a long and trying one.

The sprawling size of HUDC estates makes them intimidating to developers, says Century21 chief executive officer Ku Swee Yong.

And getting all residents on board in the first place can be a struggle. In 2008, for instance, Laguna Park saw tussles between residents who wanted a collective sale and those who did not. The cars and mailboxes of the unwilling were hit by vandals. "There's a strong sense of attachment among residents too, in most potential en blocs, and some may be above monetary reasons for relinquishing their homes," said R'ST Research director Ong Kah Seng.

As Braddell View resident and retiree K.C. Lam, 81, put it: "This is my home. Might as well own it."

Related

Helping to fulfil housing aspirations