SINGAPORE (EDGEPROP) - With close to 1,900 units, the new development on the former Normanton Park en bloc site was going to be one of the biggest residential projects to be launched in 2019. It would be second only to the 2,203-unit Treasure at Tampines – the biggest private condo in Singapore to date – which was launched last month.
However, the new launch at Normanton Park is likely to be delayed. In January 2019, the Controller of Housing (COH) slapped the developer Kingsford Huray Development with a no-sale licence “as the company had failed to meet the requirements for a sale licence”, says an Urban Redevelopment Authority (URA) spokesperson in an email response to queries from EdgeProp Singapore.
“In assessing any application for a Housing Developer’s Licence, the Controller of Housing (COH) will consider various factors, including the developer’s track record,” said the URA spokesperson. “Where necessary, the COH may issue a licence with conditions to ensure that the interests of home buyers are duly protected.”
The former Normanton Park site, where developer Kingsford Huray Development was issued a no-sale licence by the Comptroller of Housing (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Developers issued with a no-sale licence can only commence construction but are not allowed to sell any units before Temporary Occupation Permit (TOP) is obtained.
A “sale licence”, on the other hand, allows the developer to sell units in a development once Building Plan Approval is given, says URA on its website.
The former Normanton Park has been approved for the development of 1,863 apartments, 19 strata landed houses and eight commercial units on the site. However, COH stipulated several conditions that Kingsford Huray has to fulfil under the no-sale licence: strict compliance with the Housing Developers (Control & Licensing) Act and the Housing Developers Rules; the developer is not allowed to sell any units in the development without COH’s “prior approval in writing”; and Kingsford Huray has to obtain Quality Mark certificates for all units in the Normanton Park housing development. The certificates have to be obtained before an application to COH to sell the units can be made.
Kingsford Huray also has to inform COH, in writing, of any changes to persons holding responsible positions in the company; or changes in particulars relating to the developer or the building project, within 14 days of the effective date of change.
The no-sale licence “shall continue in force until the housing developer is notified in writing by the Controller that a licence under the Act is no longer required for the housing project or unless otherwise earlier revoked under the Act”, according to COH in the notice to Kingsford Huray, dated Jan 15, 2019.
COH’s requirement for a developer to obtain Quality Mark certification for a project to be licensed is to assure homebuyers that “their housing units are constructed and finished to a reasonable standard of quality”, says the URA spokesperson. The COH’s no-sale licence is to ensure that the developer is able to meet requirements such as “track record of completing a project satisfactorily”, adds URA. “A no-sale licence allows the developer to commence construction for the housing project but prohibits the sale of units off-plan without approval from the COH.”
Previous projects by the developer had been taken into consideration. According to URA, the Building and Construction Authority (BCA) had found that some building works such as windows, barriers and common storey shelter had deviated from requirements under the Building Control Act and Regulations for its Kingsford Waterbay project in Upper Serangoon View. Feedback received from buyers of Kingsford Hillview Peak, another project by the developer, was also taken into consideration.
Kingsford Huray Development’s holding company, the privately-held Kingsford Development, was founded by Chinese entrepreneur Cui Zhengfeng, board chairman of the firm. Originally from Shenyang, Cui had been a civil servant before he became a manufacturer and then a property developer. His property development company in Shenyang, also named Kingsford Development, is managed by his daughter. Meanwhile, Cui is based in Singapore, where he became a citizen in 2014.
Kingsford Development created a stir when Cui submitted the highest of six bids for a residential development site at Hillview Rise in a government land sale (GLS) in 2012. Little-known then, Kingsford Development paid $243.2 million ($638 psf per plot ratio) for the land that has since been developed into the 512-unit Kingsford Hillview Peak. That marked the developer’s maiden project in Singapore, which was completed in 2016.
Cui’s Kingsford Development followed this up by topping seven other developers to win two adjacent 99-year leasehold residential sites at Upper Serangoon View at another GLS in 2013. He paid a total of $460.4 million ($522 psf ppr) for both sites, which were amalgamated and developed into Kingsford Waterbay. The project with 1,157 apartments, six strata terraced houses and two strata semi-detached houses fronting Sungei Serangoon obtained Temporary Occupation Permit (TOP) at the end of November 2018.
In yet another eyebrow-raising deal, Kingsford Huray emerged the buyer of the former Normanton Park with a bid of $830.1 million in October 2017. It was Kingsford Huray’s first en bloc purchase and is considered one of the biggest in Singapore to date.
The 488-unit Normanton Park is located just off the Ayer Rajah Expressway and near Science Park as well as the Southern Ridges. On top of the $830.1 million price tag, an estimated $231.1 million has to be paid to top-up the lease to a fresh 99 years. A differential premium of $283.4 million to redevelop the 660,999 sq ft site with a plot ratio of 2.1 was also payable, according to Knight Frank, the marketing agent for Normanton Park, in a press release announcing the en bloc purchase in October 2017.
Normanton Park, when it was first put up for en bloc sale in 2015 (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Based on the gross floor area of 1.39 million sq ft, the land rate for Normanton Park therefore works out to $969 psf ppr. With the inclusion of a 10% bonus balcony and a proposed plot ratio of 2.31, the land price works out to about $923 psf ppr, estimates Knight Frank.
With the no-sale licence, the developer is more likely to be hit by the ABSD clawback at the rate of 15% (the prevailing rate then), as developers have to develop and sell all their residential units within a five-year period in order to comply with their undertaking for ABSD remission, says Lee Liat Yeang, senior partner at Dentons Rodyk Real Estate practice group. Upon clawback of the ABSD, there’s also a 5% interest payment chargeable by Inland Revenue Authority of Singapore (IRAS) on the ABSD amount, from the 15th day after the date of the en bloc sale and purchase agreement until the date of payment.
“This sounds harsh indeed,” acknowledges Lee. “It’s certainly challenging being a developer now.”
Had the en bloc purchase been completed after the new property cooling measures were introduced on July 6, 2018, the ABSD would have been more punitive – at 25% with a 5% ABSD payable upfront, notes Norman Ho, deputy head of corporate real estate, Rajah & Tann Singapore.
The sale and no-sale licence regime has been in place since January 1985 when the Housing Developers (Control & Licensing) Act and Housing Developers’ Rules were first introduced. “Often, a no-sale licence is issued if a developer is new, with no track record or had breached the terms of its previous sale licence, for instance, selling units before getting final approval from COH,” observes Ho.
Kingsford Huray isn’t the first to be asked to stop the sale of units. In December 2012, Chinese developer Hao Yuan Investments was told to halt the sale of units at its 653-unit Forestville executive condo (EC) in Woodlands. This was after 1,201 applicants had balloted for units on the first day of sales. However, the developer had to close its showflat and was not allowed to issue any options to purchase.
This was because Hao Yuan had proceeded to launch the project even though changes to its development plans had not been approved by COH. The developer was only allowed to re-open its showflat and commence sales six months later in June 2013. This was after COH was “satisfied” that necessary approvals for the project’s development plans were given, and that the plans in the sales brochures were in accordance with the approved plans.
At Normanton Park, a check by EdgeProp Singapore shows only a few of the original 13 blocks remain standing as at April 12. The others have been demolished to make way for construction.
The real estate agencies are aware that the launch of Normanton Park is pending COH approval. But judging from the online advertisements posted by property agents, many could still be unaware of the no-sale licence and its implications.
“The URA had referred cases relating to the Normanton Park to us,” according to a spokesperson with the Council for Estate Agencies (CEA), the regulatory body for the real estate agency industry. “Investigations are ongoing and CEA will not hesitate to take action against property agencies or agents who do not comply with our regulations.”
CEA had issued a practice circular in June 2013, regarding advertising of development projects where approval for sale has not been granted by the relevant authorities yet. “Property agencies and agents should not advertise development projects that imply or mislead the public that the projects have been approved for sale when approval has yet to be granted by the relevant authorities,” said CEA. “Agencies and agents should not use words such as ‘new launch’, ‘register for VVIP preview’, and other words with similar meaning in these advertisements as such wording may mislead consumers.”
According to CEA, property agents and consumers can go to URA’s website to check if a residential development has been approved for sale.
Meanwhile, Kingsford Huray’s Cui could not be reached for comment despite repeated attempts to contact him. The registered address of the company is Cui’s bungalow at Sentosa Cove, a posh waterfront residential neighbourhood on Sentosa Island. It is the bungalow that Cui had paid $33 million for in late 2013 and at 18,794 sq ft, is one of the biggest land plots in Sentosa Cove. The house comes with six bedrooms, a private pool and a direct view of the waterway. From the roof terrace, it commands a 270-degree view of the sea and the Southern Islands. For Cui, his luxury waterfront residence is also his place of business.