Channelnewsasia.com | Posted: 27 March 2013 1807 hrs
SINGAPORE: Owners and tenants at Pearls Centre will get a compensation package of some S$450 million to relocate.
The compensation package works out to about S$1,400 per square foot on average.
Authorities are taking possession of the centre to make way for the Thomson MRT line.
Owners and tenants of all 243 units in Pearls Centre, which is situated along Eu Tong Sen Street, have to move out by August 2014.
The compensation is based on the market value of each property as assessed by private valuers appointed by the Singapore Land Authority.
It also includes reasonable expenses like the relocation costs, stamp duty and legal fees for the purchase of a comparable replacement property.
On top of that, there is an ex-gratia payment meant to mitigate the financial impact of the move.
Senior Minister of State for Law and Member of Parliament for Tanjong Pagar GRC, Indranee Rajah, said this is to mitigate the financial impact of the move.
"The ex-gratia payment is put in there to allow for some flexibility. Because when you have the market value, the residents or the owners may have concerns about their own expenses, they feel they need a little bit more.
"It also takes into account that at the time the acquisition is made, and the time when the award is made, there may be a little bit of movement in the market, and we try to ameliorate that as far as possible."
Authorities said the compensation does not take into account speculative factors, such as the possibility of an en bloc sale.
Pearls Centre was in the very early stages of discussing such a collective sale in August 2012 when the acquisition was announced.
Ms Indranee weighed in on the compensation.
"At that point of time, there was no actual en bloc offer made, no deal sealed and the remaining term of the lease was 55 years. And you wouldn't have a willing buyer who would pay an en bloc price. You can't do it on the basis of speculative assumptions, and also because compensation is paid out of public funds, so you've got to make sure you have recognisable, defensible principles in your compensation."
Property owners told MediaCorp the compensation is between five and 15 per cent lower than their own valuations.
Lo Hock Ling, who owns 20 units in the centre, said: "On the whole, I would say it's quite reasonable. But of course, the compensation plus the ex-gratia still may not enable us to buy a replacement property, because of the increase in property prices in recent months."
John Tai, who owns two units, said: "To find a replacement property is not easy. Even if the government compensates the price for this building, we can't use the money to buy another shop like this."
Authorities said the total compensation met or exceeded the majority of claims.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)