May 5, 2009
Buyer resells 19 of 20 Fernhill units
Chinese firm receives 'pay up' notice from developer MCL Land after missing payments
By Fiona Chan
A CHINESE investor that failed to pay up for 20 of the apartments it bought at MCL Land's The Fernhill condominium has managed to resell 19 of those units.
Concordia Overseas, controlled by a Hong Kong resident named Chan Ki, was reported to have missed about $30 million in payments that were due when the project was completed recently, according to reports by the Business Times (BT).
Concordia had reportedly bought all 25 units in the freehold condominium, located off Stevens Road, in January 2007 at $1,410 per sq ft (psf). It then resold five units within the year, at an average price of almost $2,200 psf, according to BT.
The apartments were all bought under the deferred payment scheme, which allows a purchaser to pay an upfront deposit for the apartments - in this case 20 per cent - and then defer the rest of the payments until the units are completed.
But when the time came to pay in full for the remaining 20 units, Concordia failed to do so. MCL Land, a subsidiary of Hongkong Land, sent a payment notice last month but did not receive the money.
Under the sale and purchase agreement, MCL Land is now entitled to give 21 days' notice to Concordia to rescind the agreement. If Concordia does not make payment by the end of the 21 days, it will forfeit its 20 per cent deposit and MCL Land can take back the units and resell them.
In a filing to the Singapore Exchange yesterday, MCL Land said the 21-day notice period will start today.
It also said it has been informed by Concordia's lawyers that Concordia has successfully resold 19 units and will complete the sale this month, before the 21-day period expires.
If this happens, the units will not be forfeited and MCL Land will be able to recognise the revenue and profit from these units in its second-quarter results, the developer added.
MCL Land did not book the income from these 20 units when it released its first-quarter results last week. It included profit only from the five units that had been resold in 2007.
The Fernhill deal is being closely watched by the property industry as one of the first major examples of negative fallout from the deferred payment scheme, which was removed in October 2007.
Now that home values are falling, developers who sold projects at the peak of the market are on edge. If an apartment has lost more in value than the initial 20 per cent downpayment, the developer will find itself out of pocket if the buyer walks away from the agreement.