Developer MCL Land has written down a US$1.4 million for the first quarter previously as foreign buyer Concordia Overseas Pte Ltd has not made the necessary payment for its 20 purchased units at The Fernhill.
The Fernhill (District 10) is a 25 unit freehold boutique condominium off Stevens Road. Concordia has bought all 25 units under Deferred Payment Scheme (DPS) in January 2007 from MCL Land at $1,410psf and resold 5 units within a year profiting close to $700psf.
Concordia has failed to pay up when The Fernhill has completed, forcing MCL Land to servce a 21 days notice to them to rescind the sales and purchase agreement.
According to Concordia’s lawyer, 19 out of 20 units that remains in their portfolio was sold and will be completed before the 21 days period, allowing MCL Land to register its profit on Q2 results this year.There’s a remaining balance of one final unit which was not made known in the news on its status. As far as it comes to this stage, should Concordia not be able to complete the sale of the unit, MCL Land could it take back and pocket the 20% that Concordia has already paid for to remarket it.
It won’t be a profitable move if a buyer actually walks out at this point had the developers sold the units at the peak of the market.
Will the DPS Frenzy Start?
We’ve already seen Capitaland taking charge by rescinding some contracts to remarket some of The Rivergate condominium units to avoid crashing the market price in its project. There will be more of such units floating into the market as more projects are completing soon. (Many, among hiding are Tierra Vue which is coming this July, One Amber and Grand Duchess at St Patrick’s by the end of the year, and a whole lot more)
Will the developer take action against DPS default buyers? We really don’t know, but there’s only 2 outcome:
- The developer rescinds the Sales and Purchase agreement of the buyer, takes back the unit, forfeits the 20% already being paid and re-markets the unit without taking action against buyer.
- The developer rescinds the Sales and Purchase agreement of the buyer, takes back the unit, forfeits the 20% already being paid and sues the buyer for the difference. That’s the worse case scenario.
Market watchers are watching closely on The Fernhill development to look at the trend on how the developers react to DPS defaulters. We’ll see.