Cho Yaw's firms are top en bloc buyers

Published May 28, 2007

Cho Yaw's firms are top en bloc buyers

UOL, Kheng Leong, UIC, SingLand have spent $1.84b since 2005: study

By KALPANA RASHIWALA


(SINGAPORE) Companies controlled by Wee Cho Yaw have been the biggest buyers of collective sale sites since 2005.

The companies - UOL Group, Kheng Leong, United Industrial Corporation and Singapore Land - have bought a combined 2.3 million sq ft of land through collective sales for a total $1.84 billion between Jan 1, 2005 and May 15, 2007, according to a study by Jones Lang LaSalle.

And that did not even include UIC's $600 million acquisition of UIC Building on Shenton Way under a collective sale last month as JLL's study focused on collective sales of developments that involved a residential component.

In any case, market watchers note that UIC already owned 78.8 per cent of the building even before the en bloc sale was sealed.

Other big land buyers in the latest wave of en bloc sales include property magnate Ng Teng Fong's Far East Organization, which picked up around 1.7 million sq ft of land through en bloc sales for $1.25 billion, and Frasers Centrepoint, which clinched 1.2 million sq ft costing $845 million.

Hong Leong Group, including listed City Developments, snapped up around 1.13 million sq ft for $1.7 billion. GuocoLand was not far behind with 1.06 million sq ft land bought for $1.42 billion.

Jones Lang LaSalle's regional director and head of investments, Lui Seng Fatt, points out that these top five buyers - Wee Cho Yaw-controlled entities, Hong Leong Group, Far East, Frasers Centrepoint and GuocoLand - together bought 7.4 million sq ft or slightly over 50 per cent of the nearly 14 million sq ft of land that changed hands through collective sales during the period of study.

'This reflects the big players continue to be confident in the Singapore property market,' Mr Lui said.

Within Mr Wee's stable of companies, UOL was the biggest buyer, with 944,011 sq ft of land costing $819 million, followed by Kheng Leong, with 623,428 sq ft costing $368 million. UIC spent $238 million buying 445,363 sq ft of land through en bloc sales while the figures for SingLand were 281,756 sq ft and $419 million.

An industry observer noted that UOL was a significant residential property developer in the Singapore market back in the 1970s and 1980s although it missed out on the 1990s property bull run.

'This time round, it looks like they want to make sure they don't miss out,' he added.

What some analysts also noted is that with the exception of Nassim Park, the collective sale sites that the Wee-controlled companies are buying are mostly not in the super-luxury prime locations.

'UOL, for instance is buying mostly mid-upper type sites in central locations like Novena and Bukit Merah/Kim Tian that they are familiar with,' said a market watcher. 'That's probably where stable growth will be well supported from demand from en bloc sellers looking for replacement homes - rather than the high-end where the market has gone a little crazy,' he added.

City Developments has taken a liking for the Balestier/Thomson area in recent months, having acquired a large tract of land there through collective sales like Lock Cho Apartments, Concorde Residences, The Albany and Thomson Mansions.

'This helps provide some balance to their landbank, which also includes some high-end acquisitions earlier like Lucky Tower at Grange Road and Futura at Leonie Hill Road,' an analyst notes.

And as high-end residential prices have shot up sharply, it makes sense for developers to reduce their risk profile by increasing their exposure to the upper-mid market which may be less risky, some industry players reckon.

The $1.7 billion that Hong Leong Group has invested in collective sale sites in the Jan 1, 2005 to May 15, 2007 period places it in second spot going by dollar investment, after the $1.8 billion chalked up by entities controlled by Mr Wee.

Other big buyers included CapitaLand, with 600,588 sq ft costing $563 million, Ho Bee, which picked up 452,699 sq ft for $654 million, and SC Global, which has invested $648 million in two locations - Paterson Hill and Cairnhill Circle.

JLL's analysis also shows that nearly 30 per cent of the $16.2 billion total in collective sale deals transacted during the study period involved acquisitions by joint ventures. Going by land area, too, the 4.3 million sq ft bought by joint ventures reflected roughly 31 per cent of the nearly 14 million sq ft of en bloc sale sites that changed hands during the period.

For acquisitions made by joint ventures, JLL has split the partners' proportionate shares of site area and investment to arrive at the numbers in the study.

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Wee Cho Yaw didn't buy many prime plots the last few years, so now he is buying like crazy because he feels like he doesn't have a big enough land bank. The last couple of years, many developers were grabbing en blocs all around at low low prices. The absence of UOL and Guocoland was very conspicuous. Now they are making up for lost time, but I think they are buying en blocs at much higher prices, which means less profit to be made.

Tuesday, May 29, 2007

Wee, the en bloc king

Joseph yadao

[email protected]


Banking tycoon Wee Cho Yaw's web of companies — spanning UOL Group to SingLand — has emerged as the top en bloc buyer in Singapore since 2005, according to data from Jones Lang LaSalle.

His companies — which have collectively acquired around 2.3 million sq ft of land to the tune of $1.84 billion — have a preference for non-prime locations, with the exception of Nassim Park.

UOL, for instance, has been snapping up mostly mid-upper type sites in central locations like Novena and Bukit Merah, according to analysts interviewed by The Business Times.

The marking of territory is also seen in other big en bloc buyers, which include Hong Leong Group/City Developments (CDL), Far East Organization, GuocoLand and Frasers Centrepoint.

CDL has acquired several plots in the Balestier and Thomson areas through the purchases of Lock Cho Apartments, Concorde Residences, The Albany, and Thomson Mansions. It is the second-biggest buyer, snapping up sites for $1.7 billion between Jan 1, 2005 to May 15, 2007 — the period of study by Jones Lang LaSalle.

In third place is Guocoland, with its $1.4 billion worth of land, followed by Far East ($1.3 billion) and Frasers Centrepoint ($845 million).

Collectively, these top five en bloc site buyers have bought over 50 per cent, or 7.4 million sq ft, of land that was sold collectively during these 30 months.

As the developers draw out their battle plans to develop the next wave of condominiums scheduled to hit the market in the coming years, analysts whom Today spoke to applaud their niche approach.

By concentrating in that area, they can control prices and form "some kind of monopoly" within the area, said Mr Colin Tan, director and head of consultancy and research, Chesterton International.

In the case of UOL, the ventures into the Novena and Bukit Merah areas could mean a focus on the steady supply of buyers looking for replacement homes after offloading their property en bloc, they said. Any developer with a foothold in the area would also be able to better gauge the buyer profile.

"Buyers are willing to pay if you develop a product that is in sync with their needs," said Mr Tan.

However, this approach does have its drawbacks, such as a more significant capital outlay.

While the bigger players like CDL have the deep pockets required, smaller players do not have the financial clout to acquire multiple sites within a single postal code, they said.

Another potential downside would be competition from within the same area, especially if the market does not take to the developments on offer.

"By having all the properties in the same area, they will be subjected to the same market. If the market goes up, they win. They lose if it goes down. It is a gamble," said Mr Nicholas Mak, director of research and consultancy at Knight Frank.