Sing Holdings charts a balanced-portfolio course

Published April 17, 2007

Sing Holdings charts a balanced-portfolio course

After its megabuy in Cairnhill, sights are now set on East Coast, Bukit Timah

By KALPANA RASHIWALA

SESDAQ-LISTED property developer Sing Holdings turned heads last month when it acquired Hillcourt Apartments on Cairnhill Road for $361 million or a whopping $1,542 psf per plot ratio.

http://img45.imageshack.us/img45/731...71567d4rf6.jpg
Mr Lee: Sing Holdings has enough partners now but will continue to forge new partnerships as it expands

That's a new record for land in the Cairnhill area - and a whopping 40 per cent more than what CapitaLand paid for Silver Tower next door in September last year.

But the next site that Sing Holdings buys won't be in this 'super luxury' sector, says managing director Lee Sze Hao. The developer would like to 'balance its portfolio' by buying another site in the 'upper-mid' locations of East Coast or Bukit Timah.

While the 'super luxury' market will continue to do well at least in the short term, Mr Lee reckons that demand in the upper-mid tier will also be strong.

East Coast is a perennial favourite among Singaporeans, while Bukit Timah boasts of popular schools like Anglo-Chinese School, Singapore Chinese Girls School and Nanyang Primary School, Mr Lee points out. Singaporeans who have sold prime district homes through collective sales are likely to seek replacement housing in these areas, he feels.

Late last year, Sing Holdings bought Finland Gardens on East Coast Terrace and Bellerive on Keng Chin Road in Bukit Timah, and is looking for more such sites.

The Bellerive plot will be redeveloped into a 16-storey apartment block with 50 units, while Finland Gardens will make way for a 68-unit cluster housing project. In Cairnhill, Hillcourt will be redeveloped into a 24-storey condo with about 130 units.

Sing Holdings stands out in another way - it attracts foreign investors in more ways than one. US-based real estate investment group Forum Partners took a sub-5 per cent stake in Sing Holdings at the time of the company's initial public offer last year. And Forum Partners has since taken 30 per cent stakes in the Finland Gardens, Bellerive and Hillcourt projects.

Last week, Dubai Investment Group (DIG) took up a placement for 10 per cent of Sing Holdings. DIG is looking at taking a stake in the Hillcourt project and could take stakes in future Sing Holdings projects, Mr Lee says.

'These partners/shareholders will also bring their international networks to our company, for example, when we market new projects.'

DIG was sourced by placement agent HL Bank.

Sing Holdings first met Forum Partners in China a few years ago, soon after completing the Ocean Towers office development in Shanghai with Keppel Land and Hong Lim Investments. Sing Holdings and Forum Partners stayed in touch after that.

'When we were listing on the Singapore Exchange, we invited them to invest in our company and they took 25 per cent of the placement tranche,' says Mr Lee.

Sing Holdings has enough partners for now but will continue to forge new partnerships as it expands, he says. 'If they bring us good deals, why not?'

Cynics may say you can be sure the market is overvalued when a low-profile local developer teams up with big international names to buy residential sites at record prices. But Mr Lee says: 'If a new player comes in just to jump on the bandwagon, it would be quite different. But our company has been around for 40 years. We have the experience, the history, track record. I believe we know what we are doing.'

He also disagrees that he had overpaid for Hillcourt. Although the initial land cost is $1,542 psf ppr, the unit land price drops to $1,444 psf ppr after factoring in an extra 10 per cent gross floor area allowed for balconies.

'The breakeven cost could be about $2,100 psf. In that location, it is quite easy to come across projects that are targeting selling prices of $2,500 to $2,800 psf, even $3,000 psf,' Mr Lee says, alluding to SC Global's Hilltops project at Cairnhill Circle.

For the year ended Dec 31, 2006, Sing Holdings posted net profit of $31.7 million, up from a proforma $6.7 million for 2005.

Last month, the group relaunched the remaining 15 units at its completed freehold project 38 Draycott Drive. It has sold eight of these at $1,903 psf on average and lifted the average price for the other seven to $1,988 psf, including the 18th floor penthouse, which is priced at $4.32 million.

The carrying cost of the project is $1,386 psf, which means the group should be able to book handsome gains in 2007, analysts reckon.

This year, it will also start booking the maiden gains from Meyer Residence, a 68-unit project that is fully sold.

http://img45.imageshack.us/img45/605...7156905ah8.jpg
38 Draycott Drive: Eight of 15 units left were sold at $1,903 psf on average