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Thread: Simon makes good his vision

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    Default Simon makes good his vision

    http://www.businesstimes.com.sg/sub/...34404,00.html?

    Published April 12, 2011

    Simon makes good his vision

    Having forged a strong branding for SC Global in Singapore, he aims to scale the business geographically, reports KALPANA RASHIWALA


    HAVING attained his vision over the past 10 years for SC Global to become a brand name synonymous with innovative luxury residential developments in Singapore that command a price premium, Simon Cheong is eyeing a bigger playing field.

    'Over the next 10 years, my vision would be to scale our business geographically using the strong branding which SC Global has achieved. We've managed to achieve higher premium pricing than the international hotel brands that have put their names on residential projects here and these brands have been around for over 50 years. This speaks volumes for our brand and it's logical for us to build on this opportunity,' he said in a recent interview with The Business Times.

    However, Mr Cheong, the group's chairman and CEO, declined to identify the new overseas markets where the SC Global brand could be used. 'Our goal is for SC Global to be a leader in setting innovation for design and high-end lifestyle living on an international level among the top developers in the world.'

    The group has thus far developed high-end projects under the SC Global brand only in Singapore, although it has a presence in Australia and China. Australian unit AVJennings builds middle-market housing. And in China, SC Global has established the Kairong Developments brand to develop middle-income projects in second-tier cities, starting with Shenyang. In the mid to longer term, when the timing is right, however, the group hopes to enter the high-end luxury residential market in first-tier cities such as Shanghai and Beijing.

    Back in 2000, when SC Global Developments was floated through a backdoor listing, Mr Cheong had spelt out his vision for the company in an interview with BT: 'We're a lifestyle builder, not a commodity builder . . . Our strategy is to develop a brand name for producing innovative quality developments and if the timing is right and if we do the branding right, we should be able to command a premium.'

    He seems to have made good on his vision.

    Today, his SC Global Developments has emerged as a formidable brand name in Singapore's high-end residential sector, even copyrighting its taglines such as 'The Ultimate Living' and 'Own the Original' throughout Asia.

    In the past 10 years, the group has innovated marketing concepts and been in the forefront of design thinking, says Mr Cheong. Lincoln Modern, when launched in 2002, was the first all-lofts development in Singapore. The project was the first Asian residential development to bag the Royal Institute of British Architects Award in 2005.

    SC Global was the first developer to conduct viewings by appointment only when it began marketing The Ladyhill in 2000, a policy widely adopted by high-end developers today.

    The group also has set up its own condo management arm - Seven Palms Resorts Management - to provide its customers quality service. 'Why do you live in a condo as opposed to a landed home? It's because of the service,' says Mr Cheong. 'We are a homegrown brand. We started from scratch. We have become a known developer in the land of giants basically and with no track record before.'

    There are also financial markers of SC Global's success. Its revenue increased from $4.8 million for FY2000 to $878.3 million for FY2010. For FY2000, it posted a $2.6 million net loss; last year, it achieved a record net profit of $144.2 million. The group's market capitalisation has risen from $105.4 million in 2000 to $688.6 million in 2010.

    Mr Cheong recalls the challenges that SC Global faced in the early days. 'Nobody knew us as a developer, as a serious developer . . . We started with just one project, The Ladyhill, and then of course the question then was we had nothing, we had no track record, except deal-doing capabilities. In fact, at one time, people were saying you are just deals people; some people were calling me a broker. It was quite challenging,' he says in the interview at the spanking new clubhouse of the recently completed condo The Marq on Paterson Hill.

    'Real estate development is a really tough business, especially in Singapore where the industry is very mature and yet highly regulated. It requires heavy upfront capital. Along the whole value chain, everyone - from en bloc land sellers, consultants, bankers, contractors and end-buyers - exits first before the developer. Profit-wise, even the end-buyers often make more margin than developers. People forget that in the 1997 Asian Financial Crisis, many developers went under.

    'I didn't realise how tough it is being a developer. If I had known, I may not have become a developer. I would stick to being a banker.

    'Fortunately, what has made the journey easier is the support from my family, mentors, shareholders, colleagues and friends. I owe a lot to them. No general can win a war alone.'


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    http://www.businesstimes.com.sg/sub/...34403,00.html?

    Published April 12, 2011

    Staying in the moment with his landbank

    By KALPANA RASHIWALA


    (SINGAPORE) SC Global has a considerable inventory of about one million square feet gross of saleable floor area in various luxury residential projects in Singapore, but chairman and CEO Simon Cheong is in no hurry to sell it off, mindful of the difficulty of finding replacement landbank in Singapore's top-end segment, which is his company's niche.

    In fact, replenishing the landbank will be the biggest challenge facing Singapore's luxury residential market this year, he argues.

    The one million sq ft gross floor area of space available for sale comprises units which have yet to be sold in existing projects such as The Marq on Paterson Hill, Hilltops, Martin No 38 and Seven Palms, Sentosa Cove, as well as a project that the group has yet to develop on the site of The Ardmore.

    'For SC Global, we decided that we shouldn't sell ourselves short by selling out too early, prematurely, when to replace our kind of high-end landbank literally a few minutes away from the Orchard Road area is going to be tough.

    'So normally we don't price our projects to sell ourselves short. The way we price is (based on) my replacement cost. I have to make a qualification because I have to be very careful here not to go into other people's turf because we're just high-end players. We play in the 9, 10 and 11 districts.'

    The situation is unlike the case for the mass-market where government is always there to supply land, he adds.

    Mr Cheong suggests that in five to 10 years' time, finding land in Singapore's choicest districts near Orchard Road could become as difficult as finding development land today in New York's Central Park and London's Hyde Park locations.

    He also stresses that SC Global's concept of launching a project is not of the run-of-the-mill variety. 'We do put limited units for sale but we don't have launches with big fanfare, balloons outside, like a carnival. It is very different, because this is high end. And the ticket item we are talking about is huge. So we have to adapt the whole marketing.

    SC Global's gearing (net debt to equity) - stripping out AVJennings' borrowings and cash - has fallen from 2.7 times at end-2009 to 2.2 times at end-2010, according to Nomura Singapore's calculation.

    At end-2010, the group had $831.8 million of current financial liabilities, mostly land loans tied to its development projects The Marq, Hilltops and Martin No 38. The Marq received Temporary Occupation Permit (TOP) in January this year and Hilltops is expected to be completed soon. Martin No 38's residential component will also receive TOP later this year.

    Nomura analyst Sai Min Chow expects the company to roll over the debt, securing it against unsold completed units in the development.

    'Because the banks typically give a higher loan-to-value for completed units and for SC Global the value is typically quite high, I don't think they will have an issue getting the debt rolled over. Moreover, it is clear the banks have been very supportive of the company so far,' says Mr Sai.

    Mr Cheong says that Singapore has all the elements that will make for a 'very positive outlook for the luxury market this year'. He readily gives credit to the government for reinventing Singapore over the past five years by paving the way for the two integrated resorts, upgrading Changi Airport and positioning Singapore as a wealth management hub.

    'Singapore is already beginning to be an oasis for well-heeled individuals who want to put their funds (here) or diversify their funds to other countries, and Asia is a growth area. The removal of the estate duty completely removes any doubt for family trusts that want to put money in Singapore. I think our fund management and private banking structure also speaks volumes for us and for rich individuals who want to diversify their funds to a safe-haven city, Singapore is well positioned.'

    Mr Cheong also argues that Singapore's luxury residential prices are still reasonable compared with other markets such as New York, London, Paris, Hong Kong and Shanghai.

    'No property play in any country will succeed without the right infrastructure, environment and transparency that we have.'

    The 54-year-old, formerly a real estate banker before venturing into property investment and development, is married with two daughters aged 22 and 21 and a nine-year-old son.

    The experience of building up SC Global into a formidable brandname in Singapore's high-end sector over the past 10 years has left him more convinced that 'if we work hard and stay true to our passion, values and vision, in the long run we can achieve something truly unique and special'.

    'The value of having good relationships and friends is so very important in every way imaginable in life.'

    Mr Cheong developed an appreciation for Chinese tea about 10 years ago. 'Sometimes I brew tea in the office while waiting to solve the next problem. It can be rather therapeutic. Of course, tea has many health benefits too. Some people really drink tea, they gulp it like beer; but tea has to be sipped to be enjoyed.'

    His favourites include Pu Er, Da Hong Pau and Long Jing - 'depending on the time and mood of the day'. He visits tea houses in Chinatown during weekends, appreciating his passion anonymously with fellow tea connoisseurs, as he goes unrecognised clad casually in jeans.

    Mr Cheong gives some tips on tea brewing: 'Always 'rinse' tea leaves, so the first two servings should be discarded. Good tea should not be 'cooked'; there's a difference between brewing and cooking. Selecting the right tea pot is also important; it's similar to using the right wine glasses for different wines.

    There's nothing quite like sipping Chinese tea to the strains of the Chinese erhu or guzheng and watching the smoke dance from sandalwood incense - to stay in the moment.

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    The first piece sounds like advertorial The fact remains, holding inventory and not selling incurs holding costs when other developers have turned around so many units and realised so much cash inflows and revenues for their shareholders. The justification for holding inventory and not being able to move their completed units is laughable.

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    Quote Originally Posted by Wild Falcon
    The first piece sounds like advertorial The fact remains, holding inventory and not selling incurs holding costs when other developers have turned around so many units and realised so much cash inflows and revenues for their shareholders. The justification for holding inventory and not being able to move their completed units is laughable.
    well either you price your units 30-40% above market rate and have to hold on to inventories, or you cut your prices and offload....

    (hint: FEO)

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    Quote Originally Posted by Wild Falcon
    The first piece sounds like advertorial The fact remains, holding inventory and not selling incurs holding costs when other developers have turned around so many units and realised so much cash inflows and revenues for their shareholders. The justification for holding inventory and not being able to move their completed units is laughable.
    He got proven track record. U laugh at him?? Really...... But then u r entited to your opinion, he is entitled to his as well. U can laugh at him but dont know who gets the last laugh.

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    How about you laugh at the govt for holding so huge inventory of empty land, mostly in OCR? They are not doing the right thing for their shareholders (which in this case are all Singapore citizens).


    Quote Originally Posted by Wild Falcon
    The first piece sounds like advertorial The fact remains, holding inventory and not selling incurs holding costs when other developers have turned around so many units and realised so much cash inflows and revenues for their shareholders. The justification for holding inventory and not being able to move their completed units is laughable.

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