Singapore Companies
Published August 21, 2006

Bukit Sembawang eyes high-rise condo projects

BUKIT Sembawang Estates, a former rubber plantations business that turned to property development, said on Friday that it plans to focus on high-rise apartments in prime locations to increase its returns.

The company, which was set up to run rubber plantations in the early 20th century, is the largest builder of houses in land-scarce Singapore, where about 83 per cent of the city-state's 4.4 million people live in high-rise public housing.

Bukit Sembawang still owns large tracts of land in the north-east corner of Singapore where it originally grew rubber, but it has recently snapped up seven existing residential sites for redevelopment in prime districts which tend to be more popular with wealthy Singaporean and foreign investors.

'We are looking into prime areas for our high-rise condominium projects,' Bukit Sembawang general manager Ng Chee Seng told Reuters. 'For the next few years, our developments will be split 50-50 between both high-rise flats and houses,' he said.

The company, which has a stock market valuation of US$414 million, competes with property developers such as Allgreen Properties and unlisted Far East Organisation.

It plans to launch its first high-rise project since the 1980s at the end of this year and to launch at least two more high-rise residential projects next year, selling the flats for more than S$1,000 per square foot.

Four million square feet of Bukit Sembawang's landbank is in areas that face restrictions on high-rise development.

It has another 400,000 square feet of land that can be used for high-rise homes.

More than half the buyers of some recent luxury property projects have been foreigners, helping to drive property prices in the city-state to their highest level in six years.

However, non-residents still need government approval in order to buy landed property rather than apartments, prompting Bukit Sembawang to change its strategy and turn to developing more high-rise apartments.

Unlike developers such as CapitaLand and City Developments which have expanded outside Singapore, Bukit Sembawang plans to focus on the city-state.

'We have enough landbank to keep us busy for the next 10 years,' said chairman Cecil Wong.

Few analysts cover Bukit Sembawang as its shares are tightly held.

The Lee family that controls the smallest of Singapore's three listed banks, Oversea-Chinese Banking Corp, holds at least 40 per cent of the developer.

Fund managers Aberdeen Asset Management and Schroders are among its foreign institutional investors.

The share price has risen 55 per cent so far this year to hover around S$18.40, or 2.14 times book value, according to Reuters data.

'We think we are keeping our shareholders happy and that is why they are holding on to their shares,' Mr Wong said. - Reuters