http://www.businesstimes.com.sg/sub/...36740,00.html?
Published July 2, 2011
DBSS project net margins are 15-18%: Hoi Hup Sunway
HOI Hup Sunway - a consortium comprising Hoi Hup Group and Sunway Group which developed two design, build and sell scheme (DBSS) public housing projects, City View @ Boon Keng and The Peak @ Toa Payoh - says its net profit margin for such projects range from 15-18 per cent.
Focusing only on gross profit margins does not paint an accurate picture of the profitability of DBSS projects, the consortium said in a press statement yesterday.
It was responding to a story in The Business Times on Thursday, which calculated developers' profits from DBSS projects.
'Gross profit margins do not take into account essential costs incurred by us,' Hoi Hup Sunway said.
'They include differential premium, financing costs, stamp duty, GST and marketing expenses. Such essential costs for DBSS projects form a very significant chunk of total costs as compared with that for private mass market condominium projects, and therefore exert a large negative impact on profitability.'
The consortium also said that, as a developer, it was exposed to a whole host of business risks over a fairly long period of about four years: 'During this period, property prices do not always go up and bank interest rates do not always stay down.'
It added that it hoped its statement would provide a more balanced view of the true costs and profitability of DBSS projects.