June 23, 2007


SC Global hits new highs after record property deals

By Arthur Poon

SHARES of SC Global recorded strong gains this week, with investors excited by two property records set by the company just days apart.

On Monday, it was reported that SC Global had completed the most expensive collective sale in Singapore by acquiring The Ardmore condominium for $262 million.

Two days later, the boutique property developer unveiled Singapore's most expensive condominium project - The Marq on Paterson Hill.

SC Global's share price hit a intra-day high of $6.65 yesterday, before profit-taking caused it to slip.

Still, it finished unchanged at its all-time closing high of $6.45 yesterday, on a volume of 19.75 million shares.

For the week, it was 45 cents firmer. Since the start of the year, it has shot up $3.90 or a staggering 152 per cent.

Analysts say the counter received a boost after the average price of $4,000 per sq ft (psf) being sought for its ultra-luxurious residential development, The Marq, exceeded market expectations.

Phillip Securities Research, for one, had an estimate of $3,500 psf.

'The selling price of The Marq at $4,000 psf is only for the first phase of the launch.

'We could expect the average selling price to increase further in the next two phases,' said Phillip's analyst, Mr Pang Chin Hong.

The Marq comprises 66 units in two 24-storey towers, with each unit selling for between $12 million and $30 million.

It will be built on the former Paterson Tower site acquired by SC Global in March last year for $266 million.

Mr Pang reiterated his 'buy' call on SC Global on Thursday but raised his target price to $7.55 from $6, adding that revisions of the target price to as high as $8.80 are on the cards.

The stock was also buoyed by the fact that the Ardmore acquisition would give SC Global a land bank of nearly one million sq ft of prime freehold land in the Orchard Road area, said market watchers.

The purchase of The Ardmore, with a land area of 42,565 sq ft, for $262 million works out to $2,338 psf of potential gross floor area, including development charges.

This far surpasses the earlier record of $1,788 psf per plot ratio set for Char Yong Gardens in Cairnhill.

However, analysts caution that rising land costs is a concern which could see limited opportunities in the prime residential segment.

A research report by ABN Amro Bank on Wednesday said: 'Prices for collective sale properties are rising fast in the high-end segment, increasing by 75 per cent in the second quarter compared to the first.

'This is a concern, because in Singapore, land continues to be the largest single component of development costs, representing 60 to 70 per cent of the total.'

The bank added that the risk of shrinking margins or even possible losses has increased in the prime segment, and prices in the high-end market would need to rise 30 per cent for property developers to sustain margins, based on current land costs.

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