Thursday, July 24, 2008

The Dream Team

Stockbroking partners bank on property projects


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DESPITE its ups and downs, property appears to be the main investment path for those with surplus cash who want to diversify from their existing businesses. So it was with stockbrokers Han Seng Juan and David Loh Kim Kang when they founded Centurion Properties a couple of years ago.

They’re the “David and Han Team” or “The Dream Team”, as they are popularly known in the stockbroking world, due to their enormous success in share trading and for bringing numerous Chinese companies here for listing.

They first ventured into property in a big way by plonking $290 million onto a 190,000 sq ft site next to Kovan MRT Station in October last year.

The site is being developed by Centurion Kovan, a joint venture between Centurion Properties with a 61-per-cent stake, listed contractor Lian Beng Group with a 19-per-cent interest and a group of investors owning the rest.

This will result in a 521-unit condominium named Kovan Residences, which is scheduled for completion in 2011 at a total cost including land of over $500 million. Lian Beng is also the project’s main contractor.

Since its recent launch, some 110 flats designed to bring “urban living into the outskirts”, have been sold at between$820 per square foot (psf) and $950 psf, compared with an estimated breakeven price of about $730 to $750 psf. In today’s market, this is “encouraging”, says Centurion chief executive Tony Bin Hee Din.

He describes the current slowdown in the property market as a “momentary pause” and that, in the longer term, the Singapore economy would prove its resilience with more buyers coming back into the market.

“We have a quality product here, and while most of the buyers have been Singaporeans, we have also had quite a few foreigners. With the MRT station practically adjacent to the development, Dhoby Ghaut is only 13 minutes away and Orchard, 19 minutes,” Mr Bin said, adding that in a global city environment, ease of transportation would be an important consideration.

But, Mr Loh and Mr Han are not only looking at the private residential sector. “We are looking at things that are opportunistic and have a good cash flow,” Mr Bin said. In fact, the two — apart from dabbling in shares at broking house UOB Kay Hian — are also known to be corporate investors, who control stakes in companies like listed Summit Holdings and Pine Agritech.

In February, Centurion, which has a paid-up capital of $10 million, invested another $60 million in a housing site for foreign workers called Westlite Dormitory, near the IMM Building in Jurong.

Like investment bank Morgan Stanley, which :earlier bought into three other dormitories, Mr Loh and Mr Han were attracted by the relatively high yields that such properties fetch.

The dormitory, which is on a 11,680 sq m site, has a residual lease period of more than 50 years (the original lease was 60 years). The development currently has 448 units, housing 8 to 12 workers each, with a total population of 4,500 to 5,000 workers.

But, Mr Bin points out that there is presently a shortage of dormitory space for foreign workers, especially for those who work on the ongoing MRT Circle Line, the IRs and numerous other infrastructure and property projects.

“We are evaluating an asset enhancement programme that will significantly increase the number of units. If all goes well, work is targeted to start next year,” Mr Bin added.

The team is also looking abroad, and has already gone into a joint venture project in Vietnam, a greenfield hill resort just outside of Ho Chi Minh City. “With a large, richly-endowed population, it is our belief that Vietnam has good growth potential,” Mr Bin disclosed.

The project, which is in excess of700 hectares and will include a golf course and housing, had its ground-breaking recently, and will be completed in stages over the next few years.

Asked if Centurion had plans for more of such resort projects, Mr Bin replied: “Most certainly. The country has a long, pristine and beautiful coastline. Incomes are expected to rise significantly. As in all investments, they must meet our investment criteria: good projects, good partners and meeting our target returns.”

The company is also in talks with some parties in China, and is looking at Beijing and one other major city, although no deals have yet been done.

“We are in an expansion mode and we will explore any good opportunity that comes our way,” Mr Bin said.