Singapore Companies
Published February 15, 2007

High-end homes in S'pore not overpriced: CapitaLand chief


PRICES for high-end homes in Singapore are not overdone compared with those in places like London, Hong Kong or parts of the US, given the strong demand from well-off foreigners, says CapitaLand Group president and CEO Liew Mun Leong.

Mr Liew: 'There are so many super-rich billionaires who can park US$10 million without consideration for return, any time'

'You must look at why people are coming here. There are so many super-rich billionaires who can park US$10 million without consideration for return, any time. And these are the people who create momentum for price rise.

'In terms of super-luxury homes, you cannot analyse it logically. You can only analyse it in terms of who are the buyers, what is the comparative pricing and why they're coming here. These are people who own five, six homes all over the world. To park US$10 million to $20 million in Singapore is very safe for them.'

Mr Liew argued that high-end homes in Singapore are not overpriced. Super high-end homes in London are trading at over 4,000 per square foot, or about S$12,000 - four times the $3,000 psf level for Singapore.

'If you look at Hong Kong, Sun Hung Kai has bought a piece of land with a land cost of about $9,000 psf per plot ratio. It will have to sell at something like $13,000 to $15,000 psf. Still four times more than us.'

In the US market, high-end homes are selling at about US$4,000 psf, he said.

The group yesterday reiterated its plans to have 10 real estate investment trusts (Reits) by 2010. It already has five Reits under its belt and earlier this week announced it will take a 13 per cent stake in a Japanese rental apartment Reit called BLife.

In addition, it has a stake in Hong Kong's Link Reit. The group is being highly sought after as a partner for parties keen on listing Reits, Mr Liew said.

'We want to be selective. We want to make sure we have the right assets, right jurisdictions and right partnerships,' he added.

Mr Liew said potential markets for future Reits by the group would include China, India and Malaysia, while the group's strategy would be to list China Reits onshore as soon as this is allowed, 'so there is a share of participation by the local community'.

Mr Liew indicated that when expanding into a completely new overseas market CapitaLand will tend to venture into serviced apartments first, followed by residential, retail and offices.

'The best way to understand a new market is through serviced apartments. That's why serviced apartments is a business we will never sell - unless you give me a bombshell price,' he said.