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Published March 5, 2007

Choice Homes ready to take on other developers in bid for land

But projects will remain mass market, and units will stay affordable: CEO


(SINGAPORE) NTUC Choice Homes will compete head-to-head with other property developers as it looks to build up its land bank for mass market projects, but it intends to continue selling 'affordable' homes, chief executive Margaret Goh told BT recently.

Ms Goh: 'I can now embark on a new challenge. As I see it, the greater growth potential is now in the mass market.'

'We are sourcing to replenish our land banks,' Ms Goh said in an interview. 'We intend to compete with other developers and we do see that we have to be quite aggressive in sourcing for land sites because of the expected growth in the mass market.'

She said that Choice Homes would look at leasehold projects - both in the government land sales programme and from the private market, including collective sale sites.

Supply of mass market homes is expected to be quite low this year at slightly over 3,000 units, according to recent research by Colliers International. The property firm said mass market homes will make up less than a quarter of all units launched in 2007. Demand, on the other hand, is expected to grow as the property market picks up. Ms Goh expects a 5-10 per cent price upside for mass market projects this year, and also sees transaction volumes picking up substantially.

'What's coming up in the market is quite low to meet the demand,' said Ms Goh. The developer hopes to ride on the demand and launch more properties this year, but it will first have to build up its land bank, as it has just one more site left.

The developer launched the 139-unit Yew Tee Residences in Choa Chu Kang in mid-January, and has so far sold about 85 of the 100 units released at an average price of around $510 per sq ft. Next up is another 99-year leasehold condominium in Tanah Merah, which will have 556 units. Choice Homes is developing the project through a joint venture with Wing Tai Holdings.

Competing with other developers - which have deeper pockets - will be a challenge, Ms Goh admits. This is because Choice Homes has a social mission as well, and will not be able to pass on rising costs fully to buyers.

Choice Homes was set up in 1995 with the aim of helping more Singaporeans meet their goal of owning private property. The developer has also in the past sold homes at prices below the average price for comparable properties.

'Our social mission still remains,' said Ms Goh. 'We are quite focused in providing affordable homes. But we operate in a very highly competitive market in a commercial world, so we have to make sure we meet expectations in terms of shareholder returns.'

Choice Homes' major shareholders include the National Trades Union Congress, NTUC Income, NTUC FairPrice, the Singapore Labour Foundation and other unions.

Choice Homes is expected to generate 'reasonable returns' to channel back to the labour movement.

Looking ahead, Ms Goh said that Choice Homes would be expected to sharpen its competitive edge, especially with rising labour and material costs. One thing she intends to do is to build up the company's brand name, which will be given good play in upcoming projects such as the Tanah Merah development.

For herself personally, Ms Goh is looking forward to the challenge of leading Choice Homes after helming Sentosa Cove Pte Ltd - the master developer of upscale housing precinct Sentosa Cove - for two years.

The move was not too jarring, she said. 'The market segments are very different - from luxury to the mass market - but as developers, what we try to do is meet the needs of the target audience. So, it's the same thing.'

'Sentosa Cove is doing well,' added Ms Goh, 'and it will continue to do very well. I can now embark on a new challenge. As I see it, the greater growth potential is now in the mass market.'