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Thread: Aztech jumps on property bandwagon

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    Default Aztech jumps on property bandwagon

    http://www.straitstimes.com/Money/St...ry_435205.html

    Sep 28, 2009 Monday

    Aztech jumps on property bandwagon

    Listed electronics maker joins other small firms branching into real estate

    By Yang Huiwen


    IN YET another sign that the residential housing market is red-hot, a handful of small firms are venturing out of their core businesses to make big bets on real estate development.

    Electronics maker Aztech has become the latest listed company to announce a foray into boutique property development, joining the likes of bookstore chain Popular Holdings, jewellers Aspial and Heeton Holdings, once a big player in wet markets.

    Aztech believes there 'will be long-term sustainable demand' for its new business given the projected population increase.

    'The residential property sector in Singapore has seen tremendous growth in terms of the number of new projects launched as well as the amount of interest in these projects among investors and buyers,' the firm said in a statement last Thursday.

    The company's move follows that of Heeton, which was formerly in the wet market business but recently sold off its five markets to Sheng Siong to focus on boutique property development.

    It developed the exclusive The Lumos condominium in Leonie Hill.

    The firms are following in the steps of companies which branched out into the property sector during previous booms, such as bookstore chain Popular Holdings, which went into the market in 2006.

    In June this year, it launched its maiden project, the 14-unit One Robin, which was sold out within two months.

    Other developments under its belt include yet-to-be-launched 18 Shelford in Shelford Road and 8 Raja. The plunge in the fair value of these two developments caused the firm to report a net loss of $17.6 million for the year ended April 30, instead of a profit of $13.6 million.

    The property bandwagon also picked up a few passengers during the real estate boom in 2000.

    Among them were specialist contractor BBR Holdings, interior design and finishings firm Nobel, industrial gas and equipment supplier Leeden (then known as ACE Dynamics), as well as Noel, which sells hampers.

    Market experts say firms now are likely tempted by the fever sweeping through the residential sector.

    Lower construction costs and further growth in the property market, especially with the impending launch of the two integrated resorts, could potentially mean higher margins for developers.

    'Land prices for high-end residential development are still at a substantial discount (compared with) the recent peak in 2007/08,' said Ms Tay Huey Ying, Colliers International's director of research and advisory.

    Developers can reap potential returns of about 10 per cent to 15 per cent, although that pales in comparison with the 2007 property bull run, where returns on prime projects could be as high as 50 per cent or more, said Mr Brandon Lee, a property analyst at DMG Research.

    UOB Kay Hian analyst Vikrant Pandey is positive over the mid- to long-term prospects although recent government measures to cool the market could dampen the pace of recovery in the near term.

    'The current recovery in the property market has been supported by the strong underlying demand-supply dynamics, low interest rate environment and high liquidity flows that are expected to remain favourable,' he said in a report last week.

    It is also not difficult for firms to break into residential property development.

    'The residential segment has a lower barrier of entry; it is not as specialised as office retail or industrial, and is close to everyone's heart,' said Ms Tay.

    In addition, smaller developments 'have lower capital requirements and lower risk levels'.

    But the capital-intensive and cyclical nature of the business means companies need to have the holding power to last through downcycles.

    It is also a highly competitive market. The newcomers will be pitting themselves against larger developers with proven track records, more aggressive marketing strategies and larger war chests.

    'It happens in every cycle,' said Mr Lee. 'It's easy business if the market is good. The key issue is what happens when the market comes down.

    'Personally I don't think the market is big enough to accommodate so many players in a normalised cycle, although in an upcycle, it can.'

    [email protected]


    Building a new business

    # Popular Holdings: One Robin (above), 18 Shelford and 8 Raja.

    # Aspial Corporation: Palmera Residence, Vogx, Blu Coral, Palm Galleria, Espira Residence and Espira Spring.

    # Heeton Holdings: The Lumos (second picture), Juluca, Lynnsville 331, The [email protected], El Centro, DLV and Cassandra.

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    Any guesses for Aztech property development name choices?

    The Interface (aka The I/F)
    The Interference
    The Base
    The Router
    The Wireless
    The Frequency
    The Antenna
    The MegaHertz
    The GigaHertz
    802.11b Residences
    802.11 Lofts
    56k @ bps


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    Error @ 303
    Hibernate by the Park
    Shutdown Residences
    USB Suites

    dont play play, sekali their developments have home automation & high tech gadgets e.g. eye scanner lift access, automated parking lots

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    The 3Ghz
    The DSL
    The Broadband
    The Aztech
    The Fiber
    The PowerLine

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    Quote Originally Posted by The Business Times

    Wearnes to beef up property play
    The Business Times Weekends
    Saturday, 3 October 2009

    Diversified WBL Corp, better known for its technology and motor businesses, has identified property development as a core activity with vast growth potential.

    In a rare roadshow on Thursday, chief executive Tan Choon Seng said property would become a ‘very important’ part of the group’s four core divisions.

    WBL, also known as Wearnes, used to lump its property interests under 'Others', but it is now looking to build up this portfolio, located mainly in China.

    The group has built 28 developments totalling 2.32 million sq m in China over the past two decades.

    Last November, it secured approval to convert a theme park it had in Chengdu into a high-end landed residential development. The 319,000 sq m project, to be launched on Oct 18, is expected to be ready by 2014.

    In Shenyang, WBL is converting another theme park into a mixed development of high-rises. The 316,000 sq m plot will have office blocks, apartments and a shopping mall. The development is due to be completed in 2017.

    The group has a development land bank of around 800,000 sq m in China, and another 93,000 sq m in Singapore and Malaysia.

    In addition, WBL owns 75% of a sand-mining quarry just outside Brisbane, Australia, that spans nearly 10 million sq m. The sand is expected to run out in 2016, after which the plot could be converted to other uses.

    Property, which has accounted for less than 10% of group revenue, is poised for growth, said Mr Tan. Nevertheless, he noted that this division would not be expanded at the expense of others.

    'At this moment, we still like what we have,' he said.

    He said the technology division, which accounts for 60% of group revenue, was well-placed to exploit the proliferation of smart phones and netbooks.

    This is because the group – through units M-Flex and MFS – is a major supplier of printed circuit boards (PCBs). In fact, it is the world’s No. 3 supplier of flexible PCBs.

    Through its automotive arm, Wearnes sells and services Volvo, Jaguar, Bentley and Renault cars in Singapore. In the region, it has other franchises, such as Volkswagen, Mazda and Bugatti.

    'Many people see the automotive industry as a sunset industry,' Mr Tan said. ‘We see it as a sunrise industry. We are looking for new acquisitions, but obviously, we can’t talk about them just yet.’

    Even so, Wearnes is looking to ‘unlock the value’ of its Singapore motor premises, including the 16,500 sq m plot occupied by Jaguar/Bentley agent Malayan Motors. Mr Tan noted that there was scope for increasing the built-up area.

    The group’s last core division – engineering and distribution – currently caters to high-tech applications in the health-care and security industries.

    Mr Tan said this division would become ‘very different’ over the next five years, but did not elaborate. He added that Wearnes had 'no fanciful strategy'. 'Our mantra is: Watch your business fundamentals and look after your customers.'
    Now that Wearnes, after Aztech, has also joined in to play, should we also go in and play play?

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