Published March 12, 2007

The vision to move forward

Ho Bee's Chua Thian Poh has tasted the highs and lows of business and ultimately thrived. He tells ARTHUR SIM of the lessons learned

WHILE most 20-somethings were experimenting with bell-bottoms and long hair in the 1970s, Chua Thian Poh was busy making money.

Right place, right time: Mr Chua's instincts on property were spot on when Ho Bee ventured into Sentosa's waterfront developments, with its Berth by the Cove the first of several sizzling projects there. More than a decade earlier, it had a sell-out with Southaven I and II in Upper Bukit Timah .

And he was good at it.

He made his first foray into property development when he was just 22 years old. It was a cluster of four terrace houses, and it turned in a nice profit.

Thirty-six years later, Mr Chua, now 58, is not only Businessman of the Year, but as chairman of Ho Bee Investment, just announced a near 160 per cent leap in full-year net profit to a record $98.6 million.

Today, Mr Chua is also the president of the Singapore Chinese Chamber of Commerce and Industry, chairman of the Bishan East Citizens' Consultative Committee, vice-chairman of the Singapore Business Federation and deputy president of the Singapore Hokkien Huay Kuan.

His illustrious career, however, began humbly enough.

In 1970, a young Mr Chua developed his first residential project with a group of friends. With the profits and the money he made earlier selling logging tools to timber merchants in Indonesia, he bought more land for development.

But as quickly as he had made his first million, he lost it. 'We kept on buying land after our first project but then the market crashed. I lost everything I made and was in debt by a million dollars.'

An ambitious young man, Mr Chua did perhaps start land-banking a little too soon. But his instincts about the potential of real estate were right. So was the model for his business. 'Even back then, I felt that there would be a need for property. Also, it's a business that does not need a big staff. You can outsource work like construction and professional services,' he notes.

Indeed, if the slump had not hit so soon after his first property venture, Mr Chua would have become the tycoon he is much earlier in life.

Still, it did. And he walked away from the experience having learnt his first lesson in business.

'It was one of the most miserable times of my life because I went from having a million dollars to owing a million. But I did learn the first important lesson about the business and that is that you have to have cashflow. You must have the cashflow to hold your land bank,' he explains.

Having to sell the land bank at a loss, coupled with the fact that his manufacturing business was faltering, Mr Chua began to worry.

But perhaps 'worry' is the wrong word. An unflappable optimist, Mr Chua remembers telling himself that 'even failure represents an opportunity to move forward'.

Refusing to ask his family for help, he moved to Indonesia in 1973 instead. 'I had some friends there so I just went out to look for business opportunities,' he said.

With a letter of credit he obtained with the help from a friend, he bought building materials and shipped them to Indonesia. 'That's how I started my trading business. I am lucky that I have friends who trust me,' he says.

The trading business grew to include general merchandise, electronic products and office equipment. 'Whatever could be sold for money, I would sell,' he recalls.

Within three years, he paid off his debts and after 13 years in Indonesia, his trading business could boast an annual revenue of over $100 million.

Along the way, his business was hit by several financial crises which saw the rupiah, and his profits, fall. But in the face of such adversity, Mr Chua, who left Serangoon Garden Technical School with just his 'O'-Levels, became an even more savvy businessman, learning to hedge his profits against the rupiah.

By 1986, when the rupiah was devalued yet again, Mr Chua decided to move back to Singapore. 'I felt I had to move forward and look for new opportunities,' he says.

He waited for a year and in 1987, he set up Ho Bee Investment and made his second foray into real estate.

His timing could not have been better. 'At the time, the property market had been in a downturn for many years, but I thought it was a good time to enter the market because there was little downside,' he says.

'I told myself that if I ventured into the business, and even if I just broke even, at least I would have learnt something from the experience.'

The first property investment was an industrial building that he bought for stable rental returns. Then came a small residential development of 24 units followed by a larger high-tech industrial building.

Then in 1993, providence led Mr Chua to buy a large industrial property in Upper Bukit Timah that would put him in the major league. The property was already giving him decent rental returns but the site, along with other industrial properties, had been re-zoned for residential development. At the time, the planning authority was keen to have Upper Bukit Timah redeveloped so it offered additional plot ratio to encourage developers. Mr Chua, however, was the first to gamble on the potential of the area. His instincts were right and the 495-unit Southaven I and II (which were launched between 1994 and 1996) were successes.

Tellingly, the success of Southaven did not fuel the desire to land bank. After a few smaller projects, Mr Chua and his management team at Ho Bee Investment started looking overseas instead.

His timing again was impeccable. 'I thought land was getting too expensive and the pricing was really very toppish. The margins were just not there anymore,' he reasoned.

Ho Bee Investment was listed on the Singapore Exchange in 1999. Set on a course for global expansion, it ventured into Australia, Malaysia, London and China and returned to Singapore in a big way only in 2003 when it became the first property developer at Sentosa Cove.

Ho Bee Investment is now synonymous with Sentosa Cove but the association goes back to when Mr Chua was on the board of directors of Sentosa Cove Pte Ltd (SCPL). There were other property developers on the board but as he remembers, everyone had different views about the development potential there. Mr Chua stepped down from SCPL and when the first land parcel came up for tender, Ho Bee Investment's bid of $109.88 million emerged the highest of three, topping the Centrepoint Properties bid by 16 per cent and CapitaLand's by a whopping 55 per cent.

As Mr Chua points out: 'There was no talk of a casino on the island yet. It was not even clear if foreigners would be allowed to buy there.' Not surprisingly, many in the industry thought Ho Bee had overpaid for the site.

'Even the banks worried about the price. That is why we had very low financing on that project.'

Using the prices of nearby residential developments as a benchmark, Ho Bee Investment bid $351 per square foot per plot ratio for the first condominium site at Sentosa. It also paid $5.4 million for a parcel slated for terrace housing there.

Interestingly, Mr Chua lets on that he was not entirely sure that Sentosa Cove would be a success. 'I was not thinking of making a huge profit at the time. If we could just break even, it would be OK.'

When the next tender came up for the island parcel of land called Coral island, Ho Bee Investment was again in the bidding. Ho Bee's The Berth by the Cove subsequently went on to set new benchmark prices for real estate on Sentosa. The Berthside, Coral Island and The Coast, all at Sentosa Cove, followed. More recently, it bought Waterfront Collection, on the newer southern residential precinct of Sentosa Cove.

Sales of the group's development property for the year ended Dec 31, 2006, surged 160 per cent to $382.2 million.

Ho Bee Investment's market capitalisation has since hit $1 billion, double its own estimate five years earlier. Now, Mr Chua says he hopes to double the company's market cap again within five years.

And Ho Bee has already mapped out the future.

Other current developments include a site at Orange Grove Road for which it paid $153 million in September last year. It has also bought industrial properties and most recently, several floors at Samsung Hub for $134.3 million.

Mr Chua also discloses that the group is planning its third project in China, as well as looking into Vietnam and India.

Perhaps even more telling is its acquisition of a 10 per cent stake in Australia-based Cypress Lakes Group which focuses on sports and health retreats. Mr Chua believes that this will be one of the growth sectors in the future and he expects more opportunities to open up through this venture.

'My aim is to develop a whole township,' he says, adding: 'You have to have a vision or you cannot move forward.'