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Thread: Smaller players grabbing slice of prime real estate pie

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    Default Smaller players grabbing slice of prime real estate pie

    Published March 26, 2007

    Smaller players grabbing slice of prime real estate pie

    By VEN SREENIVASAN


    SO who says only the 'big boys' have fun?

    Last Friday, it was widely reported that Sesdaq-listed Sing Holdings had bought a prime Cairnhill Road property.

    Sing Holdings, with a market worth of some $97 million, bought its Orchard area property for $361 million, or $1,542 psf per plot ratio.

    But Sing Holdings is not the only secondliner in the profitable-plots game.

    Heeton Land and builder Koh Brothers are among a growing list of smaller players which are also sitting pretty on prime real estate, putting them in the same arena as the big boys like SC Global Developments, City Developments and Wing Tai Holdings.

    Sesdaq-listed Heeton, which started out in 1976 running fresh food markets, partnered mainboard-listed Koh Brothers last April - when the residential property market was still in deep slumber - to buy Hilton Towers in Leonie Hill for $79.2 million, including a development charge of $3.9 million.

    Each party has a 50 per cent stake in the 33,700 sq ft freehold district 9 estate.

    Property market insiders estimate that the property has a breakeven level of about $1,300 psf, assuming construction cost of around $350 psf.

    Given the recent pricing in the vicinity, an up-market condominium to be built there could fetch upwards of $2,000 psf.

    Even this may be conservative, given the recent prices of other properties in the Orchard vicinity. Sing Holdings, which has a breakeven cost for its Cairnhill plot in the region of $2,000 to $2,100 psf, expects a minimum sale price of $2,300.

    Nevertheless, even at a conservative $2,000 psf, and given the gross saleable area of some 120,000 sq ft (assuming over 50 units), Heeton and Koh Bros would rake in total gains in excess of $80 million.

    This would be a remarkable achievement for two companies whose earnings are around $5 million each: Heeton recently reported FY06 earnings of $4.5 million, while Koh Bros posted $5.3 million.

    Heeton, which has a market value of $100 million and whose other investments include Sun Plaza (which it jointly developed with Koh Bros) and some 200 wet market stalls islandwide, recently proposed a placement of up to 21 million new shares at an issue price at 33 cents per share to raise a net $6.67 million.

    Koh Brothers' previous projects include The Montana off River Valley Road and The Sierra in Mount Sinai, and it also bought Alocassia Apartments on Bukit Timah Road last year.

    Other smaller players that have been getting into the property game over the past year include BBR Holdings, Sim Lian Land and Chip Eng Seng.

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