‘Lion City’ a golden opportunity for local developers
KUCHING: With major property players like Selangor Dredging Bhd (SDB) seeking to make a strong foothold in Singapore, it is no wonder as to why the lion city has been a haven for the ‘big boys’.
With an extensive line of projects in Singapore, corporate affairs manager of SDB, Yeoh Guan Jin shares with the Borneo Post the story behind the group’s ambitious venture into Singapore.
According to Yeoh, Singapore already had a liberal policy when it came to bringing in the foreign expertise, regardless of the industries.
“Singapore is very open in the sense that if you are good, you are in. You can easily obtain a job here if you have the expertise required and this was affirmed by the Prime Minister during his national day’s speech. As such a lot of expatriates are taking advantage of this and this serves as a good platform for those who wish to build and sell property.”
Singapore, as Yeoh described it, had always been a financial hub that attracted the global community and businessmen from mainland China – which seemed to have a profound liking for the small country. Hence, with the world’s eye-ball on Singapore, the state was not only confined to the regional market, but exposed to the international environment as well.
Once a mining business, SDB had established itself as one of the premier boutique developers in Malaysia, carving a niche for itself in the high-end property segment and winning worldwide recognition for its projects.
Additionally, its approach to go global was evident with the continuous projects launched in Singapore that aimed to draw the interest of the potential consumers in the city state.
Of the 10 projects launched by the group since it began its foray into the property segment, three were in Singapore. Jia, being its maiden project in Singapore, followed by Gilstead Two and Okio, had been receiving a stream of positive response from the take-up rate witnessed by the group.
According to SDB’s managing director Teh Lip Kim, given that Singapore was the ‘second’ Hong Kong, demand for high-end properties had been consistent despite the economic uncertainties. Teh reaffirmed that sales had been encouraging with a 90-per cent take-up rate, even during volatile times.
Consequently, the group had been very keen in constructing a prominent presence within Singapore. Hijauan on Cavenagh, its latest masterpiece in Singapore with a gross development value of S$95 million with an estimated RM235 million, was set to be launched on Sept 1, 2015.
With Singapore being such as alluring market to tap into, and taking into account the limited landbank available within this region, competition must have been harsh amongst the property developers. This, as Yeoh noted, was undoubtedly true and remained a challenge for the group.
“While it has a very good market, you’ve got other established property developers as well. They pose a strong challenge to us but even so, we like doing business here as Singapore’s business environment is very investor friendly. It remains attractive to us despite the stiff competition we face,” highlighted Yeoh.
This was echoed by TA Securities Holding Bhd’s property analyst, Steve Tan who opined to the Borneo Post that it was a golden opportunity to invest in Singapore.
“In Singapore, land prices have been appreciating. It is an opportunity to diversify your regional exposure to the worldwide market and it proved fruitful over the long-run despite the high cost of land.”
“In Malaysia, income per capita is not as high as Singapore. Hence, the demand for properties particularly in the high-end section is quite resilient and inelastic in Singapore,” said Tan.
When it came to capital appreciation, prices of properties would be on the upward trend in the long-run even with the unfavourable internal or external market conditions.
“It is quite hard to gauge capital appreciation. But if we look at historical data, in Singapore, the trend of property prices has gone up and down.”
“But on average, the trend is stable. Hence, it is secure to invest in properties over here as we are focusing in not the short-term cycle but on the long-term series. It all comes down to holding power in Singapore,” stated Yeoh.
Additionally, the cooling measures proposed by the government were, as Yeoh noted, beneficial for the property market there as it discouraged small-time speculators and property boom.
Amongst measures implemented by the government was the holding period for the imposition
of a Seller’s Stamp Duty
(SSD) that had been increased from three years to four years.
For residential properties bought on or after January 14 this year, SSD rates had been raised to 16 per cent for those sold in the first year of purchase, 12 per cent
for those sold in the second year, eight per cent if sold in the third year, and four per cent if sold in the fourth year.
This, according to Yeoh, kept the buyers locked into their purchases if their properties do not appreciate more than 16 per cent in the first year. This coupled with the higher cash payment that property owners were subjected to now as well as a lower loan-to-value (LTV) for property buyers with more than one outstanding loan.
The new cooling measures were designed to protect the property market, given the much insecurity lingering in the global market.
“With fewer speculators in the market, the prices will stabilise and people will hold more for the long-term,” noted Yeoh.
Adding to this was the clear-cut guidelines that made Singapore an attractive market to operate businesses.
“It is very easy to do business here as the guidelines are easy to follow.
“This coupled with the fixed plot ratio allows the developer to count the maths in terms of the number of units to be built before acquiring the land,” added Yeoh.
With a buying rate that was higher than price increases, Singapore would always be viewed as a viable gateway
to the international landscape.
Corresponding to this, SDB would be aiming to establish itself as a premier developer in Singapore.