The joint venture (JV) between GuocoLand&rsquo s F17 0.00% wholly-owned subsidiary, GuocoLand (Singapore), Intrepid Investments and CSC Land Group has won the bid for the Lentor Central land parcel. Intrepid Investments is a wholly-owned subsidiary of Hong Leong Holdings. Intrepid holds 50% of the JV while GuocoLand (Singapore) holds 30%. CSC Land holds the remaining 20%.

 

The JV&rsquo s bid price of $435.17 million beat Frasers Property&rsquo s TQ5 0.00% bid price of $410.8 million and was accepted by the Urban Redevelopment Authority (URA) on Sept 18. It translates to a price of $2,749.62 psf over the site area of 14,703.2 sqm (158,263.93 sq ft). It also translates to a bid price of $982 psf per plot ratio.

 

The Lentor Central land parcel has a 99-year tenure and is zoned for residential use. A residential development of about 475 units was planned for the site. The site is located within the Lentor Hills estate and will be connected to Lentor MRT station on the Thomson-East Coast line via a sheltered walkway. The site is also within close proximity to schools such as Presbyterian High School, Anderson Primary School, CHIJ St Nicholas Girls&rsquo School, Eunoia Junior College and Nanyang Polytechnic.

 

For the purpose of the tender, GuocoLand (Singapore) had entered into a memorandum of general agreement (MOGA) with Intrepid and CSC Land where each party will take part in the JV based on their agreed proportion.

 

As Hong Leong Holdings is a substantial shareholder of GuocoLand, Intrepid is regarded as an interested person under the Singapore Exchange&rsquo s listing rules.

 

Other interested persons are Quek Leng Chan, a director and deemed a substantial shareholder of GuocoLand and a director and shareholder of Hong Leong Holdings. Similarly, Kwek Leng Hai is also a director and shareholder of GuocoLand and a shareholder of Hong Leong Holdings.

 

DBS Group Research analysts Tabitha Foo and Derek Tan are keeping their &ldquo buy&rdquo call on GuocoLand F17 -0.65% as they see &ldquo exciting times ahead&rdquo for the group&rsquo s property development and investment businesses.

 

&ldquo GuocoLand&rsquo s property development business remains resilient, with strong pre-sales across most of its projects, despite higher interest rates and inflationary pressure,&rdquo they write.

 

&ldquo We continue to be optimistic on this front, as we anticipate the group will be able to replicate its end-to-end capabilities in future projects and see a similarly impressive sales momentum,&rdquo they add.

 

Foo and Tan are also upbeat on GuocoLand&rsquo s prospects on the flight-to-quality trend that will lead the office market recovery in Singapore. The trend is likely to see the group sustaining its high occupancy rates and positive rent reversions, the analysts note.

 

In their report dated Sept 7, the analysts raise the possibility of a potential restructuring, which could crystallise value for the group.

 

&ldquo With a growing portfolio of commercial assets, the potential securitisation of GuocoLand&rsquo s income-producing portfolio or conversion into a &lsquo stapled security&rsquo could be a significant share price catalyst, with the potential upside ranging from 50% to 100%,&rdquo they write.

 

At its last-traded price of $1.53 on Sept 6, GuocoLand is offers &ldquo attractive&rdquo valuations with a P/NAV multiple of just 0.40x with a yield of 4%.

 

In addition to their &ldquo buy&rdquo call, Foo and Tan have kept their target price unchanged at $2.30. The number is pegged to a &ldquo conservative&rdquo 60% discount to their revalued net asset value (RNAV) of $5.70 due to the stock being relatively illiquid compared to its larger developer peers.

 

The analysts&rsquo RNAV factors in their fair value estimates for GuocoLand&rsquo s major investment properties and realisable values for its major development projects.

 

GuocoLand reports 60% y-o-y growth in revenue in FY2023, but 44% decline in net profit on impairment and higher interest cost

GuocoLand reported a 60% y-o-y rise in revenue of $1.54 billion for FY2023, for the 12 months to June 30. For 2HFY2023, revenue for the Group increased by 72% to $882.9 million. However, an impairment charge of $46.9 million and a 59% y-o-y rise in interest cost to $149.7 million caused net profit to fall by 44% y-o-y to $268.8 million. In 2HFY2023, net profit fell by 55% to $187.4 million.

 

The property group recognised an impairment loss of $44.0 million on its investment in EcoWorld International in 2H2023 because of adverse conditions in the UK. As a result of this, the Group&rsquo s other expenses for 2H2023 and FY2023 increased to $46.2 million and $46.9 million respectively.

 

Revenue from the sale of development properties grew by 78% to $753.0 million in 2HFY2023 and increased by 62% to $1.30 billion in FY2023. The higher property development revenue for both 2H 2023 and FY2023 was mainly from higher progressive recognition of sales for Meyer Mansion, Midtown Modern and Lentor Modern, all of which have been substantially sold. In addition, Chongqing GuocoLand 18T also contributed to the Group&rsquo s revenue in 2HFY2023, as one of its residential towers has started to hand over sold units to buyers during the period.

 

Revenue from investment properties increased 43% y-o-y to $94.8 million in 2H2023 and grew 35% y-o-y to $169.6 million in FY2023. The growth was supported by higher recurring rental income from Guoco Tower, Shanghai&rsquo s Guoco Changfeng City South Tower and the initial contribution from Guoco Midtown Office, which commenced operations in 2HFY2023.

 

Revenue from the hotel investments increased by 47% y-o-y to $33.4 million in 2H2023 and doubled to $68.7 million in FY2023. Year-on-year, gross profit for FY2023 increased by 5% but reduced marginally for 2HFY2023. The lower growth in gross profit for FY2023 and 2H2023 vis-à -vis revenue growth, was due to the absence of a one-off $79.3 million fair value gain recognised under cost of sales during 2H2022. Excluding this fair value gain, the Group&rsquo s gross profit for 2HFY2023 would have grown 50% y-o-y and by 34% y-o-y in FY2023.

 

For FY2023, the company recorded fair value gains of $156.3 million, mainly from its integrated developments Guoco Tower and Guoco Midtown.

 

GuocoLand' s board announced a final dividend of 6 cents per share.

 

GUOCOLAND Limited has obtained S$498.6 million in green financing from DBS and OCBC to develop its residential site at Lentor Gardens, which was awarded to its tie-up with Hong Leong Holdings in April this year.

 

The club facility was raised under its green finance framework, which enables it to deliver environmental and social benefits to support its sustainability initiatives.

 

This brings GuocoLand to over S$2.9 billion of green financing secured to date, said the group on Thursday (Jul 13).

 

The group added that it plans to develop the 21,866.7 square metre Lentor Gardens site into a high-end residential development with 530 units across a combination of eight-storey blocks and 16-storey towers with sky terraces. It will also include over 6,000 square feet of childcare facilities.

 

The 99-year leasehold development is slated for launch in H1 of 2024, marking GuocoLand&rsquo s third project in the Lentor Hills estate after Lentor Modern and Lentor Hills Residences. 

 

It is said to be the first residential project to achieve a Green Mark Platinum (Super Low Energy) with Maintainability Badge certification by the Building and Construction Authority.

 

Some key sustainability features will be the inclusion of on-site renewable energy sources for common areas, the use of sustainable materials to reduce the amount of embodied carbon as well as the incorporation of greenery and water bodies.

 

Andrew Chew, group chief financial officer of GuocoLand, said: &ldquo Our recently established green finance framework has again enabled us to access green financing options for our development projects, and further affirms how sustainability continues to be an integral part of the group&rsquo s strategy and our developments.&rdquo

 

The group last month announced that it obtained a S$974 million green club facility that would go into refinancing Guoco Tower, particularly the building&rsquo s commercial components.

 

GUOCOLAND Limited has obtained S$498.6 million in green financing from DBS and OCBC to develop its residential site at Lentor Gardens, which was awarded to its tie-up with Hong Leong Holdings in April this year.

 

The club facility was raised under its green finance framework, which enables it to deliver environmental and social benefits to support its sustainability initiatives.

 

This brings GuocoLand to over S$2.9 billion of green financing secured to date, said the group on Thursday (Jul 13).

 

The group added that it plans to develop the 21,866.7 square metre Lentor Gardens site into a high-end residential development with 530 units across a combination of eight-storey blocks and 16-storey towers with sky terraces. It will also include over 6,000 square feet of childcare facilities.

 

The 99-year leasehold development is slated for launch in H1 of 2024, marking GuocoLand&rsquo s third project in the Lentor Hills estate after Lentor Modern and Lentor Hills Residences. 

 

It is said to be the first residential project to achieve a Green Mark Platinum (Super Low Energy) with Maintainability Badge certification by the Building and Construction Authority.

 

Some key sustainability features will be the inclusion of on-site renewable energy sources for common areas, the use of sustainable materials to reduce the amount of embodied carbon as well as the incorporation of greenery and water bodies.

 

Andrew Chew, group chief financial officer of GuocoLand, said: &ldquo Our recently established green finance framework has again enabled us to access green financing options for our development projects, and further affirms how sustainability continues to be an integral part of the group&rsquo s strategy and our developments.&rdquo

 

The group last month announced that it obtained a S$974 million green club facility that would go into refinancing Guoco Tower, particularly the building&rsquo s commercial components.

 

GUOCOLAND : F17 0% on Wednesday (Jun 28) said it obtained a S$974 million green club facility, raised under its newly-established green finance framework.

 

The club facility, which comes from DBS, UOB, OCBC and Sumitomo Mitsui Banking, is the property developer&rsquo s largest to date, it said.

 

It will be used to refinance its flagship asset Guoco Tower, particularly the building&rsquo s commercial components.

 

Guoco Tower, located in Tanjong Pagar, is an integrated mixed-use development with 890,000 square feet (sq ft) of premium Grade A office space and 100,000 sq ft of retail space. It also houses 181 apartments at Wallich Residence, Sofitel Singapore City Cente and a 150,000 sq ft urban park.

 

The group is looking to enhance Guoco Tower&rsquo s green building performance, including improvements to air conditioning and mechanical ventilation, as well as upgrades to the property&rsquo s building management system to monitor energy consumption better.

 

The property has a Green Mark Platinum rating by Singapore&rsquo s Building and Construction Authority and was certified by the US Green Building Council as LEED Platinum, the highest rating.

 

Together with the new club facility, GuocoLand&rsquo s total amount of green financing stands at S$2.4 billion. Previously, it raised S$700 million for Lentor Modern and S$730 million for its Midtown Modern project.

 

The new green financing framework will give the developer and its subsidiaries access to fundraising options such as bonds, loans and debt financing, which will be tailored to contribute to sustainable development.

 

It is aligned with 2023 green loan principles issued by the Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications and Trading Association. It also follows the International Capital Market Association&rsquo s 2021 green bond principles and the 2018 Asean green bond standards by the Asean Capital Markets Forum.

 

DBS, UOB and OCBC are the green loan advisers to GuocoLand&rsquo s green financing framework.

 

The joint venture (JV) between GuocoLand F17 0.62% and Hong Leong Holdings&rsquo wholly-owned subsidiary, Intrepid Investments, has been awarded the Lentor Gardens land parcel. The interest holdings of GuocoLand and Intrepid are 60% and 40% respectively.

 

The JV partners&rsquo bid price of $486.8 million was accepted by the Urban Redevelopment Authority (URA). They were also the sole bidders of the 99-year leasehold site, which is zoned for residential use.

 

The bid price translates to a price of $2,068.23 psf over the site area of 21.866.7 sqm or 235,371 sq ft. The bid price also translates to a price of $984.85 psf over the maximum permissible gross floor area (GFA) of 494,289 sq ft.

 

The site is located within the Lentor Hill estate, which comprises landed estates and low- to mid-rise condominiums. The site is also GuocoLand&rsquo s third project in the estate. It will be developed in partnership with Hong Leong Holdings.

 

According to the statement put out by GuocoLand, the JV plans to build a residential development of about 530 units. It is expected to be ready for launch in 2H2024.

 

GuocoLand Group&rsquo s CEO Cheng Hsing Yao says, &ldquo We have a strong track record in creating high-end residential projects with innovative concepts. We have also demonstrated our capabilities in transforming and uplifting neighbourhoods through our developments, such as Guoco Tower for Tanjong Pagar and Guoco Midtown for the Beach Road-Bugis area. For the Lentor estate, we and our partners will position this new neighbourhood into a new premium residential estate with our various projects in the area.&rdquo

 

Dora Chng, general manager (residential) at GuocoLand, adds, &ldquo The Lentor area is well-connected and it is also close to amenities and green spaces. It is rapidly emerging as a premium residential estate. Demand for homes in this area will continue to grow.&rdquo

 

&ldquo GuocoLand developments are designed for people with modern lifestyles. Lentor Modern, the only mixed-use development in the area, offered buyers an integrated lifestyle. For the new development at Lentor Gardens, we envision a high-end residential development with around 530 units based on modern concepts of living amidst nature and greenery. The development will comprise a combination of eight-storey blocks and 16-storey towers with sky terraces. More than 6,000 sq ft of childcare facilities will provide added convenience to families with young children,&rdquo she continues.

 

&ldquo The Lentor estate has tremendous potential. We are pleased to once again partner GuocoLand in developing high quality and distinctive residential homes in this exciting and transformed area, following the development of Lentor Hills Residences which will be launched soon,&rdquo says Loke Kee Yeu, general manager (projects), Hong Leong Holdings Limited.

 

The land parcel will be connected via a sheltered walkway to the Lentor MRT station on the Thomson-East Coast line (TEL). It is also located close to schools such as Presbyterian High School, Anderson Primary School, CHIJ St Nicholas Girls&rsquo School, Eunoia Junior College and Nanyang Polytechnic.

FOLLOWING the joint bid by GuocoLand : F17 -0.61% and Hong Leong Holdings&rsquo Intrepid Investments for a residential site at Lentor Gardens, DBS Group Research believes GuocoLand is emerging as the &ldquo King of Lentor&rdquo .

 

Lentor Gardens sits on a 99-year leasehold 235,370 square foot (sq ft) site with a total built-up gross floor area of 494,290 sq ft.

 

The tender for the plot of land closed on Tuesday (Apr 4) with the GuocoLand-Hong Leong tie-up as the sole bidder at S$486.8 million, which translates to nearly S$985 per square foot (psf) per plot ratio.

 

Analysts from DBS noted in a report on Wednesday that the tender price puts it at the lower end of bids received, &ldquo accounting for the latest rules on the sellable area for the site&rdquo .

 

According to data from the Urban Redevelopment Authority and DBS, the psf land price for the Lentor Gardens tender is the lowest fetched among the five sites under the government land sales programme in the Lentor area. 

 

GuocoLand said it intends to build 533 units with childcare facilities on the site. This marks the group&rsquo s third Lentor site tender, after Lentor Modern and Lentor Hills Residences. 

 

DBS was optimistic about GuocoLand&rsquo s strategy and its appeal to buyers, citing the example of Lentor Modern. 

 

The research team noted that Lentor Modern was 84 per cent sold on its opening weekend, which exceeded expectations. This came despite a general softening of demand for new launches amid a higher interest rate environment.

 

The analysts estimate that breakeven for Lentor Gardens will be about S$1,750 psf to S$1,850 psf, given less efficiency in the sellable area, and project launch prices will be close to S$2,050 psf to S$2,150 psf.

 

They also believe this project will add up to 4 per cent to GuocoLand&rsquo s revalued net asset value per share of S$5.70, which translates to an increase of S$0.16 to S$0.22.

 

Apart from premium office space, Guoco Midtown, a 3.2-hectare mixed-use mega development, also offers recreational facilities. 

 

SINGAPORE - Guocoland&rsquo s Guoco Midtown office tower has 80 per cent of its 709,000 square feet space pre-committed, including deals in advanced stages of negotiation, the company said on Tuesday.

 

The 30-storey Grade A office tower saw &ldquo robust interest&rdquo from MNCs, resulting in strong take-up at its Temporary Occupation Permit (TOP) stage. Secured and prospective tenants come from industries such as banking and finance, chemical consumer brands, energy, maritime, professional services, reinsurance and technology, GuocoLand said.

 

Global shipping company Pacific International Lines (PIL) is an anchor tenant. Other tenants include German chemical company BASF, Chinese Internet technology company NetEase Interactive Entertainment and Liechtenstein&rsquo s VP Bank.

 

Apart from premium office space, Guoco Midtown, a 3.2-hectare mixed-use mega development on Beach Road and Tan Quee Lan Street, also offers recreational facilities. These include a 40-metre swimming pool and BBQ pavilions at the gardens.

 

The project is connected to Bugis MRT interchange station, and provides access to a business networking club with hybrid meeting and event space for more than 200 people.

 

Three retail clusters house a total of 50,000 sq ft of retail space slated for completion in phases this year and early 2024. Porsche Singapore has been signed as an anchor retail tenant.

 

Guoco Midtown also has two luxury condominiums on the site: the 219-unit Midtown Bay which will be done by this year, and the 558-unit Midtown Modern that is to be completed in early 2024.

 

When fully completed, the development is expected to receive more than 10,000 people daily into the Beach Road-Bugis district.

 

&ldquo The phased completion of Guoco Midtown will grow our portfolio of investment properties and boost our recurring income,&rdquo said Cheng Hsing Yao, chief executive officer of GuocoLand.

 

Since its launch in October 2019, some 95 units at Midtown Bay have been sold at prices ranging from S$1.26 million for a 409 sq ft unit to S$3.69 million for a 1,323 sq ft unit. On a per square foot basis, pricing ranged from S$2,438 psf to S$3,804 psf.

 

At Midtown Modern, meanwhile, 472 transactions have been recorded since the project&rsquo s March 2021 launch,   ranging from S$1.17 million for a 409 sq ft unit, to S$8.65 million for a 1,808 sq ft unit, to S$14.83 million for a 3,520 sq ft penthouse.

PROPERTY player GuocoLand on Thursday (Jan 19) reported a 13 per cent fall in net profit to S$59 million for the first half ended December, in the absence of a S$14.3 million disposal gain recorded the year prior.

 

Excluding the disposal gain, the company saw its net profit rise 11 per cent, from S$53.2 million to S$59 million, on the back of a strong property market and a revival of tourism. This lifted revenue 46 per cent in H1 to S$661.6 million.

 

The company&rsquo s property development business posted a 45 per cent increase in revenue to S$550.4 million, thanks to higher progressive recognition of sales from its residential projects in Singapore.

 

Likewise, the property investment segment saw revenue up 25 per cent to S$74.8 million, as a result of higher rental revenues from Guoco Tower and contributions from Shanghai&rsquo s Guoco Changfeng City South Tower, which began operations in H1.

 

Revenue from GuocoLand&rsquo s hotel investments meanwhile more than tripled to S$35.3 million, due to improvements in hotel operations at Sofitel Singapore City Centre and the influx of post-pandemic tourists into Singapore.

 

GuocoLand chief executive officer Cheng Hsing Yao said that the company has delivered robust results despite headwinds in the real estate sector, including supply chain issues, a labour shortage, and inflation.

 

&ldquo Sales of our residential projects are going strong, while revenue from our premium Grade A offices has grown consistently over the years as we see the trend of &lsquo flight to quality&rsquo by top global and regional companies continuing to grow, even as they embrace a hybrid work environment,&rdquo Cheng said.

 

The company&rsquo s gearing stood at 0.9 times as of end-2022.

 

Its current loans and borrowings of $2.86 billion will be progressively repaid with proceeds from the development property sales, while the remaining will be refinanced.

 

GuocoLand says it will not be exercising the issuer&rsquo s redemption option on the first call date of its $400 million subordinated perpetual securities.

 

The securities&rsquo distribution date was supposed to be reset on Jan 23, 2025, and each date falling seven years after the first reset date. If the securities were not redeemed, the distribution rate will be reset on the first reset date to the applicable reset distribution rate to be determined according the terms and conditions in the information memorandum dated Sept 28, 2017.

 

The securities carry a coupon of 4.60% per annum (p.a.) and was issued under the group&rsquo s $3 billion multicurrency medium term note programme.

 

According to GuocoLand, the decision to do so was in view of the current interest rate environment.

 

&ldquo The issuer continues to have sufficient funding sources in place, and maintains the flexibility to exercise the issuer&rsquo s redemption option on any distribution payment date falling after the first call date, taking into account market and other conditions,&rdquo reads the statement released by GuocoLand.

 

There will not be a reset of the distribution rate of the securities on Jan 23, 2023, which will remain at 4.60% p.a. Distributions on the perpetual securities will continue to be payable semi-annually in arrears on Jan 23 and July 23 of each year.

 

The next distribution payment will be made on Jan 23, 2023.

 

GUOCOLAND : F17 +1.23% chairman Moses Lee Kim Poo has stepped down after almost nine years on the company&rsquo s board.

 

In a bourse filing, GuocoLand said Lee did not seek re-election at the company&rsquo s annual general meeting (AGM) on Friday (Oct 14) after having served on the board since Nov 1, 2013. He will also cease to be an independent director at the company.

 

Tycoon Quek Leng Chan was appointed by the board to succeed Lee as chairman at the conclusion of the AGM.

THIS Friday (Oct 14), at 10am, shareholders of real estate group GuocoLand : F17 +0.61% will have the opportunity to pose questions to management at the company&rsquo s annual general meeting. On the agenda, perhaps, will be how the board and management hope to unlock value for shareholders.

 

The group, in which tycoon Quek Leng Chan holds a direct and deemed interest of about 72 per cent, traded at a 58 per cent discount to its end-June net asset value (NAV) per share of S$3.86, based on its close on Wednesday at S$1.64.

 

There are reasons to be positive about the group&rsquo s prospects. GuocoLand posted a 122 per cent rise in net profit for the six months ended Jun 30. And 84 per cent of the homes in its Lentor Modern project were sold over two days at its launch last month. But the jewel in GuocoLand&rsquo s crown is, arguably, Guoco Tower in Tanjong Pagar, in the Central Business District (CBD).

 

Market watchers are positive on the outlook for Singapore&rsquo s premium CBD office buildings. Consultancy Colliers forecasts that core CBD premium and Grade-A office rentals will grow by between 6 and 7 per cent this year.

 

As at end-June, the office and retail space of Guoco Tower, which sits on leasehold land with over 87 years outstanding, had a committed occupancy of 100 per cent and was valued at S$2.68 billion. For context, GuocoLand&rsquo s market capitalisation is around S$1.9 billion.

 

How can GuocoLand get the market to recognise the value of this prime asset?

 

Potential Guoco Tower Reit

 

For property developers like GuocoLand, the conventional means of unlocking value has been to recycle capital by selling assets to real estate investment trusts (Reits). This is an option for GuocoLand, which held nearly S$6 billion worth of investment properties as at the end of June. Yet, the company also has the opportunity to try something new &ndash by listing a single-property Reit with Guoco Tower in it.

 

The introduction of Reits has enabled retail investors to own fractions in many properties that would previously have been inaccessible. Shoppers can assess the crowds at VivoCity, Bugis Junction or Paragon, and ride on the success of their preferred malls.

 

But as Reits scale up, exposure to any one particular asset gets diluted. An investor in Singapore&rsquo s first Reit, CapitaMall Trust, would have bought exposure to three malls here at the time of listing. But after a merger and multiple acquisitions, the recently renamed CapitaLand Integrated Commercial Trust : C38U -1.05% (CICT) owns malls, offices and integrated developments, spread across Singapore, Australia and Germany.

 

Reits chase scale via asset acquisitions and mergers, to draw institutional investor interest. A larger portfolio of assets offers greater diversification, and asset acquisitions can boost a trust&rsquo s distribution per unit (DPU).

 

Some investors may dislike acquisitive Reits, however, as acquisitions can alter an investor&rsquo s exposure to a segment or geography. When an acquisitive trust raises equity, an investor&rsquo s interest may be diluted. Investors might instead welcome a Singapore-focused Reit committed to owning its initial portfolio for 20 years or more, and not making acquisitions. Actively managing leases, market rental growth and asset-enhancement initiatives can drive DPU growth at such a Reit. After two decades or more, the Reit could be wound up upon selling its asset &ndash possibly for a profit.

 

Family offices and insurance funds may like such vehicles too, as some of these investors buy commercial buildings or strata commercial spaces.

 

If Guoco Tower is injected into a Reit at a net property income yield of around 4 per cent, the hypothetical Reit&rsquo s initial annual DPU yield could be around the mid-4 per cent. Such a yield is in line with the recent five-year green bond offered by Frasers Property : TQ5 -1.04%(FPL) paying an annual interest rate of 4.49 per cent. There would also be a chance of capital gains from the Reit.

 

Unit prices of Reits have weakened amid rising interest rates. CICT, for instance, traded at an 11 per cent discount to its end-June NAV and an annualised DPU yield of 5.6 per cent.

 

A Reit that owns a top-grade asset here and eliminates the risks associated with acquisitions could, perhaps, trade at a lower yield than acquisitive geographically-diversified Reits. GuocoLand could distribute units in the hypothetical Guoco Tower Reit to its shareholders and/or sell units to new investors. While investors may apply a slight discount to the said Reit&rsquo s NAV, any such discount should be much less than GuocoLand&rsquo s discount to its NAV.

 

Owning Singapore real estate

 

Owning property is a hedge against inflation. Owning assets in Singapore, which is stable and has a strong currency, is attractive. Buying homes for investment, however, is tricky, as Singapore citizens pay hefty taxes when buying multiple homes.  

 

Owning strata space in commercial buildings can be difficult, as the Urban Redevelopment Authority prohibits the strata subdivision of commercial developments as well as the commercial components of mixed-use developments located in prominent areas and routes in Singapore&rsquo s Central Area.

 

Reits that own prime Singapore properties and eschew acquisitions can offer investors exposure to top-grade assets to help fund retirement needs. Such Reits may need to look largely to retail investors for support. But retail investors do have firepower, as evidenced by the take-up for FPL&rsquo s recent green bond. It raised S$350 million from the public offer tranche, and S$150 million from the placement tranche that was taken up by private banks and institutions.

 

GuocoLand can lead by launching Guoco Tower Reit, perhaps in 2023, if interest rates stop rising and a suitable capital market window opens.

 

Should the said Reit be well received, other property owners can follow suit. GuocoLand could subsequently launch a Reit that owns the office and retail space of the upcoming Guoco Midtown in Beach Road.

SINGAPORE - Lentor Modern, a 99-year leasehold integrated private residential project by GuocoLand, sold 508 units, or 84 per cent of its 605 units, during its launch over the weekend.

 

Units in the integrated mixed-use development to be built in the new Lentor Hills estate in District 20 went for $1,856 per sq ft to $2,538 psf, GuocoLand said in a press release on Sunday.

 

Launch prices for the units ranged from $1.07 million for a 527 sq ft one-bedroom unit to $3.33 million for a 1,528 sq ft four-bedroom apartment.

 

All 63 one-bedroom and 231 two-bedroom units were fully sold. In addition, 182 units, or more than 73 per cent of the 248 three-bedroom units, were sold, while more than 50 per cent of the 63 four-bedroom units were booked.

 

The project is the biggest non-landed private residential launch this year and analysts said the sales achieved for its first weekend showed the still-strong underlying demand from HDB upgraders and new families, despite higher home loans rates and the more uncertain economic environment.

 

It also testified to the still-tight supply of new private residential launches, as well as the project' s own pull factors, said the analysts.

 

" The number of units sold on launch day makes (Lentor Modern) the best selling project in 2022," said Lee Sze Teck, senior director of research at Huttons Asia.

 

" The one and two-bedroom units are the first to be sold out, reflecting buyers' keen interest to gain a first-mover advantage in this new private residential enclave.

 

" Buyers have also accepted that $2,000 psf or higher will be the norm going forward so they are not waiting."

 

GuocoLand said Singaporeans constituted around 92 per cent of total buyers, while permanent residents and foreigners made up the remaining 8 per cent.

 

Buyers were also mainly owner-occupiers, with upgraders constituting the majority.

 

The condominium, consisting of three 25-storey towers, will sit on top of a 96,000 sq ft mall that will include a 12,000 sq ft supermarket, a 10,000 sq ft childcare centre, plus food and beverage and retail outlets.

 

The entire development will be linked underground to the upcoming Lentor MRT station on the Thomson-East Coast Line.

 

Mr Lee said that Lentor Modern being the only integrated mixed-use development in the Lentor precinct attracted many buyers with the convenience it will bring.

 

Ms Dora Chng, general manager for residential at GuocoLand, said that buyers " really liked the lifestyle concept of ' one lift ride' to all the amenities such as (food and beverage), supermarket and MRT" .

 

The project' s launch follows the success of a smaller project in Ang Mo Kio - AMO Residence - which saw more than 98 per cent of its 372 units snapped up during its launch in July.

 

AMO Residence was the first major private residential project in the mature housing estate of Ang Mo Kio in more than eight years.

 

Lentor Modern could also have benefited from prospective HDB upgraders who wished to continue living in the area but who failed to get a unit at AMO Residence, analysts said.

 

GuocoLand, part of Malaysian tycoon Quek Leng Chan' s Hong Leong Group, won the site through a government land sale tender in July 2021 with its bid of $784.1 million, or $1,204 per sq ft per plot ratio (psf ppr).

 

GuocoLand is positioning Lentor Modern, which will have a public plaza fronting the mall, as a new hub for the Lentor neighbourhood, which is surrounded by private housing estates.

 

It will be a " chic retail and social village" , said GuocoLand chief executive Cheng Hsing Yao.

WHILE GuocoLand might be best known as a developer, chief executive Cheng Hsing Yao harbours ambitions to create a premium real estate brand in Asia as GuocoLand builds up its end-to-end capabilities.

 

Cheng, who assumed the role of CEO in July last year, told The Business Times in a recent interview: &ldquo To do so, we will continue to build on our end-to-end capabilities to create a multi-platform real estate company. End-to-end means from land acquisition and conceptualisation, to the development and management of our assets.&rdquo

 

Over the years, GuocoLand has evolved and today, its investment assets account for more than half of its total assets - making them an important contributor to the top and bottom line.

 

&ldquo With the completion of Guoco Midtown, (that steady income) will grow further,&rdquo Cheng said. &ldquo We are interested to continue to grow our investment portfolio, particularly in integrated mixed-use developments. This in turns sets the stage for us to grow our asset management business.&rdquo

 

For instance, it plans to shift towards having more investment assets in Singapore, and is open to joint ventures with external partners so as not to tax the balance sheet. The rationale for the pivot is to create more stability in the bottom line, he said, given the lumpiness and risks that can arise from development projects.

 

Still, the ability to spot the potential in an empty plot of land, as well as to imagine - and then bring to life - a new development concept has served the group well, he pointed out, adding that this has resulted in unique assets such as Guoco Tower and Guoco Midtown. &ldquo These are assets that we are not able to buy from the market as they are not commonly available, but we have the capabilities to create them from scratch.&rdquo

 

Prior to joining GuocoLand, Cheng held leadership roles at the Centre for Liveable Cities and the Urban Redevelopment Authority. He was also appointed a Nominated Member of Parliament in January 2021.

 

Another key feature of GuocoLand&rsquo s brand, he went on to say, is the desire to transform and uplift the districts in which it has a presence. It seeks to do this in two ways - in the way it develops its projects as well as by engaging the neighbourhood where its projects are located.

 

&ldquo Buildings are to be designed with the end-user as priority, so we look at lifestyle, technological and demographic changes to define our product concept,&rdquo he said. For instance, while the concept for integrated development Guoco Midtown - which features Grade A office space - was designed prior to the pandemic in 2018, it was created with hybrid working and flexibility in mind.

 

He added: &ldquo Our development philosophy is if we help to uplift the neighbourhood, we will also benefit from that uplifting. For mixed-use developments, we always try to introduce public spaces for community activities and will follow up with place-making activities as well.&rdquo

 

In Tanjong Pagar, where Guoco Tower is located, GuocoLand joined hands with other key landlords to take part in the Business Improvement District (BID) programme in an effort to enhance the vibrancy of the precinct. A similar approach is being undertaken for Guoco Midtown.

 

In terms of markets, GuocoLand will remain focused on its 3 core markets Singapore, China and Malaysia, which account for revenues of 80 per cent, 10 per cent and 10 per cent respectively. And while the strategy may differ for each country, GuocoLand is gunning for &ldquo more sharing of expertise, knowledge and participation&rdquo across the 3 countries, so that GuocoLand performs more like one company.

 

Where Singapore&rsquo s private residential market is concerned, Cheng expects it to remain relatively resilient amid the limited supply of unsold inventory, despite prevailing headwinds such as rising interest rates and a possible recession. The total debt servicing ratio (TDSR) framework, implemented in 2013, has ensured buyers aren&rsquo t over-leveraged, while a volatile stock market may prompt some to park their money in real estate as a hedge against inflation, he added. At the same time, he sees demand from genuine home-buyers and HDB upgraders, even as he still expects some investors who are willing to take a long-term view.

 

While there was a knee-jerk reaction after the cooling measures were rolled out by the government in December 2021, GuocoLand started to see demand returning after Chinese New Year, mostly from local buyers.

 

Asked whether the steeper Additional Buyer&rsquo s Stamp Duty (ABSD) of 30 per cent will deter foreign buyers, Cheng offers this perspective. &ldquo Any foreign buyer who buys in Singapore now has to take a longer-term view,&rdquo he said, adding that GuocoLand has noticed most are purchasing homes for personal use. &ldquo Singapore has become very attractive as a centre for family offices or businesses to set up, or even for people to relocate. It&rsquo s also got a really strong proposition in terms of being in Asia, the access to the South-east Asian market, stability and a very positive business operating environment. I think that is really attractive to foreigners who want to come and live here. Therefore, there&rsquo s really no choice but to pay the ABSD.&rdquo

 

The real estate developer is poised to launch residential units at its integrated development Lentor Modern for sale in the third quarter. Sales for residential units at Wallich Residence at Tanjong Pagar and Meyer Mansion on Meyer Road currently stand at 88 per cent and 86 per cent, respectively, according to the developer. Meanwhile, Midtown Modern and Midtown Bay, the two residential projects at Guoco Midtown at Beach Road, have achieved sales of 79 per cent and 40 per cent, respectively.

 

And while the pandemic has changed the way we live, play and work, Cheng remains sanguine that the office will stay relevant, although he expects hybrid working arrangements to remain a fixture. Guoco Tower maintained 99 to 100 per cent occupancy even through the pandemic, he said, while office leasing at Guoco Midtown has been gathering momentum.

 

Even though there&rsquo s been a lot of talk in the last year or so about demand from the tech firms, GuocoLand has found demand to be wide-ranging across a diverse tenant mix - which is how it likes to position its investment properties. Still, there have been some tenants right-sizing, although the shift to hybrid working means that even as firms cut down on work stations, they have to bump up collaborative spaces, he noted. Therefore, the overall reduction could be in the range of 10 to 15 per cent.

 

Cheng also stressed the importance of the quality of offices, which means that &ldquo premium and well-located office buildings will be in a better location to attract the best companies, who can afford the rents as well&rdquo . For their part, companies will likely see rent as a form of investment to attract talent.

 

But he also acknowledged that office occupiers now have higher expectations for the ESG performance of both the office building as well as the landlord.

 

There will also be challenges arising with evolving trends in business segments such as office, retail and residential. In tackling change, &ldquo a real estate company needs to prioritise innovation and agility to be able to move with, if not stay ahead, of time and trends,&rdquo he said.

 

&ldquo We need to effectively manage costs and processes, shorten our creative and innovation cycles, constantly pick up new technologies and techniques,&rdquo he went on to add. &ldquo To do so, we need to be able to work effectively across departments, have stronger integration between upstream and downstream activities, and also between internal and external partners.&rdquo