Wednesday, January 12, 2011

IT WAS the property world's own David and Goliath story

a tiny property firm takes on the biggest guns in real estate and pulls off an improbable victory.

The David in this tale is Perennial Real Estate, founded by Mr Pua Seck Guan in November 2009. Mr Pua roped in two larger players, who then managed to clinch a $250 million tender to redevelop an iconic stretch of colonial buildings in Stamford Road.

The Goliaths? They don't get any bigger than Wing Tai Group, Far East Organization and CapitaLand.

With the heavy hitters dispatched, Perennial - staff size about 30 - will oversee the site's transformation into a retail, hotel, residential and arts precinct, and all under the watchful eyes of Singa-poreans who love the old buildings there.

A 15-storey development with shops, eateries and apartments will rise above those conservation heritage buildings - Stamford House, Capitol Building and Capitol Theatre - under a $700 million makeover, while Capitol Centre will be demolished.

Mr Pua, 46, has had little time to savour the real estate coup he and his consortium partners, Pontiac Land co-owner Kwee Liong Seen and Top Global, have pulled off.

He told The Straits Times in his 25th-floor office in Suntec Tower 4: 'When I started the project, I wasn't sure I'd win, but I told myself, 'Never mind, I'll spend a few hundred thousand dollars so my team can have something to work on, to perfect our skill and to be in the market so people can see how good we are.''

Like an underdog making the FA Cup final, Perennial has suddenly found itself on a huge stage with high expectations that it will perform and, in this case, 'do the site justice'.

The consortium wants to create a striking landmark, providing a 'compelling lifestyle' that could rival the experience at London's Canary Wharf or Rockefeller Centre in New York.

'A tourist doesn't just want to go to another shopping mall,' said Mr Pua.

'These buildings have the culture and the historical background and, more interestingly, it has the Capitol, which can create the entertainment part of it.'

It will all be about putting together the right mix: retail, food and beverage, entertainment, and a good use of the theatre to provide a multi-sensory setting on a site with a history comparable to that of Raffles Hotel, he added.

His memories of Capitol Theatre in its glory days as a vibrant cultural epicentre also shaped his winning concept for the site. Capitol, Singapore's first cinema, screened its last movie in 1998.

'When I was a kid, this theatre was where I watched all the blockbusters: James Bond and Star Wars; where you had to buy tickets three days in advance. There were many hawker stalls and we must bring some of this history back, but in a modern way,' said the father of four.

He is aware that some people fear the area's historical character may be overshadowed by the modern twist he has envisaged.

But he stressed that the development had been designed 'sensitively, carefully and with respect' to make sure its modern elements do not kill its historical richness.

Mr Pua visited the Stamford location more than six times and at different times of the day, visualising viable concepts for both day and night use - a process he undertakes before bidding on any site.

'I must say I like conceptualising, and when I take on a project, without a lot of people knowing, I actually go to the place by myself many times and I conceptualise it and keep on thinking and thinking what to do with it,' he said.

While the Stamford Road deal is the firm's most high-profile win, it also secured the Katong Mall site and a large portion of Chinatown Point, both for about $250 million each.

Mr Pua is quick to credit his team for the year-old company's dramatic impact on a highly competitive market.

'I'm an individual; I don't have capital to compete with all the big organisations. What we have is our thinking, our skills, and the challenge is to make sure we have capital on our side to secure opportunities,' he said.

He is also thoroughly enjoying life as his own boss more than two years after he took a huge leap and left CapitaLand.

Mr Pua uses the phrase yin shui si yuan to describe his relationship with his CapitaLand former colleagues, a Chinese idiom meaning one should not forget the source of one's success.

He believes in establishing strong relationships, and says he has always left previous appointments on a good note.

'As we are all working in the real estate industry and for different corporations, it is sometimes inevitable that we can't be seen to be too friendly with a competitor. However, as long as we remain professional, it is not an issue,' he added.

His humble background - his father owned a small provision shop and his mother was a washerwoman - also influenced his decision to strike out on his own.

He lived in a one-bedroom HDB rented flat near Old Airport Road until he was 25, and made it through school with the help of bursaries and scholarships.

After his father died when he was 13, he and his two siblings gave tuition to help support the family.

After a high-flying career at CapitaLand - and after watching colleagues start their own firms - he felt he was ready to 'take a chance and seize the opportunity'.

'I had been a corporate soldier at CapitaLand and I told myself there's nothing for me to lose. If it doesn't happen after five years, I can still go back to corporate life and I've seen so much opportunity in countries like China, so I told myself, 'Let's try.''

His business philosophy is simple: If you have good skill sets, you will find projects to create value; and with good projects, capital will follow.

'Ours is a management company. I don't have the equity to match others so we must be transparent in our dealings, have very good governance, be disciplined in our approach, thorough in our financial calculations, and deliver the returns they are looking for,' he said.

'We think something might work, but we can't just think. I can't just tell an investor to trust me. You must use your technical skill sets to undo constraints. If you can undo constraints, you'll create value.'

Those skills came to the fore when the firm secured Katong Mall, its first site.

The building had been on the market for almost three years without a buyer before Mr Pua went to have a look at the urging of a friend.

'I went there, shook hands with the guy and closed the deal in a little over two weeks. After I closed the deal and put in my money, then I went to find the money. I'm glad I have bankers that are willing to support me,' he said.

It was his proven track record and contacts built up over the years in the industry that smoothed the process.

The mall is now more than 60 per cent leased and Mr Pua is confident he will 'deliver the financial performance promised to investors and a product that will wow the market'.

'This business involves a lot of human capital, so we must make sure we uphold the quality,' he said. 'We can't just keep wanting to do more if we don't have the right skill set to do a good job, because then we'll be looking for trouble.'

He is now looking ahead, with a special focus on China.

Perennial is involved in managing more than a million sq m of retail space in over 30 shopping malls in China, a country that the firm believes has huge potential.

'There are still opportunities in Singapore although they are more abundant in China. It's the same all over the world; there are not many retail operators and that's where we feel we have a niche. But we have to be very focused,' he said.

Perennial is also reported to be planning an initial public offering of a business trust here - consisting mainly of Chinese assets - to raise $1 billion. The firm has declined to comment.

Mr Pua's driving force is not to let down the investors and colleagues - most are former CapitaLanders - who have supported him.

'Without all my colleagues who have given me their support, I would not be what I am today. They supported me over the years, even when I had zero, nothing, no business but just an idea.

'The challenge now is to deliver.'

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