Tuesday, June 5, 2012

Smaller firms join hands to battle big developers

Straits Times: Mon, Jun 04
SMALLER firms are taking on the big boys in the battle to buy development land plots.

By joining hands and pooling funds, these upstarts have secured various prime sites around town despite stiff competition in a robust property market.

At least three out of the 11 residential sites sold under the Government Land Sales (GLS) programme this year have been snapped up by consortiums of smaller investors. Smaller firms have also done well in the private land sale market. They are redeveloping sites including McDonald's Place at King Albert Park and Seletar Garden.

For instance, a group of investors comprising SingXpress, Creative Investments and Kay Lim Realty secured an executive condominium (EC) site in Tampines for $234 million last month, outbidding others like Sim Lian Group and MCL Land.

A consortium called Unique Rezi also picked up the mixed-use McDonald's Place plot for $150 million in April.

Unique Rezi is led by Oxley Holdings, with a 55 per cent stake in the joint venture. Its fellow investors are Kim Seng Heng Realty, Heeton Homes, Zap Piling and Luxe, a unit of Lian Beng Group.

Experts say that smaller firms are banding together as it helps them spread the risk involved in the development of larger sites.

This is especially vital amid market uncertainties such as the possibility of a fresh round of cooling measures here and global concerns over the euro zone crisis, they added.

Mr Lee Sze Teck, senior manager of research and consultancy at Dennis Wee Group, said that smaller firms are also leveraging on each other's strength. Some contractors, for example, are also venturing into property development joint ventures in order to diversify their business, since it is a natural progression up the value chain...
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Martin Koh/ Sherry Tang
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