http://www.straitstimes.com/Money/St...ry_638619.html

Feb 25, 2011

Guthrie expands from retail to residential


Managing director Michael Leong said Guthrie Properties is considering residential units and mixed developments to ensure a balance. Its latest project and first public housing development is DBSS project Adora Green in Yishun, which will be launched today. -- ST PHOTO: KEVIN LIM

THE cash generator for Guthrie Properties has long been its building and running of malls but the developer is now looking at mixed-use sites in Singapore and China as it diversifies its business.

The firm owns Jurong Point mall and manages Nex mall in Serangoon, which provides it with a steady income stream, but the firm wants more irons in the fire.

Its managing director, Mr Michael Leong, told The Straits Times: 'We can't just depend on the revenue stream which we get from shopping malls, as we've done for so many years.

'We want to have a balance so we're moving into some residential units and mixed developments, so it could be from DBSS (design, build and sell scheme) right up to mid-market.'

The shift in focus has not been easy as escalating land prices have made it harder for smaller builders to secure sites.

'We're very keen - in fact we think we're very good at mixed developments but unfortunately the numbers are too large and our pocket is not so deep. We don't have that kind of war chest,' he said.

Mr Leong added that the firm had considered trying for a mixed-use Punggol site but soon realised it was 'not in that league'. The top offer for the site was $1 billion.

The firm is also looking at mixed-use projects in China, although finding a good partner has been a challenge.

Its latest project - and first public housing development - is Adora Green in Yishun, a DBSS project that will be launched today. The 806-unit development, a joint venture between Guthrie and SK Land, will be priced at about $480 per sq ft (psf).

Mr Leong said 1,700 people have expressed interest in the project. He is confident that its location - within walking distance of Yishun MRT station - would appeal to many home buyers with household incomes under the $10,000 income ceiling. The project could even get a share of the Housing Board's build-to-order (BTO) and executive condominium market, he added.

Last month's cooling measures would not affect the HDB market as much, as many in that sector are first-time buyers. The stable demand there has made it a 'fairly safe market', said Mr Leong.

The DBSS project's pricing is also a draw, he said. While it costs about 20 per cent more than BTO launches, it is priced similarly to resale transactions in similar locations, he noted.

He added that the firm is willing to consider projects priced under $2,000 psf. While it will stay 'very focused' on shopping malls, it will be open to residential or mixed-development opportunities.

But this is harder now with an increasing number of big players entering the property market - some content with lower yields.

Mr Leong said: 'We like mixed developments but the opportunities are not many. They come by and if the development cost is too high, then we're not in it, we're constrained.'

He added that the location of a site is ultimately key to developers' bids. A well-located site in Bishan can expect 'very bullish bids' in spite of the cooling measures, he said.

He is also not fazed by the measures: 'Although volumes have come off, which is not unexpected, prices have held steady... Developers nowadays are strong financially.'

Guthrie Properties is a subsidiary of mainboard-listed Guthrie GTS. The group was founded in 1821 by Scotsman Alexander Guthrie.

In 2007, the Salim Group - one of Asia's largest conglomerates - and Indonesian businessman Putra Masagung jointly bought a majority stake in the company.

ESTHER TEO