http://www.straitstimes.com/archive/...loper-20141004

No fat profit margins? It's OK, says developer

Published on Oct 4, 2014 1:42 AM

By Cheryl Ong


THE latest executive condominium (EC) by Evia Real Estate is likely to be the one that yields the least profits for the firm.

And it is not a case of dwindling demand or a surge in EC launches.

Rather, despite rising costs, the developer wishes to include facilities that might be found in condos in the Nassim area - one of Singapore's poshest residential districts - at his newest "baby", Lake Life, said Mr Vincent Ong, managing partner at Evia.

Thinner profit margins are OK, he said. Although the firm expects single-digit profits from Lake Life, Mr Ong conceded: "Is it worthwhile? I don't know, quite challenging, but it's fine."

He said the days when developers could enjoy profit margins of 20 per cent were over. But the firm is able to up the ante even at an EC because it works on only one development at a time.

"I have pride," Mr Ong said. "I have a lot of fun in this trade but I have bandwidth only for one project as I do it for myself. It's my hobby and passion."

The 546-unit condo in Yuan Ching Road is in the Lakeside District, which has been earmarked as a test bed for new technologies in Singapore's drive to be a "smart" city.

In what Mr Ong terms "future-proofing", the project will feature driverless electric shuttle buses and charging stations for electric cars. Still, that is not enough. Mr Ong also cut a deal with fitness operator True Yoga, owned by friend Patrick Wee, to provide free classes at the condo.

"You want to be able to buy a country club membership and get a condo free," joked Mr Ong.

But these extras will not add to the maintenance fees for residents, he said, because the firm has already factored in a one-time payment to the operator in its project budget.

Lake Life, which opens for e-applications today, is expected to sell for about $880 to $890 per sq ft (psf), against Qingjian Realty's Bellewoods at $760 to $820 psf. Bellewoods opened its doors to the public last weekend and drew 400 applications.

Mr Ong said the firm's break-even cost was already about $800 psf, but he is "quietly confident" of sales as Jurong has not had a new EC since 1994 when Summerdale was launched.

The developer of two other ECs, Heron Bay in Upper Serangoon Road and Watercolours in Pasir Ris, has always had his fingers in the property pie. He bought six shophouses from OCBC Bank in 2008 when hardly anyone wanted to invest because of the financial crisis.

He set up the firm in 2011 with partner Leslie Lim. The company also manages a fund, focused on South Korean logistics and warehouse properties, with an asset size of $800 million.

The 53-year-old, who considers himself "semi-retired", said his latest venture keeps him active. It is a little like a homecoming. "This is something I want to do better for myself because this is where I grew up. I'm a Taman Jurong boy."

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