http://www.straitstimes.com/archive/...apore-20141122

Mixed record for Malaysian developers in Singapore

Stricter loan rules and additional taxes have hit later entrants or projects

Published on Nov 22, 2014 1:11 AM

By Cheryl Ong


SINGAPORE developers may have gone abroad seeking fresh opportunities, but some of their Malaysian counterparts have headed here in recent years, hoping for the next El Dorado.

A booming market buoyed by Singaporeans' insatiable appetite for property lured Malaysian developers across the Causeway after the 2008 global financial crisis, market players said.

Now, some have become entangled in the recent downturn after multiple cooling measures, though some have managed to benefit from the significant jump in property values prior to that.

"Singapore was one of the best performers in the region. The Malaysian developers who did well had strategically focused on mass-market projects, which saw strong take-up due to pent-up demand, particularly from 2010-2012, before the introduction of government cooling measures," said Mr Donald Han, managing director of Chestertons.

Mr Alan Cheong, senior director of research and consultancy at Savills, said: "Many probably came because... Singapore was remaking itself to be a playground for the rich and famous."

Top Malaysian players to make their presence felt include SP Setia, IOI Group and YTL Group.

Malaysian sovereign wealth fund Khazanah Nasional, together with Temasek Holdings, is part of M+S, developer of mixed developments DUO and Marina One.

Though most have few units left at new projects, others that got into the high-end game have found themselves unable to shed unsold units, as buyers are constrained by stricter loan rules.

YTL Group, for instance, has yet to launch the 77 units at its luxe project, 3 Orchard By-the-Park, seven years after it bought the site though a collective sale worth $435 million, or $2,498 per sq ft per plot ratio.

A spokesman told The Straits Times that it still has no plans to launch the project though building has begun. "The market condition is something we want to monitor and we'll take it from there. A lot of developers like us are adopting a watch-and-see position."

IOI Group, who did not respond to media queries, has made its presence felt here through partnerships with local developers.

It is developing 190 homes at the South Beach mixed development in Beach Road with City Developments which have not been launched for sale yet.

It also developed 151 units at Seascape and 302 apartments at Cape Royale, both Sentosa Cove projects, with Ho Bee Investments, while 626 units remain unsold at its 755-unit Trilinq condo in Clementi.

SP Setia, which developed Eco Sanctuary in Chestnut Avenue, has sold more than 80 per cent of its units, Urban Redevelopment Authority data shows.

M+S had a good reception last month, with 334 sold out of the 400 units launched at Marina One Residences. But there are 1,042 units in total and the developer has said that one of the two residential towers will be launched only after the project gets its temporary occupation permit.

Foreign buyers, who have helped to prop up - and dominated - the luxury segment, are shying away after being slapped by additional taxes. The irony, said Mr Han, is that Malaysian developers had hoped to find buyers for their Singapore projects back at home.

Also, the strength of the Singapore dollar, which had first drawn those in search of higher revenue, is now a double-edged sword, given high land costs here.

"If profit margins here are to remain at current anaemic levels compared with that in Malaysia, those with a presence here will be more cautious about committing new capital to Singapore," added Mr Cheong.

In Singapore, the cost of land makes up about 60 per cent of a project's development cost, compared with 10 per cent in Malaysia. This could "confound" Malaysian developers who have not had a string of successes here, he said.

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