http://www.businesstimes.com.sg/real...ing-cautiously

Country Garden treading cautiously

By Lynette Khoo

[email protected]@LynetteKhooBT

29 Nov


UNDER its drive to expand overseas, Chinese developer Country Garden is keeping its eye on development projects in Singapore's city fringes and in Indonesia, where it is studying a few sites.

But given the headwinds in Singapore's residential market and the deterrent effect of the high stamp duties on foreign buyers, the Guangdong-based, Hong Kong-listed group has said it will tread cautiously.

Kayson Yuen, the regional president of Country Garden (Malaysia), said: "We've always been looking, but there's no time-frame. Our focus is Johor Bahru in the next few years, but we'll look at opportunities in Singapore on a case-by-case basis."

He noted that opportunities in Singapore are more limited, given the mature state of the market and the tight government controls. Besides this, the group is focusing on providing "lifestyle" homes, so city centre locations in Singapore are not as ideal. It is why the group homed in on Danga Bay in Johor's Iskandar Malaysia as its first overseas stop; it also did feasibility studies elsewhere in Malaysia, such as Penang, Sabah, Kuala Lumpur, Johor Bahru and Malacca.

Mr Yuen said that, as a first mover in Iskandar, Country Garden had a wide choice of sites at a low price. To date, more than 6,000 units have been sold at Country Garden Danga Bay, which is to be completed by end-2017. More than 70 per cent were bought by South-east Asian buyers, principally Malaysians and Singaporeans.

So important is Singapore in Country Bay's overseas strategy that the group has relocated its sales gallery; its premises in Cecil Street are now bigger, taking up 12,399 sq ft over two floors.

To mark the opening of the gallery, the developer on Friday launched 30 promotional units in a tower in Danga Bay, called Bay Laurel, specifically for Singapore buyers. All 30 were taken up, and another 50-plus released.

The group had launched all 9,000 units in the development last year, but faced with falling sales this year, it has switched tack to marketing the project by towers. Sales in the project this year are about 40 per cent of last year's, said Mr Yuen. However, he estimates that the first buyers are sitting on capital gains of between 10 and 15 per cent, based on prices of newly launched units.

Marketing agents said a one-bedroom unit at just over 500 sq ft is currently priced at more than RM500,000 (S$192,620); a two-bedder of nearly 700 sq ft costs RM660,000, and a three-bedder of over 1,200 sq ft, more than RM1 million.

Country Garden's regional general manager for sales and marketing Liu Zhen Yu said the group is unconcerned about short-term fluctuations in demand, but he conceded that Singaporean buyers have fallen in number since the lending curbs.

What is more disturbing are some "intentionally malicious" rumours of Country Garden dangling a buy-one-get-one free offer to mainland Chinese who buy units in the developer's projects back in China, he said. Both he and Mr Yuen expressed shock and disdain at these rumours, believed to have been circulated by rival developers.

Mr Yuen said he has previously clarified that it is impossible to offer a buy-one-get-one free deal for high-value products: "Firstly, it does not make commercial sense. Secondly, it is illegal and implies potential money laundering. People who are in the know should be aware that we will not do it as a listed company."

Asked about the group's upcoming Forest City project in Johor off Tuas, Mr Liu said the group was not launching that anytime soon. This mega luxury-home project, spanning 30 years, is to sit on a 2,000 ha man-made island nearly thrice the size of Ang Mo Kio estate. Reportedly backed by the Johor Sultan, the project has made the news for its controversial reclamation works in the Strait of Johor, an issue which the Singapore government has flagged as a matter of concern.

Mr Liu told The Business Times: "We will fully consider the environmental-impact assessment and when the time is right, we will share our plans, which we think should put the concerns to rest."

With more than 200 projects across China under its belt, Country Garden is ranked seventh in China. Mr Liu said the group seeks to stay in China's top 10 league, and that the group is optimistic that "fundamental demand remains strong and there is high purchasing power".