Simon Cheong Sells Village Centre, Again

Source : The Business Times, June 23, 2009

Property helps developer strike gold for second time

Developer Simon Cheong has pulled a rabbit out of his hat by making money from the same set of properties for a second time.

Mr Cheong's privately-held vehicle recently sold The Village Centre at Pasir Panjang and a site next door for $23 million.

The Village Centre: Mr Cheong's family vehicle sold it for $26m in 1996, bought it back for $10.8m in 2004 and sold it for $23m recently

This is double the $10.8 million he paid a NatSteel associate for the assets in 2004.

Mr Cheong's family vehicle had sold the freehold properties to NatSteel in 1996 for $26 million.

He is not the only one to have made two rounds of money from The Village Centre and the site next door.

Property consultancy group DTZ brokered the latest deal as well as the one in 2004.

In the latest transaction, Mr Cheong's Ridge Investments has sold the properties to Hume Homes Pte Ltd, a boutique property developer controlled by Ching Chiat Kwong, Low See Ching and Tee Wee Sien.

The Village Centre, at No 3 South Buona Vista Road, is a four-storey commercial and residential building comprising shop units on the first to third levels, seven apartments on the top level and 29 basement carpark lots.

The apartments are currently vacant while retail tenants include Cold Storage, Harry's Bar and Thai restaurant Lemon Grass.

About 92 per cent of the total 23,363 sq ft net lettable area for the shop units are currently leased.

The next door plot at No 7 South Buona Vista Road is currently a surface carpark with 30 lots.

The properties can be redeveloped.

Under Master Plan 2008, The Village Centre plot is zoned for commercial and residential use with a 3.0 plot ratio (ratio of maximum potential gross floor area or GFA to land area).

The next door plot, No 7 South Buona Vista Road, is zoned for residential use with a 1.4 plot ratio.

An estimated development charge (DC) of $7 million is payable to redevelop the two plots to their maximum potential.

However, there is a major road line sitting on the two sites, which means that Hume would have to make setback provisions if it redevelops the properties.

Assuming the properties are redeveloped to their maximum Master Plan 2008 potential, the $23 million purchase price reflects a unit land price of $351 per square foot of potential GFA inclusive of the $7 million DC.

There is at least one other instance in recent years of a property trader making profit from selling the same property twice.

Lippo group sold One Phillip Street, a 999-year leasehold office block, in early 1996 for $76.8 million to Kewalram Group.

Then Lippo unit Auric Pacific bought back the 16-storey office block from Kewalram in 2006 for $37.6 million.

Last year, Auric sold the asset to New Star International Property Fund for about $99 million.