Completed Products May Be The Way To Go For Developers

Source : The Business Times, November 8, 2008

Wheelock Properties CEO says the new trend will raise the stakes for developers to deliver good-quality projects.

WHEELOCK Properties (Singapore) CEO David Lawrence sees developers having to sell residential projects as completed products - and not off-plan, before construction is finished - in view of near-term weak market sentiment. And on a positive note, this trend will raise the stakes for developers to deliver good-quality projects, Mr Lawrence said in a recent interview with BT.

He described last week's move by Ministry of National Development to suspend state land sales through the Confirmed List until June next year as 'very sensible and expected'. 'What people may not realise is that it has an effect on the Singapore banking system, which is exposed to the property market here - and it's important at the moment to continue to have a stable banking system,' he explained.

Mr Lawrence disagrees with parties who have called on the government to 'just sell land at any price and let property fall to whatever price'. 'What we have to understand is that over 90 per cent of Singaporeans already own a home and it's their main asset,' he said. 'So the one thing we don't want is everyone's asset price depreciating. We're not running the economy for a few people who don't already own property. Let them work for a few years and buy one later,' he quipped.

Mr Lawrence has earned a reputation as an astute property investor in Singapore. Ardmore Park, the luxury condo the group developed between 1996 and 2001, earned him the nickname 'the $1 billion Man', after the estimated pre-tax profit the group earned from the project, which it developed on a prime freehold site bought at an attractive price in 1993.

Wheelock also picked up plum residential sites in Singapore's prime districts during the early stages of the recent residential upcycle, which has now ended. Mr Lawrence stopped the site buying spree at least a year before the market peaked in 2007.

He is confident about the prospects for Singapore and its real estate market in the mid-term, although the next couple of years will be difficult. In light of this, he pruned Wheelock's headcount by 12.6 per cent, or 11 employees, from 87 to 76 a week ago, he told BT.

'It's not a nice thing to have to do, but I think for the next two or three years, companies have to firm up more efficiently until the next cycle starts. Something we had to do reluctantly,' he said.

Giving his take on the bigger picture on the Singapore residential sector, he reckons the island probably has the best quality total stock of housing in the world, including Housing & Development Board estates and private housing.

'Over the past few years, the government has been successful in achieving gentle capital price appreciation for HDB housing stock, which is very important,' he said.

In contrast, those who dabble in high-end residential sector should not expect to receive too much sympathy, he reckons. 'I don't think the government cares about the top-end market. If people want to speculate, buy too many apartments, go broke or make a lot of money, they can't be expected to be supported by the government.'

New HDB estates as well as upgraded ones are sometimes not much different from private housing, according to Mr Lawrence. 'Actually, if I was allowed to, I would like to buy an HDB apartment in Ghim Moh Estate, for instance,' he said. 'I like the area for the food. It's well maintained. There's an MRT Station. Actually, some of these HDB estates are, I think, better than some of the private condos - they are very well-managed now. And good places to live. So maybe one day, I can buy an HDB flat in Ghim Moh and retire there.

'My in-laws live in an HDB flat in Toa Payoh. I am always trying to buy them a private condo but they refuse to move. They like it there. They have friends there, food, it's a well-managed estate. They're happy. So they keep telling me: 'Keep out of our business. We don't want you to buy us a flat.'