Despite towering price tags, cash-flush Indonesians still covet strategic properties in the neighboring city state. “Singapore and Indonesia have always been so friendly with each other,” Edmund Cheng, deputy chairman at Wing Tai holdings, tells media representatives during a visit to the company’s new developments in Singapore’s CBD.
“Singapore is so small, so it needs to capture a lot of investment,” he adds, referring to the country’s population of only 5 million.
Cheng, a Hong Kong-born businessman who has lived in Singapore for 32 years, says Asian countries – including Singapore, Indonesia and Malaysia – will become the economic “stars” of the world in the coming decade.
Little more than a fishing village 50 years ago, Singapore itself has developed into a modern and wealthy cosmopolitan state. “Looking at history and how the West is doing; (opportunity) is coming back to the East,” he notes.
Tremendous investment potential, says Cheng, has property firms marketing their products throughout the region. “Property is very much tied to how well a country is doing, especially in a small country like Singapore. However, small is good for a property business because that means limited land and when economic development is good, people can afford more,” he says.
Wing Tai was founded as a family business in Hong Kong back in 1955 and within less than a decade shifted its operations to Singapore. Its business portfolio includes property development and investments as well as hotel and retail businesses in Malaysia and China.
The company’s total assets exceed S$3.6 billion, with current net assets totaling S$1.7 billion and a market capitalization of S$1.2 billion. According to the company’s annual report, revenue from its property business reached S$626.7 million last year, up 93% from S$324.6 million in 2009. The group’s property business contributed more than three quarters of the company’s total revenue of S$821.9 million last year.
Despite being hit by the global slowdown in 2009, all is well in the city state with the economy growing by 14.5% last year. Meanwhile the Ministry of Trade & Industry (MTI) has projected that economic growth will reach between 4% and 6% this year.
Defying global trends, Indonesia’s strong growth throughout and following the crisis has not gone unnoticed by investors. Predicted to grow by 6.5% this year, Cheng acknowledges that Wing Tai should have been paying more attention to Southeast Asia’s largest economy.
“We missed the opportunity [to tap the Indonesia market],” admits Cheng of Indonesia’s strong growth over the past two years. He lauds the country’s economic development, pointing to its healthy capital markets and political stability, but says his company has been more focused on the property markets of Hong Kong, Malaysia and China.
“I need to know more about Indonesia, including Jakarta and all the other cities because it is important as a developer to know about the people, the culture and the policy,” he admits. “I don’t have that knowledge at the moment. Over the years and once I have this knowledge I will be able to do something good for Indonesians, as well as for myself and my company,” he says.
It could be that the tide is turning sooner that Cheng implies – Indonesia is already a very important market for the Singapore-based company, contributing more than half of its overseas sales. “About 55% of Helios’ market is overseas and more is coming from Indonesians,” says Len Siew Lian, Wing Tai Holdings’ general manager for property.
Wing Tai’s two latest apartment projects – The Light and Helios residences – located side by side in Singapore’s 09 district on Cairnhill Road, have attracted the attention of several cash-rich private Indonesian investors.
Len Siew Lian says there are no restrictions on foreigners purchasing condominiums in Singapore and many Indonesians invest for their children. “Indonesians have no problem paying cash,” she notes, adding that the maximum payment period in Singapore is 70 years minus the buyer’s age.
“Indonesian buyers usually choose to pay cash or complete payment in 10 years,” she says, adding that most purchase for personal use.
With land prices in Singapore tripling over the past five years, from $600 per sq ft in 2006 to $2,000 per sq ft in 2011, the properties attract an elite market. By comparison, land prices in Jakarta’s CBD are Rp17.5 million per sq m, bearing in mind the different measurement system.
Helios Residences is a high-end condominium consisting of 140 units of between 1,280 and 2,002 sq ft, while the three penthouse units are larger. The project was started in 2007 and is due for completion next year.
“Each project usually takes between four and five years to complete,” explains Len Siew Lian, adding that each unit is sold for more than S$4 million. The price tag doesn’t deter Indonesian buyers, who are prepared to pay big dollars for property just five minutes’ walk from Singapore’s popular Orchard Road shopping district and nearby Mount Elizabeth Hospital.
Based on the Singapore first quarter residential report released by global real estate consultant Cushman & Wakefield, the private residential market has encountered “drastic government measures” to cool soaring market sentiments and rising prices within the period.
This included lowering the loan-to-value ratio from 70% to 60% for owners with more than one home loan, as well as significant hikes in stamp duty. These measures have had some effect, with price rises slowing by 1.8% in the second quarter, from an average 2.5% in the first quarter. “Prices of luxury, high-end non-landed private homes increased by 1.5% and 1.8% respectively,” the report noted.
GlobeAsia was privy to a sneak peek into Wing Tai’s latest luxury project Le Nouvell Ardmore, currently being built at Singapore’s prestigious Claymore Hill. Named after its architect, the 33-story tower building includes 43 exclusive units of more than 3,800 sq ft.
“When we build, it is for someone. Architecture is a gift,” says Pritzker Prize winner Jean Nouvel. The French architect’s distinctive aesthetic taste is both simple and elegant, says Cheng, who has known Nouvel for years. “We share the same passion for details and something original,” he adds.
Inspired by the Rubik’s cube, the Le Nouvel Ardmore maximizes views and space. The luxury buildings also boast the work of Japanese interior designer Koichiro Ikebuchi and French lighting designer Hervé Descottes. The smallest residence in the building, at 3,800 sq ft, has a not-so-humble price tag of S$17 million.
“It is not about the price,” emphasizes Cheng. “I think it is more important to take pride in what we do, foresee vision that is long-lasting, not just in value but also in des