After 16 years in Singapore, Zuo Haibin and his wife, Li Minghua, regard the Bishan-Thomson area as one of the choicest neighourhoods to live in. Home is Clover By The Park, a private condominium that fronts Bishan Park, where the Zuo family goes for morning strolls. As a member of the Singapore Island Country Club at Upper Thomson, Zuo plays golf regularly.
Most weekends, the couple can be found at MacRitchie Reservoir Park for the TreeTop Walk. And it was where Zuo trained for the gruelling 110km four-day trek in the Gobi Desert Challenge 2012, where he was one of a team of 40 participants who represented the National University of Singapore Asia-Pacific Executive MBA (Chinese) Alumni.
Besides proximity to three parks, namely Bishan Park, Lower Peirce Reservoir Park and MacRitchie Reservoir Park, another major attribute is the location’s proximity to good schools such as Ai Tong School and Raffles Institution. Although he is from Shandong, China, Zuo’s lifestyle is very much Singaporean.
Naturally, his maiden property development as managing director of Vico Construction is in the Bishan-Thomson area. It is the 288-unit Thomson Impressions on Lorong Puntong, located just off Sin Ming Avenue. Mainland Chinese conglomerate Nanshan Group has a 95% equity stake in the project, while Vico holds a 5% stake. The site area, which measures 113,052 sq ft, is ideal, says Zuo. “We thought it was better not to buy a site that was too big for our first development.”
The 288-unit Thomson Impressions is the maiden project of Nanshan and Vico
Few competing launches in the vicinity
Another attraction is that there are not many other competing condo projects in the neighbourhood, as most of those launched on government land sale sites are substantially sold. The most recent project launched in the Upper Thomson neighbourhood was the 455-unit Thomson Three by UOL Group and Singapore Land. Thomson Three was launched in September 2013, just three months after the imposition of the total debt servicing ratio loan limit. The developer sold units at an average price of $1,338 psf and only eight units remained unsold as at end-October. The other project is the 361-unit Thomson Grand by Cheung Kong Group, which was launched in July 2011 and fully sold at an average price of $1,146 psf.
Thomson Impressions was launched at end-October and has sold 113 of 150 units released to date. This translates into a sales rate of 40% for the entire project, achieving an average price of $1,400 psf. “Sales are not bad, but could always be better,” says Zuo. “We’re quite happy being among the top three bestselling projects together with Principal Garden and Poiz Residences.”
About 80% of the buyers of Thomson Impressions are said to be Singaporeans who live in the Ang Mo Kio, Bishan and Thomson area. Thomson is traditionally considered an affluent neighbourhood where many of the “old rich” live. And with two train stations on Thomson-East Coast Line coming up in the neighbourhood (namely Bright Hill and Upper Thomson stations), it will also attract those aspiring to live in a rapidly growing upper middle class enclave.
Therefore, when it came to naming the project, Thomson Impressions was chosen as “everyone has a view or perception of the Thomson area”, says Zuo.
Thomson Impressions also marks Nanshan’s maiden residential development project in Singapore. Nanshan beat 17 others to win the 99-year leasehold site in a government land tender last October with a top bid of $173.57 million ($731 psf per plot ratio).
It was in Singapore that Zuo made the acquaintance of Song Zuowen, president of Nanshan and one of China’s 50 richest people.
Zuo is the vice-chairman of the Association of Chinese Enterprises in Singapore. He also founded the Shandong Association (Singapore) two years ago to welcome newcomers from the province. “I’m from Shandong. I’ve always wanted to bring businesses from Singapore to Shandong, such as the government-to-government initiatives in Suzhou, Tianjin and Chongqing, where many Singapore companies have invested. I also want to help businesses from Shandong that want to come to Singapore,” he says.
Another ambition is to position his company as an “integrated resource centre” that allows him to use his market knowledge and expertise to help other companies from China wanting to break into the Singapore property market.
For example, in addition to taking a small equity stake in Thomson Impressions, Vico is the builder for the project. It is also the builder and consultant for Nanshan in the redevelopment of Irving Industrial Building. Nanshan purchased Irving Industrial Building in an en bloc deal in May 2014. The building is located on a 65,309 sq ft freehold white industrial site.
‘Step by step’
Zuo is only too aware of the challenges of entering a new market. He started Qingjian Realty (South Pacific) Group in 1999 as the first overseas office for state-owned enterprise Qingjian Group. Contrary to the perception that most SOEs parachute in with a team of 1,000 people, Qingjian started with just two people, namely Zuo and his wife.
In the early days, Zuo drove a pickup truck and sent construction workers to the work sites. His wife oversaw the HR department. Zuo grew Qingjian into a main contractor, undertaking the building of many of the high-rise HDB blocks in Punggol and Sengkang. Over the years, Qingjian has constructed about 23,000 dwelling units, primarily HDB flats in the northeast region.
When HDB introduced the Design, Build and Sell Scheme in 2005 by inviting private developers to build HDB flats, Qingjian ventured into this business and developed its first DBSS project. It was Natura Loft in Bishan, with 560 units in three 40-storey blocks. It also marked Qingjian’s first foray into property development in Singapore. The project was launched in November 2008 and completed in 2012. At the time, four-room flats in Natura Loft were priced from $465,000 to $586,000 and five-room flats were priced from $600,000 to $739,000.
Since then, Qingjian has also been active in the executive condo segment, a hybrid public-private housing scheme, with the development of RiverParc Residence in Punggol, which was launched in 2011, and two other more recent EC projects — Bellewoods in Woodlands and Bellewaters in Sengkang, which were launched at end-2014. Private condo developments by Qingjian include Nin Residence in Potong Pasir, River Isles in Punggol and Riversound Residence in Sengkang. “We grew the company step by step,” says Zuo. “And we operated like a local company in Singapore.”
Being one of the first SOEs to enter Singapore 20 years ago, Qingjian had a head start, says Tony Koe, executive director of SLP International Property Consultants, who had marketed many of Qingjian’s EC and private condo projects. “Over the years, they have gained acceptance among Singapore homebuyers,” he says.
In May, Qingjian was listed on the Hong Kong Stock Exchange as CNQC International Holdings via a reverse takeover of former Hong Kong contractor Sunley Holdings.
This has been a momentous year for Zuo. Having worked 24 years with Qingjian Group, of which the last 16 years were spent in Singapore where he was CEO of CNQC Holdings and executive director of various companies under the group, he decided to leave.
Zuo felt it was time to fulfil his dream to be an entrepreneur “while I’m still young”, says the 47-yearold. “I’d like to own a company, grow the business and eventually have it public listed.” In a way, that dream was fulfilled when he was at Qingjian, even though he left just before its listing on the Hong Kong Stock Exchange, he adds. A second part of that dream is to have a prime office tower in the CBD emblazoned with his company name, similar to the headquarters of big listed companies.
Vico was set up in 2008 by his wife, Li, after she left Qingjian. Since Zuo joined the company in April, Vico has secured a handful of construction contracts in both the HDB and private sectors.
Despite Singapore being a relatively small market, Chinese companies are still interested in setting up their offshore base here because the government is stable, the rules are transparent and they can succeed on their own merits, says Zuo.
“The Singapore and Chinese markets may be undergoing a difficult time, but Singapore companies are venturing into China as part of their growth story, and likewise, Chinese companies are coming to Singapore as part of their overseas diversification strategy,” says Lee Chun Wye, executive director of LSZ International, a consultant for Thomson Impressions.
Singapore may not be a lucrative market, but Zuo intends to focus his energy here. Today, developers’ profit margins are thinner than they were two years ago. With land cost still high, construction cost on the rise owing to higher labour costs and property prices weakening, developers’ margins have eroded. “It’s less than 15% — more like 10%,” he laments.
While the consensus is that the property market in 2016 will be even more challenging compared with this year, Zuo’s expectation is that it will be better. “Everybody hopes for a better tomorrow,” he says.
Zuo is hopeful that the government will relax some of the property cooling measures next year, especially the additional buyer’s stamp duty (ABSD), which has been the main obstacle for most investors and foreign homebuyers. The market segment that bore the brunt of the property cooling measures has been the luxury condo segment.
“Property prices for some of the condos in Sentosa Cove and Orchard Road are now below $2,000 psf,” says Zuo. “Average prices of high-end condos in Beijing, Shanghai and Shenzhen are now even higher compared with those in Singapore.”
If the Singapore government were to relax some of the property cooling measures, especially ABSD or the seller’s stamp duty, the market is likely to improve next year. Prices could even see a moderate rise of 2% to 3%, reckons Zuo.
‘Back to basics’
The second phase of Thomson Impressions is likely to be launched sometime in January 2016. Instead of offering star buys and discounts, Zuo wants to “go back to basics” and focus on offering good-quality homes. This is evident from the materials selected for the project. The living room and dining room have full marble flooring with 900mm by 600mm slabs, which are larger than the typical 600mm by 300mm and therefore more expensive. Bedrooms will have flooring of Myanmar teak.
With new condos featuring more compact units today, space is now at a premium. At Thomson Impressions, the common bedrooms are designed to be large enough to fit a single bed and study desk or a queensized bed. And the master bedroom is big enough for a king-sized bed.
The façade will also have a curtain wall system, which is commonly seen in office buildings in the CBD and luxury residential projects in the prime districts. The curtain wall is effective in keeping out the elements and as a noise barrier. Units in the four blocks are oriented in a north-south direction to maximise cross ventilation. A lot of thought has been put into landscaping the project as well.
Zuo reckons homebuyers of Thomson Impressions will be able to enjoy the “park lifestyle” that his family has grown to appreciate in the neighbourhood. While Zuo is a permanent resident, his wife and son are citizens. In fact, his 19-year-old son is currently serving his national service. A couple for 28 years, it is clear that the Zuos are calling Singapore home.
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This article appeared in the City & Country of Issue 707 (Dec 14, 2015) of The Edge Singapore.