Bracing for the next lap
By Cecilia Chow
/ The Edge Property |
In December, Knight Frank Singapore relocated from its office on the 30th floor of Hong Leong Building. As it had been a tenant there for 30 years, the move was captured on video and uploaded to YouTube on Jan 11. Twin sisters and receptionists, Anne and Irene Law, who have welcomed visitors to the Knight Frank Singapore office for a decade, shed tears as they left the premises.
A particularly poignant moment was when Tan Tiong Cheng, Knight Frank Singapore’s 66-year-old executive chairman, took a lingering look around before he switched off the lights and bent down to lock the glass doors for the final time. Tan had taken over the running of Knight Frank Singapore in 1986 as managing director, the year the company moved to Hong Leong Building.
“Thirty years ago, Hong Leong Building was an attractive location — you could see the port, and there was a clear view all the way to the airport,” recounted Tan in an address to his staff at the official move.
The 45-storey building at Raffles Quay was developed by the Kwek/Quek family of Hong Leong Group, one of Singapore’s richest families. Completed in 1976, it was a landmark in the CBD for more than a decade.
Knight Frank’s new office has an expansive clients’ lounge
Source: Knight Frank Singapore
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‘A new start’
The new Knight Frank office is now on the eighth floor of Ocean Financial Centre. “It’s a good number, good feng shui,” Tan said to his staff when they moved in. “Let’s start [the new year] on a positive note.” It also marked the co-location of both the Knight Frank Singapore and Asia Pacific headquarters, with the latter moving from UOB Plaza 2.
The 43-storey Ocean Financial Centre is a Grade A office tower completed in 2011 and acquired by Keppel REIT for $261.6 million a year later. It is a landmark at Collyer Quay and Raffles Place, as it is the fourth generation of the original Ocean Building, first built on the same site at Collyer Quay in 1864.
Knight Frank’s new premises occupy a total of 14,000 sq ft and have all the trappings of the modern-day workplace — open-plan seating, hot desking, a communal area with a state-of-the-art pantry, booth and lounge seats, meeting rooms and video conferencing facilities, as well as a quiet contemplation corner. “All Knight Frank’s offices in the region — from Australia to Malaysia — are also progressively changing and updating their look,” says Danny Yeo, 63, group managing director of Knight Frank Singapore.
The office move in Singapore is also a significant milestone, marking the change of guard at the helm, with Tan stepping down as executive chairman of Knight Frank Singapore from March 31. He will then assume the newly created position of president of Knight Frank Asia Pacific, and adviser to Knight Frank Singapore. Meanwhile, Yeo will become chairman of Knight Frank Singapore from April 1, in addition to his existing role as group managing director.
Preparing for the upturn
“Apart from that, there’s very little change at the top,” says Yeo. “We will continue to inject new people who are very experienced in the real estate business, and train and prepare our staff for the next upturn.”
New additions to Knight Frank Singapore’s senior management team include Tan Boon Leong, who joined in March 2016 as executive director and head of industrial. A veteran of 23 years in the industrial space, he was head and executive director of industrial services at Colliers International.
Calvin Yeo also joined Knight Frank Singapore last March as executive director and head of office. Calvin, former deputy managing director and head of office services at Colliers International, has 25 years of real estate experience, of which 20 were spent in the office services sector.
Wendy Low, former head of retail management at Mapletree Investments, took on the position of executive director and head of retail at Knight Frank Singapore in April 2016.
Yeo: We will continue to inject new people who are very experienced in the real estate business, and train and prepare our staff for the next upturn
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Unexpected twist
In 2011, the seven shareholders of Cheong Hock Chye & Co (CHC) divested 80% of their shareholding in the company to Singapore-listed hospitality and investment company LC Development, later renamed LCD Global Investments. Four years later, in February 2015, LCD Global exercised its option to purchase the remaining 20% interest in CHC, giving it a 55% stake in Knight Frank Singapore.
LCD Global itself became the subject of an acquisition when Japan’s J Trust Group took a 29.5% stake in the company in 2014. In January 2015, AF Global, a joint venture (JV) between listed jewellery retailer-turned-property developer Aspial Corp and listed property group Fragrance Group, controlled by brothers Koh Wee Seng and James Koh Wee Meng respectively, made a general offer for LCD Global with a bid of $313.8 million. AF Global and its various parties now hold 83.49% of LCD Global, and therefore have indirectly become major shareholders of Knight Frank Singapore. In April 2016, LCD Global was renamed AF Global.
The change in ownership of LCD Global itself was the unexpected twist in the plot for the shareholders of Knight Frank Singapore two years ago.
Tan and Yeo, the two biggest shareholders in CHC, had agreed to stay on for five years until end-2016, as part of the sale of their stakes to the former LC Development in 2011. The remaining five shareholders in CHC were Lydia Sng, Nicholas Wong, Mary Sai, Foo Suan Peng and Low Kin Hon. Three of the five chose to retire and they were Foo, managing director of estate management; Sng, managing director of advisory services; and Wong, executive director of investment and capital markets.
Land acquisitions
Knight Frank Singapore will turn 77 this year. Started by its eponymous founder in 1940 as Cheong Hock Chye Pte Ltd, it was subsequently renamed Cheong Hock Chye & Co. In 1983, CHC merged with Knight Frank to form Knight Frank Cheong Hock Chye & Baillieu to carve a bigger niche in the Singapore property market. The company was renamed Knight Frank Singapore in 1996, and was 55%-owned by CHC and 45% by Knight Frank in the UK. The latter still owns a 45% stake in Knight Frank Singapore today.
The firm’s history has been closely entwined with that of Singapore’s for more than half a century. When the Land Acquisition Act was introduced in 1967, Knight Frank acted on behalf of people whose properties were acquired by the government to ensure that they received adequate compensation. It was also involved in the government’s first land sales programme in 1967.
When URA conducted its first auction of state land for residential development on Kew Drive in the East Coast in 1992, Knight Frank was the appointed agent. It was also the property consultant to broker the first collective sale in Singapore — Cosy Mansion, which was sold for $24.7 million in 1994.
In 2012, when Pearls Centre was gazetted for compulsory acquisition to make way for the construction of the Thomson-East Coast Line, Knight Frank represented the Singapore Land Authority. In March 2013, SLA announced that 241 of 243 of the owners agreed to the compensation, and 174 out of 175 tenants accepted the government’s offer of an ex-gratia payment.
Naturally, when Jurong Country Club was acquired by the government two years ago for the construction of the Singapore-Kuala Lumpur high-speed rail (HSR) terminus, Knight Frank was appointed to represent the club members. Jurong Country Club has closed on Dec 31, but it has filed an appeal over the compensation amount that SLA offered last year. The club wants $168.1 million, nearly double the $89.8 million offer made by the authorities for the acquisition of the 67ha site. The appeal is still before the courts, with a pre-trial conference fixed for Feb 15, according to media reports.
Jurong Country Club, which was acquired by the government two years ago, is appealing the compensation by the authorities
Meanwhile, Raffles Country Club members were equally taken by surprise on Jan 4 when they learnt that the 143ha site with two 18- hole golf courses would be acquired by the authorities to make way for the Singapore-Kuala Lumpur HSR project, the Cross Island western depot and other transport-related uses.
According to sources, Raffles Country Club members have also appointed Knight Frank to represent them in the compulsory acquisition.
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Picking up deals
While 2017 is expected to be a challenging year for the real estate market, there are signs that discerning investors have returned. “They are already starting to pick up deals,” notes Yeo.
A case in point was Kheng Leong Co, the private property company owned by former banker Wee Cho Yaw and his family, who paid $411.6 million for a 100% stake in Nassim Hill Realty, the entity that owns the remaining 45 unsold units at The Nassim. The purchase was made entirely in cash, according to CapitaLand in an announcement on Jan 16. The Nassim is a 55-unit luxury freehold condominium developed by CapitaLand and completed in 3Q2015.
Jan 10 marked the close of the tender for sale of the first residential site on the government land sales (GLS) programme in 2017. The residential site at Perumal Road, off Serangoon Road, has a land area of 41,417 sq ft and maximum gross floor area of 173,953 sq ft. It can be developed into a 200-unit condo block with 5,382 sq ft commercial space on the first level. At the close of the tender, there were 11 bids, indicating strong participation by developers. Listed construction group Low Keng Huat won the site with a bid of $147.08 million, which translates to about $1,000 psf per plot ratio.
Equally strong response was seen at the close of the last two GLS tenders towards end- 2016: the sale of the site on Margaret Drive to MCL Land in December, and the sale of the site on Fernvale Road to a JV between listed property groups Sing Holdings and Wee Hur Holdings in September. The sites received 14 bids each.
“There have been pretty aggressive bids at some of the recent land tenders, as most developers have depleted their land bank,” says Knight Frank’s Tan. “They are therefore actively bidding at government land tenders.”
Tan: There have been pretty aggressive bids at some of the recent land tenders, as most developers have depleted their land bank
Developers in replenishment mode
An alternative is to buy private redevelopment sites via en-bloc purchases, but that can sometimes be a drawn-out process. Last May, for instance, 82% of the owners of Shunfu Ville had agreed to sell the 358-unit privatised HUDC (Housing and Urban Development Co) estate for $638 million, after the reserve price was lowered from $688 million.
As five owners objected to the sale, the deal had to obtain High Court approval. On Jan 4, Qingjian Realty obtained High Court approval to proceed with the en-bloc purchase of Shunfu Ville estate.
Other developers have chosen to purchase redevelopment plots in private treaty deals. Listed property developer UOL Group announced on Jan 23 that it had been granted an option to purchase a 69,858 sq ft freehold site on Amber Road for $156 million from privately held property developer Sin Lian Huat Co.
Another listed property company, Roxy-Pacific Holdings, said it has acquired a row of five adjoining shophouses along Upper Bukit Timah Road for $17 million. The freehold site with a land area of 10,256 sq ft and plot ratio of 2.5 is zoned for residential development.
Meanwhile, Knight Frank launched the first collective sale of 2017. On Jan 17, it announced that the owners of One Tree Hill Garden had put it up for sale. It is a three-storey residential development with six maisonettes and seven apartments sitting on a freehold site of 39,063 sq ft. The site can be redeveloped into a combination of 13 detached and semi-detached houses.
Freehold One Tree Hill Garden, the first collective sale of 2017, is marketed by Knight Frank
Located within the exclusive housing area of One Tree Hill, just off Grange Road, One Tree Hill Garden is near the upcoming Orchard Boulevard MRT station on the Thomson-East Coast Line. The owners have indicated a price tag of $72.8 million, which translates to $1,864 psf based on the land area. The tender will close on Feb 28.
Local business sentiment remains weak, according to a recent survey conducted by the Association of Chartered Certified Accountants and Institute of Management Accountants. “I think most people are looking to see what the Singapore Budget 2017 will bring,” says Knight Frank’s Yeo.
This article appeared in The Edge Property Pullout, Issue 763 (Jan 30, 2017) of The Edge Singapore.
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