Chip Eng Seng previews Parc Komo at average price of $1,450 psf

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/ EdgeProp Singapore
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May 17, 2019 12:49 PM SGT

The mixed-use development in Upper Changi is positioned as the most affordable freehold project launch in 2019

When listed construction and property development group Chip Eng Seng Corp paid $248.8 million for the en bloc purchase of Changi Gardens in October 2017, it was at a 27% premium to the owners’ original asking price of $196 million.
View from the gateway that separates the retail component and private residences at Parc Komo (Credit: CEL Development/Chip Eng Seng)
Still, Chip Eng Seng is previewing the new project, Parc Komo, on May 17, at an average price of $1,450 psf. “A lot of leasehold projects are already priced above that,” says Michael Ng, executive director of CEL Development, the property development arm of Chip Eng Seng. “Such pricing for a new, freehold project will be very difficult to repeat.”
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Beyond pricing and the freehold tenure, the developer was drawn to the site because of the neighbourhood, says Raymond Chia, Chip Eng Seng group CEO. “We like its laid-back, rustic nature and the surrounding greenery,” he says.
Another attribute is that it is a mixed-use project. Parc Komo has 10 five-storey blocks with 276 apartments and 28 retail units on two floors fronting Upper Changi Road North. The retail units will not be offered for sale as the developer wants to have better control of the tenant mix, says Chia. For the convenience of both residents of Parc Komo and those in the neighbourhood, he reckons potential tenants could include a supermarket, childcare centre or pre-school and F&B outlets.
Even though the site could potentially yield a new development with 330 units under the URA guidelines, Chip Eng Seng decided to build just 276 residential units in order to retain the “laid-back feel” of the development, says Chia.
The former Changi Gardens, which Chip Eng Seng purchased en bloc for $248.8 million in Oct 2017, and will be redeveloping into the new mixed-use development, Parc Komo (Credit: ET&Co)

‘NOSTALGIA, SLOWER PACE OF LIFE’

Lim Koon Park, founder and principal of Park + Associates, is the design architect for Parc Komo. “We wanted to recreate a certain nostalgia without being retro, and to bring back a time when the pace of life was slower,” says Lim. He drew inspiration from Changi Village and Loyang, which he feels are “not as congested as many areas in Singapore with spanking new developments”.
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Park + Associates also designed the sales gallery. Meanwhile, the interior designer for the showflats is 2nd Edition and the landscape architect for the project is Salad Dressing. The three appointed marketing agencies for the project are ERA Realty Network, PropNex and SRI.
Unit sizes range from 452 sq ft for a one-bedroom apartment to 1,905 sq ft for the largest five-bedroom penthouse. Prices start from $663,000 for a one-bedroom unit; from $871,000 for a two-bedroom unit; and from $1.294 million for a three-bedroom apartment.
“The attractive pricing of Parc Komo will allow HDB upgraders to be able to buy a freehold, quality investment that can be enjoyed over the generations,” says Ismail Gafoor, CEO of PropNex.
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A two-bedroom loft-style apartment with 4.6m ceiling height (Credit: Albert Chua/EdgeProp Singapore)

LOYANG MRT STATION, CHANGI REJUVENATION

The most anticipated amenity is the new Loyang MRT Station on the upcoming Cross Island Line, which will be an eight- to nine-minute walk from Parc Komo. “The Cross Island Line and Loyang Station is definitely a huge benefit to those living in the area, especially those who don’t drive and rely on public transport,” says Ken Low, managing partner of SRI.
While the majority of the buyers are expected to be existing residents in the East, “it would not be uncommon to have buyers that currently do not live in the East; for example, those that are working in the East but staying elsewhere,” says Jack Chua, CEO of ERA.
More jobs are likely to be created under the URA Master Plan 2019 for the Changi Region. Centred around the expansion of Changi Airport. It includes the aerospace park and logistics cluster as well as the new Changi East Urban District to complement the Changi Business Park, Singapore University of Technology and Design (SUTD) and Singapore Expo, which together have been designated as “Changi City”.
“All the condominiums in the Upper Changi are already enjoying very strong rentals, and it’s actually one of the more popular locations in the east,” says CEL Development’s Ng.
Jewel Changi Airport opened last month and has created a lot of excitement (Credit: Jewel Changi Airport Group)
He points out that Parc Komo is low-rise at just five storeys, unlike most of the other condominiums in the area which are high-rise. “Being mixed-use with the convenience of the future retail and F&B outlets, it’s ideal for both owner-occupiers and investors who are planning to rent out their units.”
PropNex’s Ismail concurs. “Jewel Changi Airport is sparking some excitement in the Changi area,” he says. “In addition to the convenience of a major mall at Jewel and the upcoming Loyang MRT Station, there’s also the rustic lifestyle and recreational facilities available at Changi Village and the Changi Point Coastal Walk.”

RECENT AND UPCOMING PROJECTS

Chip Eng Seng continues to actively seek sites in government land sales (GLS). In January, the group emerged at the top of seven bids received for the 125,328 sq ft residential development site at Kampong Java Road. Chip Eng Seng’s bid was $418.38 million or $1,192 psf per plot ratio (ppr).
At the close of the tender, Tricia Song, Colliers International head of research, had commented: “The top bid was below our expectations, a testament to the cautious mood of the developers.”
The showflat of a three-bedroom unit at Parc Komo (Credit: Albert Chua/EdgeProp Singapore)
The top bid of $1,192 psf ppr for the GLS site at Kampong Java was also lower compared to the $1,540 psf achieved for the Fourth Avenue GLS site and the $1,733 psf ppr for the Jiak Kim Street GLS site in December 2017, notes Nicholas Mak, executive director of ZACD Group.
Chip Eng Seng hasn’t decided when to launch the upcoming project at Kampong Java: It could be towards the end of this year, or early next year. However, it has already received “a lot of enquiries” from prospective buyers, says Chia. “Based on the price that we paid for the GLS site, they probably think we will be launching at an attractive price.”
After all, Chip Eng Seng’s breakeven price for the Kampong Java site is estimated to be $1,700 psf, with selling price of the new project expected to be in the range of $1,900 to $2,000 psf, according to Colliers’ Song.

LIM FAMILY EXITS, SINGHAIYI’S TANG ENTERS

Early last October, Chip Eng Seng announced that seven of its shareholders including founder and honorary chairman Lim Tiam Seng, who is Chia’s father-in-law, sold their shares amounting to 29.73% of total issued shares of the company. The buyer was Celine Tang, group managing director of listed property group SingHaiyi.
Other members of the Lim family who also exited Chip Eng Seng were executive deputy chairman, Lim Tiang Chuan (brother of Lim Tiam Seng); Lim Sock Joo (Chia’s wife and the founder’s daughter); Lim Tian Moh (another brother of Lim Tiam Seng); and Dawn Lim Sock Kiang (the founder’s other daughter and Chia’s sister-in-law).
Chia: I was looking to diversify into a sector that would complement our real estate development business (Credit: Samuel Isaac Chua/EdgeProp Singapore)
Chia, meanwhile, remained at the helm as group CEO. “While the older generation are very passionate about the businesses that they have founded, they realise they have to think about succession planning eventually,” he says.
And that’s what Chip Eng Seng’s founder did. The 80-year-old Lim established the company in the 1960s as a sub-contractor and grew to become a main contractor. In 1982, the firm won its first HDB construction contract. Chip Eng Seng was also the contractor for Pinnacle @ Duxton, the landmark 1,848-unit, high-rise HDB development with seven 50-storey towers linked by two sky bridges.
Chip Eng Seng will be handling the construction of Parc Komo. It is also the contractor for the 720-unit Grandeur Park Residences, which is expected to be completed sometime in 2020-2021.
While SingHaiyi’s Tang is now chairman of Chip Eng Seng, she is a non-independent and non-executive director. “The lines are drawn very clearly between management and non-executive shareholders to avoid any conflicts of interest,” emphasises Chia.
As an example, Tang was not aware that Chip Eng Seng had placed a bid for the Kampong Java site. Only in the event that the two listed entities intend to form a joint venture to bid for a site will they consult each other, says Chia. “If Chip Eng Seng wants to form joint ventures with other long-term partners such as Heeton Holdings or KSH Holdings, we can do it without having to consult anyone.”
Lock Wai Han was also appointed an independent and non-executive director of Chip Eng Seng at the end of last year. Lock is the CEO and executive director of OKH Global, another listed property company in which Tang had purchased a substantial stake (44.3%) in 2016. Tang subsequently assumed the role of executive chairman of OKH Global.
One of the bedrooms of the five-bedroom showflat with 3.2m ceiling height (Credit: Albert Chua/EdgeProp Singapore)

DIVERSIFYING INTO HOSPITALITY, EDUCATION

Meanwhile, Chia had been actively looking to diversify the group’s revenue and income base beyond property development and construction. It was in 2011 that Chip Eng Seng first ventured into hospitality when it acquired a GLS site, which has since been developed into Alexandra Central, with a strata retail development and hotel. The group appointed Park Hotel Group to manage the Park Hotel Alexandra. Chip Eng Seng also owns the Grand Park Kodhipparu Resort in the Maldives.
Hotel acquisitions by Chip Eng Seng in 2017 and 2018 included the Sebel Mandurah in Western Australia as well as the Mercure and Ibis Styles Grosvenor hotel in Adelaide, South Australia. According to Chia, the company has an- other five-star hotel site in Adelaide.
In March 2018, Chip Eng Seng announced that it was venturing into the education sector. “I was looking to diversify into a sector that would complement our real estate development business,” says Chia.
Last July, Chip Eng Seng acquired a 70% equity stake in White Lodge Education Group Services, which has 10 pre-schools in Singapore and two in Malaysia. Earlier in April, Chip Eng Seng had formed a collaboration with Repton International Schools to set up international kindergartens in cities within the Asia-Pacific under the Repton brand. The first Repton Schoolhouse opened in Singapore in January 2019.
Though only in its infancy, Chip Eng Seng’s education business, CES Education, generated $2.6 million revenue in FY2018, and $1.75 million in 1Q2019.
Chia sees opportunity to include schools in Chip Eng Seng’s mixed-use or integrated developments overseas, such as China and Vietnam. His intention is for CES Education to expand in the Asia-Pacific, particularly in Singapore, Malaysia, Vietnam and Australia.
The living area, dry and wet kitchen as well as private lift lobby of a 1,800 sq ft, five-bedroom unit showflat at Parc Komo (Credit: Albert Chua/EdgeProp Singapore)

‘CONFIDENT’ ABOUT PARC KOMO SALES

Despite the dampening effects of the ninth round of property cooling measures that kicked in last July, Chia is “confident” about Parc Komo’s saleability. He attributes this to the sales at Park Colonial, its 805-unit, 99-year leasehold project located next to Woodleigh MRT Station. The project is 76% sold to date, at an average price of $1,730 psf. In just the past four weeks, more than 30 units were snapped up. Park Colonial was launched on the eve of the property cooling measures on July 5.
Meanwhile, at Grandeur Park Residences, only 21 units are available. Launched in March 2017, the 99-year leasehold private condominium at Bedok South Avenue 3 is linked to Tanah Merah MRT Interchange Station (for the East-West and Downtown Lines). The project is 97% sold to date, at an average price of $1,394 psf.
SRI’s Low expects Parc Komo’s buyers to be those in the mid-30s-to-40s age group who value a laid-back lifestyle over the convenience of city living. “Given the lifestyle proposition of Parc Komo, they wouldn’t mind the 25- to 30-minute drive to the CBD,” he adds.
“At $1,450 psf, the project is positioned as the most affordable freehold project launch this year,” says Low. “Most freehold projects today would be in the $1,600 to $1,700 psf range. At $1,450 psf, Parc Komo therefore presents potential price upside.”