Oxley launching at ‘breakneck speed’

By Cecilia Chow & Timothy Tay
/ EdgeProp |
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The Singapore-listed property group is going ahead with its launch plans even in the face of harsh property cooling measures. It asserts that it is well diversified and can withstand the hit better than most.

This was supposed to be a big year for Singapore-listed property group Oxley Holdings. Having amassed $2 billion worth of land last year — including en bloc sites — it had one of the biggest landbanks among property developers in Singapore. The developer had planned a 2018 rollout of eight to 10 projects with a total of 3,900 units by year-end.
Low (left) and Ching went on a shopping spree from July 10 to 12, buying close to 14 million Oxley shares between them (Picture: Samuel Isaac Chua/ The Edge Singapore)
Oxley has been on track, with a new project launched every month or every other month. So far, it has launched five projects this year. It has also sold a total of 948 units and delivered $1 billion in residential sales in Singapore this year. That was until the government unleashed a ninth round of property cooling measures on July 5. “The measures were sudden and quite provocative,” says Ching Chiat Kwong, Oxley’s executive chairman and CEO.
The measures also sent property stocks tumbling. Oxley’s share price fell 15.85%, from 41 cents at the close on July 5 to 34.5 cents at the close on July 6, before recovering to 37 cents on July 25. “After the property cooling measures, we decided to do a health check on ourselves,” says Eric Low, Oxley’s deputy CEO. “After we did the numbers, we wanted to justify to people that we’re in far better shape than [they] think.”
Oxley held a corporate presentation on July 9 for 59 institutional investors and analysts to demonstrate that beyond the $1 billion in residential sales in Singapore, it has also clocked another $446 million in sales from its overseas projects so far this year.
Convinced by the corporate presentation, Ching relates: “I told Eric, ‘We’ve been working like dogs and didn’t even realise how big Oxley has become. I think we’d better go and buy Oxley’s shares.’”
The duo went on a buying binge in the subsequent days. Ching swept up more than 11 million Oxley shares on the open market over three days — from July 10 to 12 — for $3.9 million, increasing his stake in the company to 41.45%. Low bought 2.97 million shares on July 10 and 11 on the open market for $1.05 million, or an average price of 35.4 cents apiece.
Moving forward
Oxley is not going to let the property cooling measures derail its launch plans this year. “We’re left with only five months [this calendar year],” says Ching. “We’re going [to launch] at breakneck speed.”
According to Low, projects comprising a total of 3,000 units have already been launched in the first six months of the year. “Planning is underway for the remaining 900 units. We are going to launch when we get planning approval and move forward,” he adds.
The remaining sites in Oxley’s Singapore landbank include Mayfair Gardens on Rifle Range Road (off Dunearn Road), purchased for $311 million ($1,244 psf per plot ratio) in November; and Vista Park on South Buona Vista Road, purchased for $418 million ($1,096 psf ppr) last December. “We know these locations very well because we have launched and sold Viva Vista on South Buona Vista Road and The Verandah Residences nearby on Pasir Panjang Road,” says Ching. The Dunearn Road-Bukit Timah area is also familiar to Oxley since it has developed and sold a mixed-use development there: KAP Mall and KAP Residences at King Albert Park.
The new development at Mayfair Gardens will have a ‘very British, very colonial’ theme (Picture: The Edge Singapore)
Last December, Oxley purchased a cluster of properties on Balestier Road for $38 million. It wants to amalgamate the properties with the site at 3 Tessensohn Road that it purchased last November.
According to Oxley’s timeline of launches this year, the new development at Mayfair Gardens is scheduled for launch in early September, followed by the Vista Park site in the middle of that month. Meanwhile, the Balestier Road-Tessensohn Road site will be launched in early November.
“Besides Mayfair Gardens and Vista Park, the remaining projects are small; for instance, the one in Potong Pasir [at 21 Meyappa Chettiar Road],” notes Ching. “The remaining five projects are all in mature estates.”
Mayfair Gardens will have a “very British, very colonial” theme, given its name. It will also capitalise on its proximity to the King Albert Park MRT station, says Ching. Meanwhile, the attraction of the Vista Park site is its proximity to Kent Ridge Park and Southern Ridges Nature Reserve.
“In Singapore, we did $1 billion [worth of residential sales] in the first six months of this year, with another half a billion from overseas projects,” says Ching. “So, this year, we’re on target to hit $3 billion in sales in Singapore and $1 billion from overseas projects.”
The group’s residential land value (based on effective stakes) is $1.5 billion and represents just 43% of its Singapore portfolio, says Low. Its two hotels at 30 Stevens Road (Novotel and Mercure) are valued at $900 million (26%) of its portfolio; its office properties $716 million (20%); commercial, $205 million (6%); and industrial $177 million (5%).
The Peak is a mixed-use development in Phnom Penh; CapitaLand has been appointed manager for the project’s 420,000 sq ft mall (Picture: Albert Chua/The Edge Singapore)
At Oxley’s corporate presentation, attendees were told that Singapore represents just $2.6 billion (21%) of the gross development value of its remaining projects. Overseas projects, on the other hand, have a GDV of $10 billion (79%).
The $446 million in revenue from overseas sales were from units sold at projects such as Royal Wharf in London; SO Sofitel Residences in Kuala Lumpur City Centre (KLCC); Dublin Landings in the capital of Ireland; and The Palms in Phnom Penh, Cambodia.
Given the latest round of property cooling measures, Ching foresees some investors switching to alternative assets and even overseas properties. On July 17, Oxley launched its strata retail units at The Peak in Phnom Penh at an exhibition in Singapore and cities in China. It sold 285 units over two days and released more commercial units for sale due to “overwhelming response”. So far, more than 300 units have been sold. CapitaLand has been appointed to manage the 420,000 sq ft, five-storey mall at The Peak, a joint development by Oxley and World Bridge Land.
The crowd at the Singapore launch of the strata retail units at The Peak on July 17 and 18, where 285 units were snapped up over the two days (Picture: Oxley)
The group intends to launch $3.1 billion worth of overseas projects this year. These include its Deanston Wharf project next to its flagship Royal Wharf development — a collaboration with Ireland-based Ballymore Group — which is scheduled for launch in 4Q2018. Oxley also intends to launch the residential and office space at Dublin Landings in 4Q2018 and its new residential project in Cyprus.
Following the property cooling measures, many property counters were downgraded. Oxley was not spared. On July 6, Maybank Kim Eng downgraded it to a “hold” from a “buy”. “With almost 30% of its valuation due to the Singapore residential market, we expect the recent policy tightening to weigh on stock sentiment,” said its analyst Derrick Heng. “We expect its elevated financial leverage to magnify the impact on the bottom line.”
Low believes that the company continues to be misunderstood in Singapore. He laments, “When we’re overseas, people have only nice things to say about Oxley. In Cyprus, the president came to welcome us. In Ireland, the various ministries want to work with us.
Royal Wharf, Oxley’s flagship project in London, comprises apartments, offices and retail space (Picture: Oxley)
In Singapore, they only associate Oxley with high gearing. A lot of people think we have only residential land in Singapore and that we’re still a shoebox developer. Oxley is bigger and far more diversified today compared with what it was before.” In Singapore, most developers had expected a low turnout at their showflats on the weekend following the property cooling measures: “But showflats of all three projects launched on July 5 were packed,” says Low. “Park Colonial sold 50 units, Stirling Residences sold 50 units and Riverfront Residences sold 60 units. In the second weekend, we closed another 32 units at Riverfront Residences and 10 units at Affinity at Serangoon.”
At 1,427 units, Riverfront Residences is the largest project in Oxley’s Singapore residential portfolio. Launched on July 5, the evening the property cooling measures were announced, 511 units were sold that day at an average price of $1,285 psf. Since then, another 100 units have been sold, bringing the total to 611 as at July 17. Its average selling price has gone up 1%, to $1,305 psf.
“It’s probably the best-selling project this year,” says Ching. “We’re confident that we can drain [the available units] at Riverfront Residences in the next six months, especially when other new projects are launched at higher prices.”
The 1,472-unit Riverfront Residences (Picture: Samuel Isaac Chua/The Edge Singapore)
Low recounts how having purchased the Rio Casa site (Riverfront Residences) en bloc for $575 million, or $706 psf ppr, with its consortium partners in May last year, Oxley had already pegged the new development’s selling price to about $1,300 psf. “It was what we had planned for,” he says.
Oxley’s effective stake in Riverfront Residences is 35% and the group is expected to generate a profit of $230 million, based on a 15% profit margin. In terms of psf price for a new project launch this year, “we’re the lowest in the market”, adds Low.
A project that was launched this year and fully sold is the 170-unit The Verandah Residences in Pasir Panjang. Launched on April 7, the freehold development was sold out by June 28, at an average price of $1,792 psf. According to Oxley, the project generated $249 million in revenue and $65 million in profit.
‘Good launch price’
Oxley’s other project, the 1,052-unit Affinity at Serangoon, was launched in June. So far, the developer has sold 141 units of the 300 released. According to caveats lodged, the average price is $1,550 psf. “Sales momentum at Affinity is picking up,” says Low.
Affinity at Serangoon is a redevelopment of the former Serangoon Ville that an Oxley-led consortium purchased en bloc for $499 million, or $835 psf ppr, in July 2017. Oxley has a 40% stake in the consortium. The group is projecting a total profit of $873.3 million for its Singapore projects this year, with profit margins ranging from 12% to 25%
For Mayfair Gardens, Oxley figures that $1,800 to $1,900 psf “would be a good launch price”, while the new development at Vista Park could be looking at $1,700 to $1,800 psf. “These were the prices we were looking at originally when we bought these sites last year,” says Low.
The new development at the Vista Park site will capitalise on its proximity to greenery such as Kent Ridge Park and Southern Ridges Nature Reserve (Picture: Teakhwa Real Estate)
With the hike in the additional buyer’s stamp duty (ABSD) for homebuyers and the five percentage point reduction in loan-to-value (LTV) borrowing limit, Oxley will be “absorbing” the 5ppt ABSD for the buyers in some of its upcoming projects. “I’m sure the government will be happy with our 5% contribution to the homebuyer,” quips Low.
Upgraders’ dreams dashed
While Oxley can stomach the 10ppt hike in ABSD that all developers are subjected to, Ching wonders about the homebuyers who have been hit by the new measures, especially those looking for a second property, who are now slapped with a 12% ABSD and LTV of 45%.
He is also concerned about the unintended consequences of the property cooling measures on the aspirations of young Singaporeans. “What else can you aspire to? People need to have dreams and aspirations to motivate them,” he says. “In Singapore, how many other ways are there to move up the social ladder? If it’s an investment property, you have something to retire on, pass to your child or something to fall back on if you’re in trouble. Suddenly, it seems that now they can only buy an HDB flat.”
Ching also sees many of those born in the 1980s forming the bulk of first-time homebuyers. The cooling measures have affected some of them because they have only saved up enough to cover a 20% down payment. Since July 6, the LTV for first-time homebuyers has been cut to 75%. The down payment has therefore been raised to 25%. “So now, you need rich parents, and it has become parents’ responsibility to help their children buy their first home.”

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